Q:Hi Everyone,
I hope nobody minds me posting this but I've nowhere else to go.
We would like a balanced review of our situation. I have seen many mortgage advisers, brokers and spoke to as many people as possible but pretty much got the same answers "only you can decide if you can afford it or not, nobody can predict the future".
I don't mind sharing our information on this site as I need to know if we are doing the right thing….basically, would you do the same in our position?
The house we are in now is a 2 bed semi, perfect starter home and done us well for the past 7 years. Back then we were first time buyers, so glad we bought when we did as we wouldn't be in this position right now.
Current Mortgage is ￡57,500 with 18 years left
House is Worth in the region of ￡120,000 (one on the market for ￡130k)
so, we have ￡62,500 in equity and are looking to buy a new home. We have had enough of the current neighbours anyway and fancy something a bit bigger. We spent last weekend looking at new properties and found our dream home with a builder (persimmon homes). The house will be finished in July and has an asking price of ￡229,950 which I think we should be able to knock them down. Hopefully quite a lot.
I like the sound of a part-ex deal and heard rumors that another builder on the same road is offering a 110% part-ex. If we get 110% for our house and do knock them down we would be looking to take a new mortgage of ￡145,000 over 25 years fixed rate for 10.
We are currently paying ￡480 a month, this would jump up to ￡820 a month and an increased term of 7 years. I will be 55 when it's paid off. Now we are obviously earning more money than we did 7 years ago and after all bills, food, petrol, taxes etc etc leaves us with ￡700 a month spending money.
one thing worrying me is the obvious state of the market, will we get a crash this year? who really knows…..should we even care if we will be living in the new house for the rest of our lives? Can we even afford this house?
another thing which made me feel uneasy was this:
current mortgage is just over doulble my salary
new mortgage would be four times our joint salaries
Do we just bite the bullet and ride the wave? We do really REALLY like the house but also don't want to make a huge mistake.
Thanks for taking your time reading this and I hope we get some interesting replies.
I've no problem answering any questions
Glen and Sarah.
Cheap and loads of extras
The one thing I think they will say is that because of the part-ex (they are paying the estate agents fees and I am guaranteed to get a sale straight away) I might not get a brilliant deal
I will stick to my guns
229,950 down to 199,950
Good part-ex on mine
plus:
stamp duty, legal fees, carpets, fitted wardrobes, turfing and fencing
Do you think this is a cheeky offer and we'll get laughed at or shall we just go for it?
It's a low offer but not outrageous in the current market – builders will be considering any serious offer.
My mum and dad fell in love with a new-build development in late 1989. They made a cheeky off-plan offer for a house with the best plot on the estate and were told where to go.
Nine months of renting later, they offered ￡40k less than their first offer and the builder almost bit their hand off. Joys of timing the market just right (although they were moving because of work, not because of any particular focus on what the market was doing).
Point being, if your offer is shot down, only go up to what you're truly comfortable with. Things aren't flying off the shelves right now. Once you've hit your maximum (and only you can decide what that is), back down. There is a good chance (no guarantee of course) the house will still be available in a couple of months and by that point the builder might be more willing to listen.
Careful with an insurance policy, as you pay rather alot each month, then if/when you come to claim, they often find any excuse not to pay out. My dad had a heart attack, heart bypass, and told he mustn't work any more otherwise he'd have another heart attack and probably die (his job was pretty stressful), but alas that wasn't good enough for the insurance company. They can be an utter waste of money.
Can you get better value buying a newish home but not a new build – new builds are where you stand to lose most, as you are paying the premium for a new build; even if house prices remain stagnant, it will be worth less once 'second-hand'.
Does your ￡700/month (quite a lot!) include regular expenses like birthdays, holidays etc – if not, you need to work out average monthly cost of these anddeduct that too.
Good luck – sounds risky to me, and if I were in your shoes I'd look at cheaper properties to buy/sell to rent.
But it's your decision. Hope it all works out well for you.
Bellway Homes has a 5bed detached for sale at 229,950 and one at 199,950 due to a sale falling through (altho the plot size is smaller than the rest). The cheaper one also has carpets, curtains, garden turfing and fencing however he did say the deal would only be part-ex minus 10% not plus 10% due to the discount already made.
still a 30k saving is great and I can go to the developer with that to see what they can offer
I was hoping (maybe being a bit naive here)
229,950 down to 199,950
Good part-ex on mine
plus:
stamp duty, legal fees, carpets, fitted wardrobes, turfing and fencing
Do you think this is a cheeky offer and we'll get laughed at or shall we just go for it?
You are right about not wanting to live near neighbours from hell. We can't stand our neighbours 15 year old son We are going to look at the plot tomorrow afternoon so I will ask about social housing….altho I guess any families can cause trouble.
We always have the ASU insurance cover and will save a bit of our spending money each month to create an emergency buffer in case the worst were to happen.
We will be living in our next house for a LONG time so we need to make sure it's the right one.
Thanks again!!
I like the sound of a part-ex deal and heard rumors that another builder on the same road is offering a 110% part-ex. If we get 110% for our house and do knock them down we would be looking to take a new mortgage of ￡145,000 over 25 years fixed rate for 10..
I'm always suspicious of builders offering deals like this, and you have to ask yourself WHY they're doing it! Possibly because they're worried they're not going to sell all the properties…?
I live in a new build, and it's fab, on a lovely street etc… and no social housing in the development as it was too small . Check where the house you're buying is in relation to the allocated social housing, as you don't want to end up with potentially a neighbour from hell… (I rented in a new build street before, and although 99% of the neighbours were lovely, 1% caused 99% of the problems).
We are currently paying ￡480 a month, this would jump up to ￡820 a month and an increased term of 7 years. I will be 55 when it's paid off. Now we are obviously earning more money than we did 7 years ago and after all bills, food, petrol, taxes etc etc leaves us with ￡700 a month spending money.
So long as you can afford it… Kids? savings in case of job loss or redundancy? This sounds like it's going to be your home for a long time, so do your research and make sure it's the right one.
one thing worrying me is the obvious state of the market, will we get a crash this year? who really knows…..should we even care if we will be living in the new house for the rest of our lives? Can we even afford this house?
You're buying a home, not an investment, so who gives a sh*t what house prices are going to do!! You've already said you're taking a 10 year fixed mortgage. House prices only matter when you come to sell. If they drop, you'll get less when you sell your current one, and pay less for your new one.
another thing which made me feel uneasy was this:
current mortgage is just over doulble my salary
new mortgage would be four times our joint salaries
Do we just bite the bullet and ride the wave? We do really REALLY like the house but also don't want to make a huge mistake.
What are your earning prospects? 4x your salary for now is do-able, but you wouldn't want to be doing it for 10 years!! Our initial ratio was 3.8x our joint salaries, but by summer it should hopefully be down to 2.7x so much nicer
10 years is a LONG time, so just make sure you think everythign through!