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  1. #1
    We like music. weirdbeardmt's Avatar
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    Good time to buy?

    I will be living in Southampton (Southern England, UK) for at least the next 3 years (doing a PhD at Uni...) and I am fed up with burning money in extortionate rent fees and being tied to a grumpy landlord.

    So I am thinking about buying a house/flat. I can secure a mortgage, but I am worried. I know the Housing Market is extremely strong at the moment and there is a complete shortage of property which means that not-so-good properties (that are available) are probably completely overpriced. Interest rates are fairly stable at the moment (around 5% ish I believe) but many economists are predicting that either a) the housing market could easily bottom out in the next 12-18 months (not quite as spectacularly as at the end of the 1980's but I could still lose a lot of money) and/or b) interest rates look set to go up which could have nasty effects on mortgage repayments.

    I don't think negative equity will be a problem, but the interest rates do worry me.

    Anyone got any great advice/experience buying a house (pref in the UK!). Is now a good time to buy? The way I look at it is I could spend around 650 PCM on rent here for the next 3 years (say 20k min) or I could get a mortgage and pay that (or probably less...) but risk losing 20k on the price of the house...

    Thanks.
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  2. #2
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    Buy new construction homes whenever possible. they have a tendency to start a little below market value, and to appreciate by about 10% within the first year or two. Before you buy though, also check out the local property and school taxes. Consider money that will need to be placed into escrow, and whether or not you will be buying points on your mortgage. Also, if you are buying a resell, there might be real estate fees associates (up to 2-3% of the house) if you agree to pay a percentage of the sellers fees, even if you do not use your own agent.
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  3. #3
    SitePoint Wizard gold trophysilver trophy
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    Southampton! What a dump! I grew up just up the road in Romsey. Kidding - have heard people say that for students, Southampton can be a lot of fun, one you find the "scene", whatever that is.

    But at the moment it's all hot property for those insane fools who commute to London.

    Personally though I'd say don't buy until the matter of England and the euro has been decided. If England joins, the pound will have to be devalued, probably causing a house price crash and if England doesn't, it may well go into recession anyway (causing house prices to fall as well), as our last manufacturing industry goes elsewhere.

    And they're saying there's a house market crash on the horizon anyway.

    If you were buying a place in Hampstead, London, for a great deal, then may be buy. But Southampton is one of those places where you buy a house and can't sell it for a profit if there's a crash.

    Course that's all my own opinion based on guesswork. Don't own a house because I don't want the stress of a mortgage.

  4. #4
    Mlle. Ledoyen silver trophy seanf's Avatar
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    Originally posted by HarryF
    If England joins, the pound will have to be devalued, probably causing a house price crash
    More likely to happen before then

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  5. #5
    SitePoint Wizard silver trophy Jeremy W.'s Avatar
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    The housing crash is just about imminent. Houses are incredibly overvalued, developers are still building like it's the mid 90s and interest rates won't stay low for long.

    Developers are often taking losses (that 10% referred to earlier) on new homes because they are tax deductible, but that isn't any way to build a long-term business.
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  6. #6
    Don't get too close, I bite! Nicky's Avatar
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    You might as well buy. Think about it this way: even if you lose money on your house it is much much cheaper than renting so in a way you are saving aren't you?

  7. #7
    We like music. weirdbeardmt's Avatar
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    Originally posted by Nicky
    You might as well buy. Think about it this way: even if you lose money on your house it is much much cheaper than renting so in a way you are saving aren't you?
    Unless the housing market crashes so that I lose more money on the value of the house than what I would have saved had I been renting...

    But I think I am gonna give it a shot. But it is such a nightmare! I didn't realise quite how much there is to do!
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  8. #8
    SitePoint Wizard gold trophysilver trophy
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    Think the question is are you planning to go AWOL in the next few years?

    If not, then paying the mortgage while the slump is on isn't a problem. It's just if you want to get out again that you lose money.

  9. #9
    We like music. weirdbeardmt's Avatar
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    Well I'll be here for at least 3 years, and thereafter I was planning to let it to students if I decide to leave Soton.
    I swear to drunk I'm not God.
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  10. #10
    ********* Scotland Saltire's Avatar
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    Buy a dump and do it up.

  11. #11
    SitePoint Wizard silver trophy TheOriginalH's Avatar
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    Originally posted by HarryF
    Think the question is are you planning to go AWOL in the next few years?

    If not, then paying the mortgage while the slump is on isn't a problem. It's just if you want to get out again that you lose money.
    I completed a few weeks ago, and Harry sums up my philosophy precisely. The market is quite high at the moment, but if it is a long term investment the chances of losing out are very slim.

    Well I'll be here for at least 3 years, and thereafter I was planning to let it to students if I decide to leave Soton.
    Don't do students!!!! Having been one, having loads and lived/dossed in many student houses, it really isn't a great idea - and only half rent over summer???? Look at letting through a professional agency, slightly less profit (although prolly balances over the year) but a lot less aggro. Don't forget if you plan on letting the property (or even subletting), you may be breaching clauses in your mortgage (in fact this is almost guaranteed unless you have a deal specifically for this purpose).

    Have you looked at Virgin One? - Not the best rate in the world, but your other borrowing is attached to that rate (eg: Credit Card and loans @ 5.6%), and the minute you put money in the account, you reduce the interest. This brings repayment times down in some instances by a matter of years.

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  12. #12
    We like music. weirdbeardmt's Avatar
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    Originally posted by TheOriginalH


    Don't do students!!!! Having been one, having loads and lived/dossed in many student houses, it really isn't a great idea - and only half rent over summer???? Look at letting through a professional agency, slightly less profit (although prolly balances over the year) but a lot less aggro. Don't forget if you plan on letting the property (or even subletting), you may be breaching clauses in your mortgage (in fact this is almost guaranteed unless you have a deal specifically for this purpose).
    Students, tenants... whichever. I know there will always be students about so it is quite safe if I can't get "respectable" tenants

    Mortgage concern is correct though -- you need a different mortgage, but I assume it would be possible to switch it over?
    I swear to drunk I'm not God.
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  13. #13
    SitePoint Wizard silver trophy Jeremy W.'s Avatar
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    Don't assume anything when buying a house. Get a building inspector to inspect and sign off, get the town to sign off, make sure there are no leans against the property (which you as the owner will be reponsible for whether they are yours or not), etc.

    Don't assume
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  14. #14
    Serial Publisher silver trophy aspen's Avatar
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    I don't know about the UK, but in the US they say that if you don't plan on staying for atleast 7 years you shouldn't buy. What with closing costs, down payment, property taxes, and everything else.
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  15. #15
    SitePoint Wizard silver trophy TheOriginalH's Avatar
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    Originally posted by aspen
    I don't know about the UK, but in the US they say that if you don't plan on staying for atleast 7 years you shouldn't buy. What with closing costs, down payment, property taxes, and everything else.
    Very good point, and one I forgot to mention. With Virgin One there are NO penalty clauses for early repayment. Other costs you can expect are the usual solicitors fees (conveyance, land registry searches (registered land), other searches to guarantee good title (unregistered), payment for first registration if unregistered (unlikely but possible), stamp duty (circa 1% of value, depending on area of country), water searches etc. etc.

    All costs came to around 2k on a 80k house for me. A survey will cost you around 200.

    but I assume it would be possible to switch it over?
    absolutely, with subtenants, (although I must stress this is not the legal position), something of a "blind eye" principal can be applied

    make sure there are no leans against the property
    What J is talking about here manifest themselves in Covenants and Easements affecting land in the UK. There are complex rules on how the benefits and burdens pass (depending on type of ownership, dominant and servient tenement, whether the land is registered or unregistered etc) - however, establishing the existance of these, and explaining their relevance is what you pay your solicitor for
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  16. #16
    We like music. weirdbeardmt's Avatar
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    Originally posted by TheOriginalH
    what you pay your solicitor for
    Well I'm not paying my father anything! -- it can be really useful having a solicitor in the family sometimes, especially someone who specialises in corporate acquisitions...this'll be a walk in the park for him!
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  17. #17
    SitePoint Wizard silver trophy Jeremy W.'s Avatar
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    Yeah, after he finishes a certain TOS and PP for us Say thanx to dad btw
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  18. #18
    runat="server" Golgotha's Avatar
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    Originally posted by aspen
    I don't know about the UK, but in the US they say that if you don't plan on staying for atleast 7 years you shouldn't buy. What with closing costs, down payment, property taxes, and everything else.
    It's not that I disagree with Aspen, but the US is too big and polar to generalize like that. Buying a house in Michigan is differenct then buying a house in Wyoming or Colorado. It varies from state-to-state. I know that with what I paid for my house in Colorado I could be living in a mansion in Texas, but then again I would be living in Texas. I have bought 3 houses in that last 5 years and each one that I sold helped in making money for the next one.

    I just hate the idea of paying rent, it's money that you NEVER get back.


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