Would you buy a house now?

[saramoon]

I know there have been a few messages similar to this but hear me out!
We have never been able to buy a house but have recently applied for a keyworker scheme that a colleague at work has gone through (NOT half buy, half rent)and have been told that we can get a mortgage. It would be 70% mortgage and 30% equity loan. Of course the loan provider and the mortgage provider are eager for us to buy but is it a good time? I know that house prices are supposed to go down even more and so perhaps we should wait. We have a limited budget - only a mortgage of £108,500 + 30% so about £155,000.
We live in a nice area at the moment and want to stay here which limits us. We have looked at a couple of houses but they do need alot of work. There is a cresent of council houses up the road and two of them are on the market, 1 for £139,500 (2 bed)and the other for £164,000(3 bed). They look spacious and have lovely big gardens. I would really like to have a smaller mortgage than the full £155,000 so the smaller one would be perfect financially.
What kind of things should we be considering at the moment? Haven't done this before and am feeling a bit lost. Sorry this is a bit all over the place.

What's an equity loan? How does that work?

My first instinct would be not to touch it with a very long bargepole.

Nope. I think anyone who buys now with no deposit is almost certainly going to end up in negative equity within a few months. That's not necessarily a disaster if you're not planning to move for several years, but if you wait another year you may be able to get something even more cheaply.

So I would suggest that you just hold your horses for now!

An equity loan means that the loan is tied into the equity of the house, meaning if house prices rise, the amount you have to pay back rises and if the price of your house falls the amount you have to pay back falls.The equity loan is interest free for 5 years then 1.75% for 5 years and then 3.75% for the remainder of the mortgage period. Of course you should pay back the loan in installments otherwise at the end of your mortgage you still have a sum of money to pay back.
It is the only way we would ever get onto that bloody ladder. Not that i want to be on a ladder. I just want a home for my family. I am not interested in moving house, in making money and getting a bigger place. I am interested in some security for my children and having a house that will always be home, not different rented accommodation every year or two. Daisy, yes maybe we should wait. Wish we could save up a deposit but it is just not possible.

It sounds like you can't loose if it drops along with any market value drops.
Can you choose any house ?
Is there a deadline for when you have to apply or use the loan ?
In your case, I'd go for it and negotiate a good 10% off prices today, if a house has been on the market 12 months or more then you want 20% off the orginal asking price at least, more if you can.
How do I get one of these loans
Can you if you see the market going up switch to another lender ?

You can choose any house - that's why we went with this scheme as opposed to one where you can only buy a new build.
The loan ,we've been told, is indefinite but the mortgage which we have applied for - you have to go with the co-op - runs out in 3 months and you have to apply again, i think that is normal though in case your circumstances change.i think you can change lenders after the 1st five years but not sure. The scheme is for first time buyers who are key workers ie teachers, nurses etc.

Well in that case I would look for bargains and if one comes up that you like then go for it, as I've said in other threads in a free market there will be winner and loosers and you are in a good position.
You need to be tough though, no falling in love with houses, they are all just shells that you can make your own and the old location, location, location is the key.
The other thing is it might take another 6 months for venders to get the message that this isn't a blip, it really isn't . But that's what agents are saying at the moment when the spring bounce doesn't happen then people will start to panic and the real drops will start, I'm looking to buy next April/May at the earliest.

we sold our house to a couple who were buying under the keyworker scheme. In their case the government put up 25% as deposit and the rest was on a mortgage. I would still wait simply so you can get more for your money in 6 months time.

yes, if we could afford it.

but i would never buy a house with the express intent of trading up. for us, it would always be seen first and foremost as shelter rather than investment.

also, we'd be first-time buyers.

Please don't do it. I hear what your saying about security for kids (I want that too), but is security for kids having a massive debt?

House prices are still massively overvalued. House prices take ages to turn down/ up , but when they do they maintain that momentum. My point is that now they are going down there is no rush.

Give it 6 months and see what the winter has been like. If you still feel that you want to do it, say next feb, then reassess the situation. In this next 6 months, you could save £10/20k off your loan. Also, don't forget that whatever amount you save, would be double to pay back as part of a mortgage, so you could save £20/40k.

Thanks for messages. It is difficult to know what to do but from what I have heard, sunshine and showers I guess you are right. Think we may wait and see what happens. It is just so tempting to look at houses cos we have never been able to before. You are right though, we are never going to earn a huge amount of money so the lower our mortgage the better. I actually hate the idea of this big debt round our necks but would love to have our own home.

Yes, I know the feeling. I am seeing real price falls round here (Guildford) and would love to buy for me hubby and bub. But we have decided that we will not even start looking until 2010, and probably not buy until 2011. You will know when to buy, when you come on here and say, "shall I buy", and everyone goes "Noooooo...houses always go down, renting is much better". Then, buy!

Debt is a vile thing, but over the last few years it has become normalised. We are about to go the other way and having alot of debt is going to be and be seen as a very stupid thing. It sounds like you have been patient for a while. Good things come to those who wait.