Cover me in debt, debt to the eyeballs (or advice on buying a shoebox in England)

[Cort Haus]

We've now put an offer on a smaller place in a worse location than our original target - but it is a really nice flat, in a church conversion in excellent condition. Most importantly, the vendor has no chain. 10% price rises in SIX MONTHS is a nightmare. We've effectively lost around £30,000 after being shafted on the last deal.

The worrying thing is that the vendor, on accepting the offer, initially said that he'd keep it on the market until the survey was done. As our mortgage application has to be redone from scratch, this might take a while, giving him time to sell to someone else in the meantime.

We also saw another place today which was an even smaller, expensive place but in a dream location (Primrose Hill - drool). We're wondering whether to pull out of the first location and get rid of nearly everything we own (tempting) or go for the more practical option - which we'll amost certainly do. I'm not ready to say goodbye to making music forever quite yet.

The other worry is getting the mortgage renewed, as my employment income has taken a severe dive over the last few months as promised work did not materialise. Getting another job at the rates I was used to is proving a problem, as is several years of using proprietory rather than generic software tools. Even more .

[Arrian]

Best of luck, CH. Rough market you're in...

-Arrian

[DanS]

Aye.

[Solly]

Don't buy at the moment, you'll regret it

[Cort Haus]

Thanks again for the comments, guys. We met the bank today and applied for a new mortgage at a decent rate given the climate of ever-sharpening rate rises- fixed, 2 years at 5.11%, but need to raid all of our long term savings for the 25% deposit requirements. This means, however, that the monthly repayments for this period are manageable by just one of us should unemployment or death become a long-term problem. Better to blow all savings now for a lower loan and rebuild the savings than risk a higher debt.

Doddler - I see your point but I'm already regretting not buying 12, 10, 7, 5, or even 2 years ago. If we were in our twenties we could afford to wait for a cooling or adjustment but when you hit 40 the years for repayment start growing thin. Not buying now is as risky as buying. Actually, we couldn't afford to buy any time before now, ironically, and the only reason we can do so now is because we've sacrificed most comforts and lived ultra-frugally through years of saving.

In 1995 I moved out of a beautiful (but small) rented flat in one of Islington's deluxe Georgian squares that was for sale at £71,000. At the time I was single and earning £13,000. It's probaby worth around £300,000 now. In 1998 I moved out of a rented 3-bed flatshare in a cool terrace in Camden that was sold for £125,000 and was earning around £20,000. It must be worth £400,000+ now. If only I was in a better position to buy at the time.

The over-valuation of property in London is insane, and has a number of causes. First, high City salaries and bonuses for those in the Financial sectors. Second, tax breaks for rich foreigners allow the city to be a playground for the richest people from all over the world, which drives prices up all the way down the food chain. Third, the misery of commuting added to the long hours demanded for many to keep their jobs drives people to do almost anything to live near their work. Fourth, the cut-throat land-laws in England (but not Scotland) encourge piratical behaviour from the buy-to-let classes at the expense of those just desperate for a home. Fith, the propertied classes in Goverment, Media, Economics and Finance have a vested interest in the madness. Sixth, nimby opposition to increasing the housing stock and green-belt dogma inhibit essential increases in supply.

An adjustment is inevitable at some point in the coming years, but the conditions for a crash are not really in place, it seems. The three crashes of the last hundred years were the great depresion of the thirties, the smog of the fifties, and the crash of the late eighties-early nineties was at a time of high unemployment rates and stellar interest rates of around 15%. These conditions don't apply now, and a cooling and levelling off is more likely than a full-on crash.

The place we're going for is architecturally stunning, fully modernised, and on the edge of a reasonably desirable area. This will help protect against any possible drop - compared with large ex-council properties in nasty areas which would be very hard to sell if things started reversing.

Even if prices dipped by 25% our financing would protect us from negative equity, so as things stand we shouldn't be too exposed. No-one knows what's going to happen, but whatever we do is a risk. To not buy now could be just as disastrous as buying before a slump.

[Drogue]

Originally posted by DanS
Why is she against it? Is it the long hours? You can live like a king in the US on a doctor's salary, so long as you aren't in a major city.

Really, you can live like a king in much of the US, so long as you're paid reasonably well.

This is not for everyone, of course. I do not prefer to live in such areas. I live in an outrageously expensive part of the city, but those London prices are just mind-blowing.

Partly because of litigation issues, partly that she doesn't like (what she knows of) US culture, partly because of retraining, probably a few other reasons too.

Doctors are paid reasonably here, though not as well as in the US, and they work long hours here too, so it isn't that. I can't say I've thought of it much, as I do like living in the UK, it's just I'd rather not live in London for too long, yet working in economics or finance it pretty much has to be in a big city.

[Solly]

Try Leeds.

[Krill]

Brum? Manchester?

[Solly]

Originally posted by Krill
Brum? Manchester?

I do believe Leeds is the second largest financial centre..though I may have been brainwashed by the YEP.

[Krill]

Who wants to live in Leeds though?

[Drake Tungsten]

Leeds

[MikeH]

Dirty Leeds.

We're buying now, despite market worries, on the basis we're buying somewhere we will be happy to stay for a long time, and we want to have our own place with all the things that implies about what you can do to it, and the repayments are affordable (I'm going to mentally think of it like rent) already, even without taking into account likely future pay rises. Also, like Cort Haus, because we can. Sure, the market readjusting down is a risk, although I think cooling is more likely, but for us it's also a risk that it continues to rise, even at a slower rate, and we get priced out of the quality of house we're looking to buy for a few years.

[DrSpike]

Originally posted by Doddler
Try Leeds.

Good god, even America would be better than that.

[Dauphin]

Originally posted by Doddler


I do believe Leeds is the second largest financial centre..though I may have been brainwashed by the YEP.

Depends on whether you want to include Edinburgh and Glasgow as a single centre or not.

Either way, London dwarfs them both.

[Kuciwalker]

Originally posted by Drake Tungsten
Leeds

Do you hate him? I know he's a rosbif, but still...