Same Question Six month later - Should I Buy?

Hi

I posted several months back about buying house in an okay area…I took the advice of most people and Didn’t buy but rented a {lovely] unfurnished apartment - that I am very happy with.

However now I have come across the ideal house for me in the ideal area - its perfect [except it needs to be completely renovated - 50k at least]. I could see myself living and retiring in this house.

The price [including renovation costs] would be 4x my salary = I was holding out for a 3x salary house next year but this house is great.

I am going to put a bid on it. I’ll be 40 next year - I want a 25 years mortgage.

Basically Id like to get others opinions [again] on my current intentions.

Best

Go for it. Negotiate hard on the price - since you can close the deal straight away. Before you buy get the best mortgage deal you can - in your situation (if you are not planning on selling this house on in the near future) I would try a fixed mortgage for security. If you like the house and you are happy with the price, go with your gut. Best of luck. And remember, if you are outbid, another perfect house will come along.

I always thought the idea of the pin was to educate. Anytime a newbee comes along and asks a question doesn’t bother me. Coming back 6 months later to mooch don’t impress me much.
Honestly, I’ll probably buy in the next six months, small mortgage, my dreams of grandeur are spending time with my kids with few bills. House prices will fall. At the moment banks won’t lend and you can drive hard, if you can factor in a 10-20% drop in the asking, PROVIDED the asking reflects the current market, then it might not be a bad bet.
It depends on the persons circumstances. I don’t want to sound like a prick but if you spent the last six months reading up on the subject, including the vast knowledge of some of the posters, you would not only be better armed in buying a house but also in a lot of other financial tranactions. But then again, maybe you are run off your feet providing or taking care of a family.

As for me, I might buy in the next six months so what do I know. Best of luck but read up a bit and when you make a decision know that you did it fully aware of the facts at the time and the possible 5-6% interest rates and move on once you decide.

Having worked as an estate agent for many years, I am fully aware that many people buy property for reasons other than money e.g. family etc.

The ‘need’ to buy is strong - even now.

Like many on the pin, I am convinced that far worse is to come and to buy now would be a serious mistake.
But if you don’t have the luxury of being able to take a back seat as a spectator in all of this, then I suggest you review your situation on a month-by month basis.

Barring any temporary rise in prices (such as the UK experienced*), I believe that as each month rolls on, you will see your situation continue to improve and perhaps the confidence to put off buying will increase.

Whatever you decide, good luck.

I’m older than you and I don’t want a mortgage!

I agree with others here that the market has to fall further. I could buy too, but to convert my liquid assets into a highly illiquid, depreciating property, in a country that is probably heading for sovereign default, would not be for me.

In the current environment: Liquid Assets = Freedom. Property/Debt = Captivity.

But if you have to go for it, I wish you luck.

+1

You’re pricing of the renovation costs seems very sketchy?
Have you had the house properly surveyed?
Have you had two or three competent builders in to give you a quote?
Have you worked out exactly what you want to change and where?
Have you factored in paying a mortgage and rent while renovation is being undertaken?
Have you doubled the cost of any quotes you’ve received, because with renovations, that’s entirely likely.

Thanks for the replies - I know its risky buying a house at this time - however I want to buy this house to live in - possibly for ever after…

You’re pricing of the renovation costs seems very sketchy?

I got a quote from a reliable builder - I am getting another quote this week - friends who have enovated myself said it would cost 25 to 30 K if I did it myself (with help) over the course of a year or too - which I am considering.

Have you had the house properly surveyed?

No. If my offer is accepted I will get a survey - obviously of there are serious problems I wont be buying - There does not appear to be though.

Have you had two or three competent builders in to give you a quote?

I’ve had one - will get a second later this week

Have you worked out exactly what you want to change and where?

The lay out is perfect as is for me [and kid] - just need to decide where sockets/radiators go…

Have you factored in paying a mortgage and rent while renovation is being undertaken?

yes- hopefully wont be too much of an overlap - if there is I can move in with family for a few months. I dont need to move into a completely finished house either.

Have you doubled the cost of any quotes you’ve received, because with renovations, that’s entirely likely.

No I haven done this - 100K … I couldn’t afford this - I have however factored in 6% interest rates - would be v tight but doable…

Personally buying a fixer-upper in a falling market makes no sense to me. How long will the renovations take? How much will prices have fallen in the same period (say moving average falling 1% p/m)?

The house is 105k cheaper (asking price) than a fixed up house around the corner.

I know there are many downsides … but some upsides [its very cheap in an overpriced market] etc.

we’ll see what the builder /surveyer say

Set yourself a reasonable and rational target, 3x income , and revisit this idea early next year ( and do please drop by the PIN for a natter too).

3x Income over 25 years is THE LIMIT what I would consider “affordable” for a single income. 3x is what the banks are historically comfortable with too. The only way to get from 4x to 3x is a mega promotion at work or if prices drop another 25%. The latter is the more likely scenario given how little the banks are lending …mortgage lending in 2010 will be €6bn compared to €40bn in 2006.

In the 1960s my oul fella ( single income/married with sprogs) got 2-2.5x his income over 20 years and then only after he saved 10% up front. But at your age insuring a mortgage over 25 years will cost a lot more than his 20 years stretch starting at 30.

Once you get into 4x income or ( god bless us) 5.5-6x income over 30 years which was quite normal at the height of the bubble then you are buying something you really cannot afford and leaving yourself no wiggle room to save for rainy days / emergencies like normal rational people should.

Do please recalibrate your comfort zone and remember while doing so that our governments are eventually gonna tax the bejaysus out of you to close this deficit…and if they won’t the IMF will ultimately make them.