Is it safe to buy a house now?

I live in the UK and I'm looking at buying a house very soon. I have savings which I am going to use as the deposit on a mortgage.

I only know what I read or am told when it comes to the economy, currencies and banks. And I dont know how accurate that knowledge is but I see lots of discussion about economic collapse and banks taking our money.

It has led me to believe something is coming sooner rather than later. I am wondering if it is safe to use my savings and purchase a house? what will be the consequences of an economic collapse?

I'm thinking if the economy collapses would it matter if my money is in a bank or under a mattress as the cash would be worthless right? But at the same time I am desperate to get that money out of the bank.

but what would the case be if i put it into property?

I want somewhere of my own to keep me and my family safe during economic collapse and also to store food and water supplies which I dont have the means to do at the moment.

reply to post by Silicis n Volvo


It really depends on the housing market by you. If the houses are priced reasonably then it should be ok to purchase. The problem is when the prices are bloated and eventually everyone figures out that they are not worth that much (or they can not afford the loans because the conditions change after a few years). I live in the US and the housing market around me is great for the buyer, because there are a ton of house for sale and all of them are priced how they would have been 15 years ago before the bubble.

Buy something you can afford even if you lose your employment. People are conditioned to believe that we should buy a home for as much as our credit allows these days. Just because you are approved for a couple of hundred thousand doesn't mean you need to spend that much. Buy only what you need. I personally think people are going overboard on homes, making them into idols. In the UK there are a lot of older homes that were well built. Who cares if everything is modern, I like old style myself...not the beer though.

rickymouse
Buy something you can afford even if you lose your employment. People are conditioned to believe that we should buy a home for as much as our credit allows these days. Just because you are approved for a couple of hundred thousand doesn't mean you need to spend that much. Buy only what you need. I personally think people are going overboard on homes, making them into idols. In the UK there are a lot of older homes that were well built. Who cares if everything is modern, I like old style myself...not the beer though.

Thanks and i understand. I have been telling my girlfriend that we don't have to get the most expensive house we can afford. After all we both still have cars to maintain and fuel, food to buy and other bills to pay.

Its not so much the type of house or price that is a worry, it's what would happen if the economy went tits up sometime soon?

Would we be knee deep in sh!t or would we be better off having put those savings into bricks and mortar?

reply to post by Silicis n Volvo

Owning a reasonable amount of real-estate isn't necessarily a bad idea. I would investigate the true value of the property versus the selling price. You need to know this so you don't get whammied by taxes unexpectedly. I did ... that sucked.

Assuming there is no pending economic crash etc. Then now and this year
is the best time to buy. We are now in what I call the pit or valley of real
estate prices and more so in some parts of the UK than others.

We are now at the base of the next 5-10 year growth curve. So get on with
it but dont dont stretch yourself (allow room for interest rate increases
starting 2015. Always keep a few quid a month spare for covering this angle.

I would expect house price growth to be on average in the UK to be between
4-8% a year for the next 5 to 10 years.

The rest is just basic mathematics.

If you require any further financial advice or assessment of what you
want you want to buy and where then happy to give you further advice
and the ok. My services are 50 pound and hour and 2 hours assessment
would surfice any likely purchase you wish to make. Far cheaper and
wiser than the high street.

Goodluck.

rickymouse
Buy something you can afford even if you lose your employment. People are conditioned to believe that we should buy a home for as much as our credit allows these days. Just because you are approved for a couple of hundred thousand doesn't mean you need to spend that much. Buy only what you need. I personally think people are going overboard on homes, making them into idols. In the UK there are a lot of older homes that were well built. Who cares if everything is modern, I like old style myself...not the beer though.

Can't agree more. Only buy what you can comfortably afford, not max out what the bank is willing to give you. A lot of people seem to put little to nothing down and have a huge monthly mortgage payment. Depending on where you are buying, house prices seem to be a little inflated right now but on the bright side mortgage rates are quite low. If you are truly worried about a major economic collapse, do a little math. If say in 5 years you go to renegotiate your mortgage and interest rates are twice as high as they are today, can you still afford the payments? We were fortunate enough to put down a good size down payment and have a low mortgage payment, therefore if we end up with a housing bubble burst - even if our house was devalued by 20%, we won't end up owing the bank more that what the house is worth. As a friend of mine (who is a financial advisor) says 'They aren't making any more land'. I would feel comfortable putting your money into real estate, assuming you keep it well within your personal budget.

reply to post by Silicis n Volvo


I don't know how different it is where you are, but I feel it is a good time to buy.
I bought a home last year - 3% interest rate, plus the prices are pretty good.
Do some research and good luck

I think it is safer to buy now than it has been in recent years. I have noticed people are not so much afraid of spending this last six months or more.

-Research any banks you will be doing business with and stay away from RBS.

-Consider living on a hill, at least 2m above sea level.

That's all I have to offer, sorry I'm not much use.

Good luck.

Mark your income and savings as a little less if you are going to a realtor. I used to be a real estate salesman. The realtors prequalify you and usually show you houses within the prequalification range...so you don't get to see the perfect little home you actually want with a lower price tag. Remember that the taxes may raise from the present level when purchased. The insurance costs can vary widely and they are based on credit history nowadays. I don't care what home you buy, there is always some maintenance to plan for, sometimes big ticket items like a furnace or roof. Remember a house isn't a home unless you put some of yourself into it. The remodeling is specific to your wants and those wants change over time.

Don't be afraid of taking on those little remodeling jobs yourself, it is fun doing those little jobs and even funner talking to people to find out how to do it. People working in some hardware stores and plumbing stores will teach you, but do not go for their sales pitches selling you more than you need. A good quality faucet doesn't have to be expensive, I put price Pfister faucets in my house because I knew they were reliable back then. I am sure that there are others out there that are also good and inexpensive. Remodeling makes good conversation opportunity, and looking in advance of a project is necessary to keep costs down...as long as you just look and don't buy things you will never use. I would prepurchase things on sale before starting a project...this gave me incentive to do it. Only start one project at a time...it sucks to have everything torn apart. Always remember that there will be extra costs that you did not plan for when starting a job.

Even if you buy a completely finished home, you will want to remodel, it is like it is a part of us. I see that all the time. We will get sick of something after a while and want to change it. Humans love change, and we also like to do things. With a little desire and access to good knowledge we can create what we want.

Make sure that whatever it is, it is something that you will continue to be able to afford if the worst should happen.

Take a look at your job situation, and not just at whether or not your personal job is stable, but at whether or not your employer is stable. Having a stable job won't help if the economy goes under and takes you employer down with it.

Make sure you can either buy outright or figure out what you can afford and then seek to purchase something cheaper than that.

Figure out how much wiggle room is on your budget so that you know how much you can tighten your purse strings in an emergency cash flow situation or skyrocketing inflation.

Similar question, we are thinking about selling our house, and renting for a while until we buy another.. the reason being is house prices in our area have sky rocketed last year and the value went up by 100k in 6 months.. its a good time to sell but is it a good time to have all our money in a bank?

reply to post by Silicis n Volvo


Cheers guys I think we are definitely buying within the next 4 to 5 months. We wont go too expensive, one thing I am good at is money management.

I guess I was just wondering weather putting my money into a house now was risky due to the economy but if not then thats what I will do

reply to post by Silicis n Volvo


If you plan to live there for a long while, it's maybe the best thing to do with your money. At current rates, try to put as little of your own money down as possible.

reply to post by Silicis n Volvo


Don't wait any longer than you must. Rates could double in the next 6-12 months. Getting 3% after points here. At that rate $250,000 over 30 years costs you $1054.01/month. Let's assume the rate goes to 6% before you buy. To keep your monthly approximately the same ($1049.21) you can only borrow $175,000. Huge difference in your buying power.

A couple of issues:

1) IMO houses are still over-priced. In my area prices have "recovered" quite a bot and are still expensive. the houses that "bombed' are in the "stretching to afford it" category where it takes two incomes and a big down to get into one. Those are still deservedly depressed, but "normal" houses aren't. If another hit comes, I'm expecting prices to go down again because they are still unaffordable.

2) it depends on exactly how a financial hit goes down. If it happens in terms of increased inflation AND you have a rock-steady job, then that mortgage is due in the currency value of when you made the loan. In other words, if you owe L150,000 and a heavy hit of inflation strikes, pretend 100%, you still owe that L150k, not L300K. So if your income kept up with that inflationary spiral, you'll be paying back in smaller pounds, and that is to your advantage. The point is that the debt does not increase just because inflation strikes. Given that interest rates are pretty good right now, about what they were in the 1950's, then all things being equal, it's a pretty good time to take out a loan.

3) As other have said, though, that does not justify stretching yourself thin. When my wife and I decided to buy a house we also decided that we would only buy as much house as a single one of us could afford. That way, if one of us lost a job, we would still be able to handle the house payment. We bought a lot less house with that decision, but as a result the house is now paid off, perfectly adequate for our needs, and now we have no house payment. If something financial does happen now, it won't hurt us nearly as much as it would have if we were struggling to make a monthly payment and also worried about having a job.

4) Having your money in property, which they are not making any more of, is probably better than having your money in cash, which can disappear overnight. Just don't try to buy Longleat.