Mortgages, Bonuses and Lodgers

Hi All,
Okay, I'm thinking it might be about time to stop renting and start looking for a place to buy, and I've got some questions:
1. My salary is composed of base + car allowance + bonus. How much of
this will be taken account of in the mortgage multiplier ?
2. I can probably afford to get a 1 bed or studio flat, but would much rather get a two bed flat and rent out one of the rooms to a lodger. If I did this, I think I could comfortably meet the monthly mortgage payments. But will the bank take account of this?
3. Do you think this is a bad time to buy? Since house prices in London (I live just outside west london) having been going up faster than salaries, I feel that the market must slow down. The question is, do you think that there is much risk of prices dropping over the next few years ?
4. I'm probably going to keep this place for about 2 years. Do you think this is too short a time period to see any return on the investment (capital growth) ?
5. What sort of properties tend to go up the most? I think a 1-bed flat is probably better than a studio in this respect, and a 2 bed more so ?
6. What precisely is meant by a "Masionette" ?
The main thing I'm wondering is if I'm better off just carrying on renting (where my total monthly expenditure is going to be much lower than owning my own place) and saving (or investing in a tracker fund etc) rather than buying a place and hoping to see some capital increase.
All advice appreciated,
Art
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not usually.

yes.

Yes, lots.

In the current market, yes.

I don't think that there is a 'type', it's location that matters. Note that studios are near impossible to give away in a falling market.

If I currently didn't have a house I wouldn't even think of buying in the south. The market has little room to go up and lots to go down IMHO.
tim

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Art wrote:

All of it, if the bonus is guaranteed.

I doubt it.

Yes.

Why are house prices in London relevant. Surely you aren't thinking of buying *there*?

If you're thinking of moving, why does it matter where you live now?

The question is when and how fast.

See below.

Are you a comedian? In (3) you're on about prices dropping and in (4) you're expecting growth. You can't have it both ways. And 2 years is hardly enough of a period over which to amortise the transaction costs. I mean, won't the survey/solicitor/estate agency fees, and stamp duty, not already be equivalent to half a year's rent, if not more?

If they're all going down, the question is moot.

Dear knows, but the "-ette" bit is a feature for which the technical term is "diminutive". So you can bet your boots it'll be small. I suspect it's too small to be called a "house", but it's not a flat because it's on more than one floor. Think of it as a flat cut in half and spread over two floors. One room on each floor.

Almost certainly

Is it?

Increase? What increase?
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snipped-for-privacy@boxfrog.com (Art) wrote:

I would not even think about buying with Cash let alone a mortgage at the moment.
I am waiting with the cash for the market to collapse.
Andy
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On Wed, 29 Oct 2003 09:16:19 +0100, " snipped-for-privacy@nospam.co.uk"
How long have you been waiting? The recent spurts of growth must have been surprising....
3 years ago people were saying the same thing - the market (especially in London) is long overdue a crash. Three years later many FTBers have seen 40% capital appreciation.
It's not possible to call the top of the market before it happens, I wouldn't bet against 10% growth next year. But then again, I wouldn't bet on it either.
Remember - supply and demand - and the demand in London is still set to outstrip the supply for years to come. There are plenty of countries where mortgage terms are 40,50 or 100 years. There isn't an excessive amount of land in the UK to go around - what is to say this couldn't happen here?
Regards, Zen
www.cashquestions.com - Personal finance problems solved
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Zen <> wrote:

I actually agree with all that you say, I have been convinced that the market will collapse for at least 3 years and it has not happened yet. The houses I have are I think insanely priced now (and no I never take out any equity from them).
I agree with the Supply and demand but when I see 1 bedroomed flats in New Cross going for 175K I can not see how FTBs can get on the market and without them how can the market keep rising without investors selling to investors. I to I is what happened in the Classic Car market in the 80s and that burnt a lot of people badly.
I am still buying small things like Garages near the Congestion zone but all my instinct tells me not to buy anything large at the moment.
Especially when I read things like this http://news.bbc.co.uk/1/hi/business/3222053.stm
which keep making me think of the .com and tulip bubbles.
Basically I am not willing to bet on this market at the moment.
Andy
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On Sat, 01 Nov 2003 18:25:33 +0100, " snipped-for-privacy@nospam.co.uk"

FTBers have always propped up the UK property market. But this isn't the case worldwide - there are plenty of places where it is common to rent for your whole life. Many of our friends in Europe do this.
Britains population is going up, people are living longer, more people live alone and there is still a squeeze on new housing due to the Green Belt policies.
Even if these were relaxed, there is plenty of pent up demand in the market that will take many years to remove.
I think a lot of people look almost exclusively backwards - historical trends, past parallels etc and use these factors to draw conclusions on the immediate future.
Past performance is no guide to the future - the world we live in is always changing and while many factors - human greed, follow the herd mentality, economic cycles - stay the same, others change. Has there been a paradigm shift in the housing market?
I don't know - maybe yes, probably no. But to say the market cannot continue rising is inaccurate!
Regards, Zen
www.cashquestions.com - Personal finance problems solved
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Zen wrote:

Of course, this sort of argument is what sucks people in at the top of a market - usually it's the sensible people who only give in at the end who are burnt worst.

Actually there's plenty of land, but not much planning permission, and it doesn't look like changing any time soon. However, I'm a little baffled at what's been pushing the market up this year. I live south of Oxford, in an area with very little buy-to-let. I bought a house in early 2002, and I think the cheapest thing I looked at was a 2-bedroom flat for £125k - the flat itself was OK, if small, but it was in a fairly horrible-looking development. rightmove is currently showing what I assume is an identical flat for £167k. This is something which is only likely to appeal to a FTB, but who would be able to afford it? Certainly I find it hard to believe it will be selling for a quarter of a million in 2005 ...
--
Stephen Burke


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On Tue, 28 Oct 2003 21:25:53 +0000, Art wrote

During my time of buying in London I remember going to look at two things which were described as "Maisonette". One of them was a two floor flat in a former council block, the other was a top floor flat with a loft conversion turning it into a, sort of, two floor flat.
Personally I found buying in London to be an absolute nightmare I must write unfortunately...
--
Patrick


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