When property prices were booming you had some first time buyers saying that prices HAD to fall.  Were they right? Well yes.  Were they clever? Well not really.

Take the first time buy who bought at the peak in 2007.  He bought a property for £100,000 with no deposit at a nice rate probably a discounted tracker or 3year fixed.

Now take a first time buyer who wants to buy in 2008 where the same property is say £85,000.  This first time buyer is now saving themselves £15,000 and thinks great I will just go and get one of those 100% mortgages and get on with my life. WRONG!

This first time buyer now needs to find a 15% deposit which equates to £12,750.  Now most first time buyers do not have this sort of money sitting around.  Mum and Dad cannot help as they cannot access the equity in their home easily anymore to give as a gift.  This first time buyer has to save up in a recession and a high inflation environment.  Oh dear.  Our first time buyer will not be getting on the property ladder any time soon.

The original first time buyer who bought at the peak (who may be considered as a mug by his peers) is now facing negative equity.  But does this really matter?  They have lived in their home only 12 months so have no need to move.  They can make their property their home over the next 5 years and they are heading in to a low interest period with interest rates heading downwards to 1%.  They have a home which they can make their own and pay a fraction of rent would cost.  I call that a win win.

This mug of a first time buyer is one of the lucky ones.  They have got a MORTGAGE!  At the minute getting a mortgage is considered only for the elite it seems with impeccable credit records.

Now if you look at buy to let.  If they withdraw the buy to let mortgage all together then all of us who have buy to let mortgages are the lucky ones.  If they withdraw a buy to let mortgage then you can say good bye to building yourself your own financial future.  I am very glad I have my mortgages as I have my properties which produce cash for me every month.

So do not let the press put you off.  The negative press about buy to let is all those novice landlords buying city centre apartments at £200,000.  It was funny as Hana and I were passing an unfinished luxury block of apartments I considered to myself what would I pay for each of those 2 bed flats.  The price I came to was around £40,000.  They would yield around 12% (£400 per month) and rent no problem.  The asking price will be way more that what I am offering but it is a waiting game........

Lets make the end of 2008 the best part of the year where we all remember it.

Ajay

PS We have some awesome deals direct from a MASSIVE developer who we can sell to if you do not have a residential mortgage and get you 20% cashback on purchase prices of up to £300,000.  That is a cashback of £60,000.  I will keep you informed.

 

 

Posted on: 28th Oct 2008