Why you should buy a property right now

							     WHY YOU SHOULD BUY A PROPERTY
              RIGHT NOW!!!!
The best time to invest in a property (or anything else) is when prices are low.

Most people aren’t buying property right now. Most people will tell you not to buy property right
now. Most people will tell you to carry on renting “until the market stabilises”. But this is a very
short-term view where everybody is consumed with what is happening right now. What you need
to do is look at the bigger picture or the long term view. After all, owning your own home is not
just for tomorrow, or next year or the year after that, it’s for the rest of your life.

When looked at this way, you can find many reasons why you should buy your first home right
now.

        BUT MY MUM AND DAD SAY “DON’T BUY NOW”!

Lots of people whose views you value and trust, even some financial “experts”, will tell you not to
buy property right now. Their reasoning is usually that the market is too unstable, that no-one
knows what’s going on in the finance and housing markets and that property prices might fall even
further. Their advice is fuelled by fear of the unknown and is backed up by screaming headlines of
impending doom.

The trouble is that headlines are written to sell newspapers, not to give you impartial, factual ad-
vice. And the truth is that the best time to buy property is when everyone else is selling. True -
you could play the waiting game and try and pin-point the exact time prices hit rock-bottom before
you buy. The problem with that strategy is that you will only be able to recognise the bottom when
prices have started going up again.

By that time it will be a sellers’ market and many of the discounts and schemes that are available
to you right now will have disappeared.

Here are six reasons why buying a property right now is a good idea:


1.      IT’S A BUYERS’ MARKET – YOU HAVE ALL THE POWER!
According to a recent survey by rightmove.co.uk, there is currently one buyer for every twenty-five
sellers on the market. If you are that 1 buyer, you are in a very strong bargaining position.

With house prices falling the way they are, the only people who are selling right now are those that
have a compelling reason to do so. And the reality is that in order to sell their property to you they
are going to have to sell at a very competitive price.

They all have to compete with twenty-four other sellers to get their buyer. How do they make their
property more attractive than the other twenty-four? By lowering their price. They may not be ad-
vertising at their lower price but you can bet they are open to negotiation.

As a rare buyer in the current market, there are significant benefits to you:

     ü You can negotiate a discount which is then effectively used as your deposit – no need for
        you to find 10% or more of the purchase price.

     ü You have a “buffer” against any further drop in the market price as you have “locked-in” eq-
        uity.

     ü As the overall price has dropped, your monthly repayments are lower than they would have
        been this time last year.

     ü You can take your pick of many properties, knowing that you are not competing with hordes
        of other buyers.

REASON TO BUY NOW – NUMBER 1: Once the market turns, your buying power will be
gone.

2.      THE MARKET CONDITIONS ARE MASSIVELY IN YOUR FAVOUR
In a slow market, mortgage lenders and building companies struggle to make sales. To improve
their sales many of them are coming up with all sorts of financial products and schemes to help
people like you buy their first property. The government too is desperate to help first time buyers
onto the market and are coming up with their own schemes to make buying a home more afforda-
ble to you. Current schemes and incentives include:

     ü Stamp duty holiday for 1 year on properties up to £175,000 (the threshold until recently was
       £125,000)
     ü Builders offering to double your deposit up to 10%
     ü Government offering equity schemes up to 50% of the purchase price
     ü Newbuilds offering between 15% to 35% interest free loans for 10 years
     ü Affordable housing schemes for low income families and households
     ü Special schemes for “Key Workers” (teachers, nurses, police, fire and ambulance services
       etc)
     ü Vendor deposit schemes

Used wisely these schemes and incentives could help to reduce your monthly payments, pay off
your mortgage quicker, or buy a better property than you thought you could afford. For instance,
instead of buying a flat, you could buy a 3 bedroom house for the same monthly cost. In some
cases you might even afford a 3 or 4 bedroom detached house.

 These market conditions will not last forever. Prices will pick up again, buyers will return to the
 market and sellers will once again be in control. Many so-called experts are warning buyers to
“wait and see what happens to the market”. They are waiting for “rock bottom” – but they will only
 be able to identify the bottom when prices have picked up.

By the time they feel confident enough to recommend that you buy, the tide will have turned and
your opportunity to buy the bargain property of your choice will be gone.

Almost certainly the opportunity to buy without a deposit will be gone and you will have to save up
to 10% of the purchase price (£15,000 on a typical £150,000 purchase). In the meantime proper-
ty prices could be growing by a further 10% a year and you would never catch up!

It is also highly probable that there will be fewer mortgage lenders around and almost certainly no
100% mortgage products. First time buyers without a deposit will not be able to buy.

And of course once the housing market is back on its feet the government won’t feel the need to
help out so a lot of their schemes will disappear until the next housing crisis or general election is
looming!

REASON TO BUY NOW – NUMBER 2: You are in a unique position right now with all the
market conditions in your favour. There is a definite opportunity right now to get your foot
on the first rung of the property ladder. However, wait too long and that opportunity could
be gone.



3.      BUYING VERSUS RENTING – SOME ASTONISHING FIGURES
        (WARNING: – after reading this you will never want to rent again!)

Why even consider buying? Why not just rent for the rest of your life - no worrying about interest
rates going up, the next credit crunch or what happens to the value of your home.
That can be answered very simply by doing a straight comparison with the cost of buying over a
typical 25 year mortgage to the cost of renting for the rest of your life.

Let’s assume a £100,000 mortgage at 6% repaid over 25 years at a monthly cost of £644.30 and
the age of our first time buyer being 35 years old with an expected lifespan of 85 years.
If he decides to rent then let’s say £500 month. Again let’s keep it simple and assume 0% inflation,
so he pays £500 a month for the rest of his natural life (i.e. 50 years).

So a straight forward comparison is very simple to do:

Total cost of mortgage = (£644.30) x (12 monthly payments) x (25 years)
                       = 644.30 x 12 x 25
                       = £193,290

 At the end of which he will own his own home outright and no further payments will be necessary.

Now if he rents for the rest of his life:

Total cost of rent    = (£500 rent a month) x (12 months) x (50 years)
                      = 500 x 12 x 50
                      = £300,000

A total saving of = £300,000 - £193,290
                  = £106,710

Plus, he has an asset worth £100,000 (again assuming 0% inflation). So ‘saving’ plus ‘asset’

£106,710 + £100,000 = £206,710 better off than if he had rented.

But of course you are going to say “you have ignored inflation - you can’t do that”!

OK, let’s try to add the mystery of inflation!

Let’s assume inflation at 3% per year, now look at the figures again:

If the mortgage increases by 3% each year then his last month’s payment would be £1,310.
The total mortgage paid would be £274,157 over the 25 years.

If the rent increases by 3% each year then the last rent paid would be £2,129
The total rent paid over the 50 years would be £676,850.

A total saving of     £676,850 – £274,157
                      = £402,693

But don’t forget to add to that the value of his house - which again we will use 3% inflation over 50
years. His home would now be worth £438,391.

So not only has he saved £402,693 but added to this his home value of £438,391 he is now a stag-
gering

        £841,084 BETTER OFF BUYING OVER RENTING!!!!

Just a quick note, Nationwide are actually offering a 25 year fixed rate mortgage at 6.43% costing
£670.84 a month. This means you can forget inflation altogether as the monthly costs wouldn’t
change over the 25 years thus guaranteeing the total cost of £201,252. This would mean a further
saving against rent of £72,905. The buyer would now be £913,989 better off!

Now, according to Nationwide, house prices have actually risen by 9% a year since 1973 (when
they started recording them). We are not saying they will continue to grow at that rate. But if they
did, then his house would be worth an absolutely unbelievable £7,435,747! Yes folks, you read
that right - 7.44 million pounds!

Now, whether you believe house prices are going to grow at 0%, 3% or 9%, whichever way you
look at it you are better off buying than renting.

At 0% inflation you are better off by £206,710
At 3% inflation you are better off by £841,084
At 3% inflation and 9% house price increase you are better off by £7,838,440

REASON TO BUY NOW – NUMBER 3: Just in case you have any lingering doubts, let us
remind you, that by using our know-how and experience you could also buy your first
house without using your own money. So try working out the % return on your own money
invested. I will leave you to work that one out for yourselves!


4.      PROPERTY IS STILL A GOOD LONG TERM INVESTMENT
Most people recognise that property is still a good long term investment with growth averaging 9%
a year for the last 35 years since 1973. That’s even taking into account the last two “crashes” in
the early 80’s and early ‘90s. Most people have made significant gains from buying and owning
their own home. Property values have on average doubled every 7-10 years.
There are many causes of this rise in prices but the main driving force behind the growth is a sim-
ple case of supply and demand. The fact is that there are not enough properties in the UK to sup-
ply the growing housing need. The short-term instability in the market may have dampened the
demand for property – but when the economy stabilises the demand will return and prices will be
pushed up again.
The need for new households is increasing through family separation, immigration and more and
more young people wanting to own their own home. This increasing need far outstrips the rate at
which new homes are being built.

The Government currently has a target of building three million new homes by 2020 to meet this
increasing demand. That means 240,000 new homes need to be built every year and so far they
are falling far short of this target (current estimates are 35,000 shortfall a year). Whenever de-
mand outstrips supply, prices are inevitably pushed up.

Many experienced property investors are buying properties right now, when prices are low. Inves-
tors like Andy Shaw, who has bought hundreds of properties and written the book “Money for Noth-
ing and Your Property for Free”; Parmdeep Vadesha, a self-made property millionaire; and
Warren Buffett, who this year replaced Bill Gates as the richest man on the planet. If the experts
are buying now why shouldn’t you?

REASON TO BUY NOW – NUMBER 4: The experts know that the best time to buy any in-
vestment is when prices are low. That time is now – however it does mean going against
the crowd!


5.      BUT IT’S NOT JUST AN INVESTMENT – IT’S ALSO YOUR HOME!

It’s not just about investment (though if you believed the papers you wouldn’t think so). It’s also
about buying your first home - the place you are going to live in, come home to at night and make
your cosy little love-nest. Maybe it’s where you hope to raise a family, so you want the right area
with the best schools and a safe environment for your children to play.
Now in the past those areas may have appeared too expensive, not only by price but also the
monthly costs were above your budget.

But not anymore. In the current market place with the deals that are around now, you could buy a
much better home for you and your family.

With interest-free schemes from the government and builders, 3 and 4 bedroom houses now have
the same monthly cost as 1 and 2 bedroom flats before the credit crunch.

Now you can buy a brand new beautiful family home in the best areas available with newly built
schools and modern facilities, all perfectly affordable with the right scheme, so you and your family
can have a comfortable lifestyle beyond your dreams.

 REASON TO BUY NOW – NUMBER 5: Right now you can get a lot of house for your money
- far better than you could imagine before, so if you were looking at flats maybe you can
 now afford a house. There’s never been a better time to buy. You can get so much more for
 your money.


6.      CURRENT INTEREST RATES ARE LOW

There is a lot of talk about interest rates being higher than recent years, but again when you look
at the bigger picture, looking back over the last 20 years, they are still low. That means money is
still cheap to borrow. In many cases it is still cheaper to own a property and pay the mortgage
than it is to rent a like for like property.

Interest Rates since 1985




Right now, there are many long-term fixed rate mortgages available, anything from 5 to 25 years.
This means you can actually fix your costs for the whole term of the mortgage, so now you don’t
have to worry about fluctuating interest rates.

In fact, with your interest rate fixed for 25 years you don’t even have to worry about property pric-
es going up and down, because with your monthly cost fixed, you know you can afford it – the un-
derlying value is irrelevant.

REASON TO BUY NOW – NUMBER 6: Interest rates are historically low right now, so mak-
ing the monthly cost of buying low. Also there are some long term fixed rates around
which means you won’t have to worry about soaring interest rates in the future.


So, right now you could buy your ideal first home, at a bargain price, using
very little of your own money, and knowing that you can afford it for the next
25 years.

If you’d like to discuss any of this report, or find out more about how we
can help you buy your first home: -

            Call our freephone number 0800 756 6689
or leave your contact details on our website www.firsttimebuyerhomes.org