Tag Archives: house

Buying a house without a large deposit

The financial crisis of 2008 hit almost everyone, especially home owners and house buyers. For those people wanting to buy a house suddenly a figure of 30% was conjured up out of nowhere to be a suitable deposit when buying a house.

Suddenly, my clients around Manchester, Liverpool and Chester were being asked to find £60,000 as a deposit for a modest £200,000 property. The effect his had was to kill the housing market as no one could afford to buy a house anymore unless they had a substantial amount of money behind them.

With house prices currently falling (see this Telegraph article), the number of people who have bought houses with only a 5% deposit has hit it’s height.

To clarify, a 5% deposit means that instead of a £60,000 (20% deposit) on a £200,000 house, buyers would only need to raise a far more modest £10,000 deposit. This is obviously great for home buyers, but when house prices start to fall, so does the equity of your house.

Let’s say you bought a £200,000 house when you moved from Manchester to Chester and you paid a 5% deposit of £10,000. Now imagine you’ve lived in that house for 2 years but it’s now worth only £150,000. In two years, you’ve probably paid off somewhere in the region of £8,000 from your mortgage of £190,000, but your house is now only worth £150,000, so in real terms you’ve lost almost £40,000.

House prices and equity values are just one of the things home buyers need to consider when spending large amounts of money on a house. The lesson: Be diligent and research well !

Nice Houses in Lancashire

The Lancashire Life magazine run an interesting page related to houses for sale in the North West of England (see http://www.lancashirelife.co.uk/homes-gardens/property-market). The cost of houses is highly dependent on the cost of the land they will be built on and the more desirable the area, the higher the cost of the land.

Pendle walkers

The same magazine provides a useful list of land prices by area throughout Manchester and the north west of England (Lancashire focused), you can see that here: http://www.lancashirelife.co.uk/homes-gardens/property-market/how-much-does-one-square-metre-of-property-cost-in-lancashire-1-5232476

Clitheroe and Whalley are towns to the north of Manchester that are far enough away from any major conurbations that they qualify as “rural” or “semi rural”. Prices per sq metre of land here are about £300 more expensive that they are in Bury.

A short distance away from these places is Burnley, which has some of the cheapest hour prices in the country. Surrounding Burnley are Hyndburn and Pendle – 2 more ruralish areas where getting a nice house could be within your price range.

Of course it’s not just about location. Most people need amenities to go with the nice location. It’s no good having a lovely house if the nearest school is 10 miles away, or the nearest shop is a 20 minute drive. In some cases, this is the reason that some houses in rural areas of Lancashire are so cheap – the house might be perfect, but it’s very cut off meaning that everything you need is a drive away. This is not ideal, especially if you have a young family that need entertaining.