My house lost £100K today!

baby_boomer

I'd been updating the family finances spreadsheet and realised I'd been putting off a realistic valuation on the property :rotfl:

However the mortgage debt seems to be about the same .

I'll review again in April 2009 to see if the tidings of woe show any signs of abating, or whether I'm still being too optimistic with just a 30% one off cut.

pizzagirl

It's all good. Cheap houses for everyone. Who can argue with that?

amcluesent

Surely it wasn't prudent to value illiquid assets at anything more than the original purchase price?

WTF?_2

baby_boomer wrote: »

I'd been updating the family finances spreadsheet and realised I'd been putting off a realistic valuation on the property :rotfl:

However the mortgage debt seems to be about the same .

I'll review again in April 2009 to see if the tidings of woe show any signs of abating, or whether I'm still being too optimistic with just a 30% one off cut.

Just shift it into your tier 3 assets and put whatever value on it you like. Aaah, that balance sheet is looking so much better

Works for the big banks.

mewbie_2

baby_boomer wrote: »

I'd been updating the family finances spreadsheet and realised I'd been putting off a realistic valuation on the property :rotfl:

Whew! Someone else is as nerdy as me. I stopped reviewing it upwards once they'd passed insanity level.

Max_Headroom_3

baby_boomer wrote: »

I'd been updating the family finances spreadsheet and realised I'd been putting off a realistic valuation on the property :rotfl:

However the mortgage debt seems to be about the same .

I'll review again in April 2009 to see if the tidings of woe show any signs of abating, or whether I'm still being too optimistic with just a 30% one off cut.

Appreciate that this is probably a "tongue in cheek" post maybe, but why would someone consider their house value when considering family finances (unless considering selling of couse)?

It makes not one jot of difference to my finances whether my house is worth £100K more or £100K less tomorrow than it is today, all the bills are just the same.

The only time I can see house value having any effect from a day to day perspective (other than planning to move) is if a danger of negative equity impacts on LTV from the point of view of getting a decent mortgage rate.

As I say, I appreciate the original post was probably in humour, but I do think this is why a lot of people get into a financial mess, they figure the amount of debt they take relative to perceived house value (in other words feel comfortable with £50K of debt in car loans, personal loans, credit cards etc because they have £100K of equity in the house compared with 10 years ago when they had none, just through house price increase).

Truth is of course that they still have to service that £50K of debt, the £100K equity earns them nothing.

mewbie_2

Max_Headroom wrote: »

why would someone consider their house value when considering family finances

In my case it's to provide an estimated idea of total net worth - equity plus savings minus mortgage. Doesn't really mean anything, but if you enjoy playing with spreadsheets...

LillyJ

Max_Headroom wrote: »

Appreciate that this is probably a "tongue in cheek" post maybe, but why would someone consider their house value when considering family finances (unless considering selling of couse)?

It makes not one jot of difference to my finances whether my house is worth £100K more or £100K less tomorrow than it is today, all the bills are just the same.

The only time I can see house value having any effect from a day to day perspective (other than planning to move) is if a danger of negative equity impacts on LTV from the point of view of getting a decent mortgage rate.

As I say, I appreciate the original post was probably in humour, but I do think this is why a lot of people get into a financial mess, they figure the amount of debt they take relative to perceived house value (in other words feel comfortable with £50K of debt in car loans, personal loans, credit cards etc because they have £100K of equity in the house compared with 10 years ago when they had none, just through house price increase).

Truth is of course that they still have to service that £50K of debt, the £100K equity earns them nothing.

I agree, we use our mortgage payments in our spreadsheets (obviously) but don't think about the value of the house. It will only become an issue when we remortgage if in negative equity. But until then I will just make sure I will be able to afford the SVR should it come down to that.

My parents own their house outright and they wouldn't dream of using the house in their budgeting. It would be like using the tele or something as equity.
Their finances are more complicated than ours- ours have salaries on the "in" side, then mortgage and bills etc on the "out" and that's it.
My Dad is a chartered accountant and therefore takes great pleasure in having his money in a million and one places, with it all accounted for on multiple clever spreadsheets. Even his bank statements automatically download in to excel. He is such a finance geek it's unreal. It's served him well in life though!

Max_Headroom_3

mewbie wrote: »

In my case it's to provide an estimated idea of total net worth - equity plus savings minus mortgage. Doesn't really mean anything, but if you enjoy playing with spreadsheets...

I understand that, but as you say, it's meaningless really from a family financial perspective (apart from some feel good factor perhaps )

Max_Headroom_3

LillyJ wrote: »

My parents own their house outright and they wouldn't dream of using the house in their budgeting. It would be like using the tele or something as equity.

That's a good example, thanks.

mewbie_2

Look! Just because it's on a spreadsheet doesn't make it budgeting. Budgeting is income less expenditure. Different spreadsheet.

This is to do with a vague total net worth. In case something happened that meant all assets needed to be realised. Such as sickness, death or divorce. And I know you can't really estimate the house, until it is sold the value is meaningless. But used to do it anyway. Until the madness took over.

<returns to chuckling madly over spreadsheet, and rubbing hands together. Picture gloves with fingers cut off...>