“I’ve already made 12k in 2 years on my house, in 20 years time I’m going to be rich”

grumbler

happenstance wrote:

Also it is on a repayment rather than intrest only.

This doesn't make any difference. Repayments (on the top of interest) are in fact his savings at 5.85% net rate. He does get interest on these savings at this rate - in a form of decrease in monthly iterest payments ('rent') on his mortgage.

happenstance

poopscoop wrote:

S/he is saying that enjoying life is more important than thinking about property all the time.

Couldnot agree more, but hey this is a property forum.

Intresting point grumbler, did not think about that.

tomstickland

F_T_Buyer wrote:

tomstickland wrote:

The original post is about right - last year I've lived at home with my parents in a single room, paying £300 pcm for everything and saving around £900-£1000 per month.
I did the same sums, but I factored in a 4% house price growth rate and then years of saving a large deposit offered virtually nothing over buying and paying a mortgage at 4%.
ie: save at 4% ish, houses grow at 4% ish, mortgage rate is 4% ish.

Either way, I'd recommend continuing to live on the cheap for as long as possible so you can have 10s of thousands saved.

So your first property would be around £300k? I.e. £1k saved per month = £12k per year, so for £12k to be 4% of any house increase means the house would costs £300k (4% of £300k = £12k). Pull the other one.

Most FTBs can easily save more than HPI - but you forget wage inflation too!!! Which is roughtly equivalent to HPI! So any deposit would help you get further ahead (when living with parents/shared house).


Edit:
It's just the kind of irrational responses in this thread that encourage FTBs to over stretch and buy a house when it does not make sense! If prices were rising 20% a year, fine. But they are not!

You seem to have drawn some odd conclusions from what I was saying. I work on the principle that I want to pay off the mortgage, hence the amount I save per year is going to be used towards clearing capital, so the £12K pa saved cannot be compared to a 4% gain on a £300K house. The £12K pa saved has to be used towards paying off a £100K mortgage or whatever.

My calculations were based on working out when I would pay off my mortgage, and if saving for x years and then buying actually made this date any earlier or later.

I selected a predicted growth rate of 4%, which is about the same as a savings growth and a mortgage. This is a pretty conservative number and is not irrational or encouraging FTB to do anything. I've not mentioned 20%growth rates, because I don't see that sort of growth being possible.

I decided to use numbers whereby the rate of house price growth was about the same as the rate of savings growth. So it's all staying in proportion.

The calculations which I did showed that saving a large deposit didn't actually make much difference to the date on which I paid off my mortgage.The whole point is that saving doesn't get your further ahead.

irnbru_2

Stewboy1978 wrote:

I bought 3 years ago for £60k, done £7k worth of work - Flat now valued at £105k due to condition plus the area. Far bigger gain than I could hope to have just saved.

If you wanted to make a 75% return you wouldn't have saved. You'ld have sought a high-risk investment.

Equally: lets say your next property would have cost 100K 3 years ago but its now 175K (75% rise). You were short by 40K last time but now it's 70K.

OOC, are you buying a bigger property?

Gorgeous_George

If I was a gambler, I'd say that the chance of a house price crash is quite high and I'd sell my house and rent. After the crash, I'd buy again.

The problem is, my house is my home. Somewhere to call my own (even though I share it with the building society and the wife). If I want to decorate, I decorate. If I want a new garden, I do a new garden. If I wanted a pet, I'd have a pet. It's my home and I can do pretty much what I want to do.

I've never been a free-loader. I cut the apron strings at 16 and bought my first house at 22. I might agree that I was lucky and I'd struggle now but interest rates were 16.5% and my mortgage was half my income in 1987. I struggled then.

Houses are ridiculously priced but only because people can afford to buy them - either by stretching themselves to the limit or, more stupidly, borrowing deposits from parents. This simply adds to house price inflation and delays the inevitable slump in prices when any additional borrowing will be wiped out by the fall in value. Negative equity was suffered by many in the late 80's/early 90's and I predict the same will happen again quite soon.

Interest rate rises and a drop in the population are both quite likely.

I'm still not selling up though.




S

Tiggs_2

happenstance wrote:

btw no itention of getting married or having a family.

may i ask how old you are? feel free to ignore my intrusion into your life but its a big part of whats being discussed here....a house is more than ££££, its a place to live your life in. to rule out sharing that life with anyone else makes your ability to achive what you suggest more likley but unrealistic for many people who will follow the traditional path of boy meets girl......they buy a house, etc, etc

meanmachine_2

Maybe the OP is gay or unable to have kids.

And no, that really isn't anyone's business.

Tiggs_2

meanmachine wrote:

Maybe the OP is gay or unable to have kids.

And no, that really isn't anyone's business.

Not sure what either of those have to do with wanting to live alone your whole life?

And he posted his life plan on a public internet forum....so has to expect a few comments where people see flaws in his plan - and i see one on the issue of living life as the OP described.

poopscoop

meanmachine wrote:

Maybe the OP is gay or unable to have kids.

I think you've jumped the gun there

happenstance

As I said in an earlier message, this is no long term plan just what I'm doing and the moment and for fun I did a few calculations for if I did do it for the next 30 years.

Anyway no intentions of getting married is not the same as 'wanting to live alone your whole life':rotfl:! I'm in a long term relationship but not religious.