Rich People in Big Houses

jazabelle

I would just be thrilled to own a house of any value, having had to rent my whole life. So the first option - saving money on paying the mortgage/rent would be amazing and could build up a nice amount of savings.

kabayiri

Rich to me in this context would be a mixture of :-
- being in a house you could happily live in, and
- feeling relatively secure with the financial exposure you have taken on.

If I go back to when I had a mortgage, at the time I chose to buy the lower priced property which could be done up resemble more expensive property. This still limits your cashflow, since you spend money quicker than if it were added to the mortgage. However, you can do this at a pace to suit you.

Nowadays, after a decade of 'property development' focus on telly, I suspect its harder to find good 'fixer uppers' at decent prices though?

Cleaver

mbga9pgf wrote: »

Have to agree, why would you want to live with the detrius of society, potentially ruining any future for your children as they either

turn into a chav
have their education ruined by chavs tormenting them for being bright at school?

I find the idea of living next door to a judgemental and aloof person who blames society for the outcome of their children rather than looking at themselves a much worse option. Just my two penneth of course.

I lived in a very posh estate with my parents before I bought my first home: most of the neighbours were lovely, some were complete ars*holes. Then I moved to a terraced house worth about a quarter of what my parents house was worth. And guess what? Most of the neighbours were lovely, some were complete ars*holes. Everywhere you go in life, at each level of society, you get ars*holes and lovely people and everything in between. You just get a different type of ars*hole in a detatchced cul-de-sac with 'kerb appeal'.

whathavewedone

But Mbg9gf, in a highly inflationary environment surely interest rates would also be high so while your house was rising in value you might not be able to afford the mortgage on it. A couple of my friends actually have a 100k deposit on a house that they bought for £950k in 2007 and they can only afford the mortgage on an interest only basis despite them both being employed full time in very well paid jobs. If they had to pay interest rates at 7% they'd be completely sunk, even on an interest only basis.

Unless of course you're talking about the highly inflationary environment that we've been living in for around the last 10 years which curiously only affected house prices.

Jomo

Personally I would always go for the mortgage free option!

mbga9pgf

I find the idea of living next door to a judgemental and aloof person who blames society for the outcome of their children rather than looking at themselves a much worse option. Just my two penneth of course.

I lived in a very posh estate with my parents before I bought my first home: most of the neighbours were lovely, some were complete ars*holes. Then I moved to a terraced house worth about a quarter of what my parents house was worth. And guess what? Most of the neighbours were lovely, some were complete ars*holes. Everywhere you go in life, at each level of society, you get ars*holes and lovely people and everything in between. You just get a different type of ars*hole in a detatchced cul-de-sac with 'kerb appeal'.

So, if society is not to blame then, why do we have state benefits? Why is there so much crime in sink estates? Personally, I will get slated for this, its because we either have a natural genetic underclass, or people have it too easy. I prefer the latter explaination, as it goes some way to explain why crime and poverty have gone up despite scum being pandered to by socialists. Give them a reason to cross class boundaries, as well as the ability to (cheaper housing for example!) and I reckon poverty (and state productivity) would be a gonner! Its called creating aspiration, something that house prices out of reach of top rate earning FTBs are starting to see dim too!

Wheras I would agree with you to an extent, I grew up in both types of neighbourhood as a child. Wheras posh areas have !!!!!holes,those !!!!!holes rarely become a nightmare in your life, they are a minor annoyance. Unlike !!!!!holes like this:

http://www.youtube.com/watch?v=z64D-l6JUS8

Who are more likely to commit burglary to feed their dirtly, self induced drug habits, have no inhibitions about having a raging arguement at 3 AM with their wife in their street, hanging around in large groups carrying knives and generally threattening the neighbourhood.

I know which sort of !!!!!hole I would want next door.

mbga9pgf

whathavewedone wrote: »

But Mbg9gf, in a highly inflationary environment surely interest rates would also be high so while your house was rising in value you might not be able to afford the mortgage on it. A couple of my friends actually have a 100k deposit on a house that they bought for £950k in 2007 and they can only afford the mortgage on an interest only basis despite them both being employed full time in very well paid jobs. If they had to pay interest rates at 7% they'd be completely sunk, even on an interest only basis.

Unless of course you're talking about the highly inflationary environment that we've been living in for around the last 10 years which curiously only affected house prices.

Yes, you would have higher rates, but rates in highly inflationary enviromnents rarely exceed actual inflation. When I talk about inflation, I am talking about the sort we had in the 1970s, not the sort we may encounter, which will be very bad for asset values as we do not have any wage growth capacity for the long term. Not without significant further job losses at least. Demand pull is desirable in other words not cost push, which I reckon we will go for a short while this year. (not a kensyan btw, just find those terms handy to explain what I mean!)

And seeing as the banks are completely devoid of care about moral hazard, your friends shouldnt be worried. as long as they can pay something towards the mortgage, I doubt they would be repoed.

nearlynew

Jomo wrote: »

Personally I would always go for the mortgage free option!

Years ago, this is what most people aspired to and achieved long before they retired.
They took out a mortgage and paid it off as quickly as possible.

In more recent years the majority of people have been doing the opposite - taking out a mortgage and continually extending it as house prices rise.

But debt is not wealth.

What really amazes me is the high number of people in their mid-late 50s and 60s who still have large mortages. That prospect would frighten the life out of me.

Blacksheep1979

Mr.Brown wrote: »

Would you rather..

Own a 100k property outright?
Have a 100k mortgage on a 200k property?
A 200k mortgage on a 300k property?
Or a 300k mortgage on a 400k property?

The point is, which is richer. Or just has the appearance of it. With a lot of worry.

What do you think rewired?

It depends whether you mean at the point of purchase or within 1/6/12 months. At the point of purchase the 100k outright is better off as they have paid less stamp duty. But 12-18 months down the line the 400k property is better off assuming house prices are going up - also they will have (depending on how the mortgage is set up) paid more into their property.

Jomo

nearlynew wrote: »

Years ago, this is what most people aspired to and achieved long before they retired.
They took out a mortgage and paid it off as quickly as possible.

In more recent years the majority of people have been doing the opposite - taking out a mortgage and continually extending it as house prices rise.

But debt is not wealth.

What really amazes me is the high number of people in their mid-late 50s and 60s who still have large mortages. That prospect would frighten the life out of me.

I agree, I changed my mortgage to interest only a few years back when I needed to but changed it back to repayment as soon as I was able to.

I suppose those with no children live for today rather than think about what they'll leave behind?