House Prices To Rise By 20%...

chucky

HAMISH_MCTAVISH wrote: »

I think you did......

And did you correct for the land registry May revision upwards?

no i didn't

here's what i had without the adjustment

Nationwide +2.20%
Halifax +0.50%
Land Registry -0.20%
Acadametrics -1.90%

do you have the adjustment percentage?

did i just bump this thread again?

HAMISH_MCTAVISH

chucky wrote: »

do you have the adjustment percentage?

did i just bump this thread again?

Yes you did. Oooops, so did I.

I think LR ended up at May +0.2% (but you'd probably better check)

chucknorris

HAMISH_MCTAVISH wrote: »

Yes you did. Oooops, so did I.

I think LR ended up at May +0.2% (but you'd probably better check)

Guys please stop bumbing this thread, it upsets the bears

IveSeenTheLight

julieq wrote: »

So to answer your question, yes, in general having a loan on your house IS better than owning it outright.

Sorry julieq, got to disagree.
I look forward to the day in which I am mortgage free.
In fact it is when I Saw The Light that overpaying the mortgage saved me in interest payments.

In you scenario, the homeowner does not have an outlay for the property they live in. should they be forced to sell, they no doubt would be in no better a position as they would still have all the equity upon sale. However this scenario likelyood is extremely small.

What's that likelyhood of someone becoming unemployed immediately after the own their property outright?

HAMISH_MCTAVISH

chucknorris wrote: »

Guys please stop bumbing this thread, it upsets the bears

I ain't bumbing any threads......

Although I may have bumped this one.

julieq

IveSeenTheLight wrote: »

Sorry julieq, got to disagree.
I look forward to the day in which I am mortgage free.
In fact it is when I Saw The Light that overpaying the mortgage saved me in interest payments.

In you scenario, the homeowner does not have an outlay for the property they live in. should they be forced to sell, they no doubt would be in no better a position as they would still have all the equity upon sale. However this scenario likelyood is extremely small.

What's that likelyhood of someone becoming unemployed immediately after the own their property outright?

I'll do this in reverse order.

The likelihood of someone being long term unemployed is reasonably high. That is an extreme example incidentally, but it's demonstrating the concept of opportunity cost. By sinking cash into an illiquid asset, you are explicitly preventing yourself from accessing it easily.

To your second point, take the scenario that the value of the house has stayed static in real terms or dropped and a forced sale, i.e. the worst cases. If you own outright, well done, you have just locked in your losses by investing solely in a depreciating asset.

If you have savings and investments that have performed better than the housing market in this scenario - not difficult in falling market which this would be by definition - then you have gains from a better investment to offset losses from a poor investment once the mortgage is repaid, it's the best of a bad job. You're in a better situation even if you have to sell. But you wouldn't be forced into a sale anyway because the cash you have is a buffer allowing you to choose your moment.

If you take the best case, which is one where your house rises in value AND you get a return on savings and investments, it's double bubble, equity plus returns.

In my example, both homeowners are allocating exactly the same amount of money as each other to housing payments, just that one is taking it off their mortgage on the basis that debt is a burden, and the other is building a fund which can be used flexibly. Neither has any payments to make after the 10 years, but the basic position of the non overpayer will be increasingly better over the period than the overpayer.

I realise that if you've overpaid this will be a hard pill to swallow, but there is simply no scenario where you do better owning your house outright than creating an accessible, diversified offset.

And of course if you have basically offsetting savings and investments, you don't pay net interest. The most astute situation financially is to get to a balanced situation where you make as much from your savings and investments as you pay in interest.

Graham_Devon

julieq wrote: »

OMG, an open goal, and I slept right through it...

Graham, imagine yourself having bought a house, and slaving away for 10 years with every penny you earn being put aside to make overpayments.

And then the day after you make the final payment, you lose your job.

Hold that thought and imagine yourself having bought a house. And you slave away for 10 years and put every penny you have spare into an instant access savings account.

Who is in the better position to deal with 18 months of unemployment? And who is more likely to have to sell their house?

Sinking money into your house is generally a poor financial strategy. It is a highly illiquid asset and destroys your ability to weather other shocks, and if you, as you seem to, believe house prices are going to see a long term decline in real terms it's a foolish investment too (would you buy a savings product you believed would lose you money?)

So to answer your question, yes, in general having a loan on your house IS better than owning it outright.

I'm surprised you haven't yet deleted this, and have left it for all to see.

You see, the person who owns their home can also put their money into savings as they now have no mortgage or rent to pay.

Bit naive to assume the person who owns outright has left themselves without a penny, AND they then go on to lose their job in the same month they pay off their home.

chucky

GD - i'd rethink what you just posted... seriously

Graham_Devon

chucky wrote: »

GD - i'd rethink what you just posted... seriously

Hey, when even you couldn't bring yourself to thank Julie in what she said, I don't need to re-think anything.

She's going to absolute extremes to try and waffle together a point.

I'm sure there will be more waffle yet. Afterall, it's going to take a lot of it to convince us having a loan on your home is actually better for the average person than owning it outright.

chucky

Graham_Devon wrote: »

Hey, when even you couldn't bring yourself to thank Julie in what she said, I don't need to re-think anything.

She's going to absolute extremes to try and waffle together a point.

I'm sure there will be more waffle yet. Afterall, it's going to take a lot of it to convince us having a loan on your home is actually better for the average person than owning it outright.

that's because i don't agree with everything in her post.

the logic about efficient use of savings and ploughing it into becoming morgage free is correct.

just ask Stevie - he did it and regrets it now.