House Prices To Rise By 20%...

Dirk_Rambo

i wiped my bottom with the daily xpress the other day. it isnt even good for that

Graham_Devon

chucky wrote: »

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.

Sometimes, we have to go back to basics.

What is a house in the majority of cases in the UK? It is a home.

This home keeps the occupants, the family, warm, dry, grounded.

Julie is waffling on about this home in investment terms. Even then, having to use absolute extreme examples.

Owning your home outright brings untold amounts of security to your family, your children, and your life.

Waffling and trying to make out it's better to be in debt and claiming that as some sort of own goal is not only desperate, it's wrong for the majority of the people in this country.

I really need go no further. Debt is NOT wealth.

chucky

Graham_Devon wrote: »

Sometimes, we have to go back to basics.

What is a house in the majority of cases in the UK? It is a home.

no efficient use of savings or funds is relevent to homeowners or investors.

there's no point in paying off a mortgage at 4% if you're getting 6% elsewhere on your savings. if you've paid off the mortgage - you're unable to get that extra 2% income you could have got. it doesn't matter if you're a homeowner or an investor. it's common sense.

debt is actually wealth - if used properly.

i'll leave it for her to explain

Blacklight

Graham_Devon wrote: »

Sometimes, we have to go back to basics.

What is a house in the majority of cases in the UK? It is a home.

This home keeps the occupants, the family, warm, dry, grounded.

Julie is waffling on about this home in investment terms. Even then, having to use absolute extreme examples.

Owning your home outright brings untold amounts of security to your family, your children, and your life.

Waffling and trying to make out it's better to be in debt and claiming that as some sort of own goal is not only desperate, it's wrong for the majority of the people in this country.

I really need go no further. Debt is NOT wealth.

Graham I think you're getting a little confused.

Even I can see that Julie's post was about liquidity and ability to get your hands on money if you need it rather than have no savings having used that money to pay down your mortgage.

Somehow you've managed to shoehorn 'debt is not wealth' into the conversation, which isn't relevant to anything anyone's talking about.

nearlynew

Owning your home outright is a key step towards finacial security.

And it doesn't prevent you from also having decent savings and other investments.

Graham_Devon

Blacklight wrote: »

Graham I think you're getting a little confused.

Even I can see that Julie's post was about liquidity and ability to get your hands on money if you need it rather than have no savings having used that money to pay down your mortgage.

Somehow you've managed to shoehorn 'debt is not wealth' into the conversation, which isn't relevant to anything anyone's talking about.

Yes I'm confused.

All those who have paid off their mortgages have left themselves with nothing. Nadda. And will lose their job the same month.

Silly me.

I was wondering when it would come to me being confused.

Everyone can get more interest on their savings than they can the interest they pay on their mortgage, because they all seem to know of these secretive, easy access (remember, they have lost their job and need access) accounts. I am so wrong.

Debt is wealth.

I won't ask where these easy access accounts are that pay more than the average mortgage rate, because obviously, I'd only be totally confused.

Linton

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.

Julie, so sensible on most things but a blind spot on this.

If you are a skilled investor with a wide diversity of assets and investments then using the place where you live to provide some extra cash to invest may be a financial risk worth taking.

BUT a general rule of investing - leveraged investing, ie investing with borrowed money, is higher risk investing and if you dont know what you are doing or are just unlucky can lead to disaster. Even if you do know what you are doing, I believe you would be foolish to base all your investing on borrowed money.

I believe most people with IO mortgages dont take them on the basis of a coherent investment plan. They are relatively poor, financially naive and believe they are buying a bigger and better house than they otherwise could afford. They dont invest the money they should have saved, they live on it or use it to fund high risk business ventures.

If you dont believe this happens look on the dealing with debt forums.

So, the advice from a website that attracts mainly inexperienced people looking for expert money saving advice must be to go for repayment mortgage every time. IMHO the option of IO is only for the experienced and relatively wealthy.

Llubrevlis

FATBALLZ wrote: »

Is this going to happen before or after the 600,000 jobless ex-public sector workers find meaningful employment?

That 600K jobless will along with the almost 3 mil other jobless be claiming the new capped housing ben. They will have to find cheap housing somewhere.

andykn

OMG, I think I agree with Graham.

There's almost no circumstance where you have mortgage interest at 4% and access to safe investments paying 6% tax free.

If you lose your job with your mortgage paid off you shouldn't need to dip into savings.

If you are worried about that and are in a position to make significant overpayments, get a flexible or, preferably, offset mortgage. Then you have both accessible savings and no mortgage if you lose your job in julieq's scenario.

chucky

andykn wrote: »

OMG, I think I agree with Graham.

There's almost no circumstance where you have mortgage interest at 4% and access to safe investments paying 6% tax free.

If you lose your job with your mortgage paid off you shouldn't need to dip into savings.

If you are worried about that and are in a position to make significant overpayments, get a flexible or, preferably, offset mortgage. Then you have both accessible savings and no mortgage if you lose your job in julieq's scenario.

but that's the point - if you do lose your job you then pay the mortgage off, only pay off the mortgage when you need to or you don't get a decent return on your savings.

why be in such a rush to pay off the mortgage when you could be earning a better return on your investments elsewhere?