Baby boomers struggle to pay off debts

Percy1983

IveSeenTheLight wrote: »

There are many businesses that work that model, including BTL.

you could borrow £120k on a £150k property and mortgage it for the 25 years.
Each opportunity, you MEW the equity back to the £120k and invest it else where.
You have the benefits of tenants servicing that loan so it doesn;t in reality cost you anything, but of course you get the regular MEW factor.

Adter 25 years, you still owe £120k on the loan, however as a percentage of the value it's significanty lower.

Debt is interesting as it's effect is erroded away with inflation.
As long as the business is covering the operating costs, capital appreciation is always shown in recorded history to improve

I fully agree there is many business which are forever in debt.

I am not looking for a business, I want a home.

IveSeenTheLight

Percy1983 wrote: »

I fully agree there is many business which are forever in debt.

I am not looking for a business, I want a home.

I understand, just pointing out that still having a loan after 25 years can make sense.

Lets look at it slightly differently.

You could buy a home and have it interest only throughout the term, essentially this is renting but without a landlord and without increasing rental costs.

As long as there is an option to recover the loan (sell the property) is there a problem.

RenovationMan

Percy1983 wrote: »

I fully agree there is many business which are forever in debt.

I am not looking for a business, I want a home.

Will you only be buying one home, ever?

In one of your earlier posts you mentioned that you will have a 25 year mortgage that ends in 25 years. My first 25 year mortgage on a 2 bed starter home would have ended in 2020, I've subsequently moved twice since, with my most recent mortgage starting last May and running for 23 years.

seven-day-weekend

Pair of Baby Boomers here (1949 and 1950) who don't have debt to speak of.

We have two mortgage-free houses, one in the UK (which we have had since 1976 and has not had a mortgage on it since the 1990s) and one in Spain which we bought for £47k in total in 2004 for cash (from a mixture of our own resources and the proceeds of a small inheritance).

We have a debt on a 0% credit card of less than £2k which we are paying back within the 0% interest-free period, but we have more than enough savings to cover it anyway.

We have never MEWed on our main home for other than home improvements, although we did have a mortgage on an investment property in the 1990s onto which we coonsolidated other loans, and paid them all off when we sold the property in the mid 00s. The Spanish house has never had a mortgage on it.

We now have an income of around £14k a year and spend our time between both our homes. From when we took early retirement in 2004 up until February 2010 our income was less than £10k a year and we lived full-time in Spain.

Oh....we have a Bank of Mum and Dad open as well (small amounts only though).

So, we have a nice life with a small income, modest savings and no debt. Don't tar us all with the same brush please!

Percy1983

RenovationMan wrote: »

Will you only be buying one home, ever?

In one of your earlier posts you mentioned that you will have a 25 year mortgage that ends in 25 years. My first 25 year mortgage on a 2 bed starter home would have ended in 2020, I've subsequently moved twice since, with my most recent mortgage starting last May and running for 23 years.

Very true, but I am jumping in at the 3 bed semi's so less need to move, with that I will only move to a bigger place when we can afford it. EG after 5 years if we decide to move we will look at 20 year mortgages. Basically as income goes up we may increase our mortgage payments, but we never intend on increasing the term.

The real big push will really be if we get any inheritance, I say if as both sets of parents owe us nothing so we don't expect anything, if they wish to sell up and enjoy there last days to the max I will support them.