anyone else want a CRASH...?

sm9ai

Carrying on with the Key Workers housing (What about everyone else who can't afford :mad: ). But anyway with key workers...

So young key workers cannot afford to live in the city where they work. At the moment it doesn't matter as there are older key workers to fill in for them.

But give it 20 years there will be no older key workers either. So therefore your expensive city has no police, no fire, no nurses, no teachers. So I imagine the prices in the city would then plummet in value.

sm9ai

cwcw wrote:

Can I point out that a lot of people use the "it's cheaper for me to pay rent then pay for a mortgage so renting is better" argument, but this is too simplistic.

If renting is cheaper than a repayment mortgage, but the interest element of the repayment mortgage is less than the rent would be, then the mortgage is still better. You would be building up equity in a house which is likely to yield a much better annual rate of return in the long term than a high interest savings account would (3.9% after tax for the market leading accounts).

If renting is cheaper than an interest only mortgage, or cheaper than the interest element of the repayment mortgage, then it may indeed be better to rent, although there are other considerations to renting such as being at the mercy of a landlord, not being able to alter your own home, lack of long term stability, no "light at the end of the tunnel" as you will always have to pay rent - it won't stop after 25 years, etc. These also need to be taken into account.

Well most places the rent is cheaper than interest only mortgages. And by quite a margin.

I currently rent a £200k property for 575 a month.

In our town most new builds go for £180k+ and only command rents of £650 if there lucky.


And with the current increases in property of 8-10% the gap is only getting larger as rents are staying inline with inflation.


Trouble at the moment is all these people I know on the ladder saying how great things are. Just wait until they try to sell it and find the next rung on the ladder is too far away.

cwcw

sm9ai wrote:

Well most places the rent is cheaper than interest only mortgages. And by quite a margin.

I currently rent a £200k property for 575 a month.

In our town most new builds go for £180k+ and only command rents of £650 if there lucky.


And with the current increases in property of 8-10% the gap is only getting larger as rents are staying inline with inflation.


Trouble at the moment is all these people I know on the ladder saying how great things are. Just wait until they try to sell it and find the next rung on the ladder is too far away.

A 90% interest only mortgage on a £180k property would cost £665 a month at 4.95% over 25 years, so the difference between the rental dead money and the interest dead money is negligible. Is £15 a month worth it to be able to alter your own home as you see fit, not have the possibility of being thrown out in 6 months, etc? I would say yes. I would get a repayment mortgage on it, which at the above rate would be £938 a month - £273 into equity every month, which over the long term is likely to out perform investing £273 a month in a savings account.

lynzpower

cwcw wrote:

A 90% interest only mortgage on a £180k property would cost £665 a month at 4.95% over 25 years, so the difference between the rental dead money and the interest dead money is negligible. Is £15 a month worth it to be able to alter your own home as you see fit, not have the possibility of being thrown out in 6 months, etc? I would say yes. I would get a repayment mortgage on it, which at the above rate would be £938 a month - £273 into equity every month, which over the long term is likely to out perform investing £273 a month in a savings account.

Id say yes it is - if it WERE only 15 quid a month we are talking about

Heres how it works for me.,

IM selling my flat now, and have found a absolutely lovely 2 bed HOUSE to move into. It works out cheaper because

a) its 50 quid less a month than the IO mortgage on this place
b) I dont have to pay buildings cover ( saving about 20 a month)
c) I dont have to pay my life cover ( 35pcm)
d) I dont have to pay maintainence - reckoning on at least 30pcm
e) I wont ever have tp put in new boiler/kitchen/ bathroom driveway and a whole host of other expenses a conservative estimate on what my parents have spent on this kind of thing over the last 2 year is circa 20k

these are just a few savings we will be making.

Also we will not be at the expense of changing interest rates. If they stayed where they are then wed be fine from here on in, but they wont will they .

So we are not talking about 15 quid a month, id happily forego a luxury if it were, we are looking at about 120 pcm before the mortgage increases are factored in. .

sm9ai

cwcw wrote:

A 90% interest only mortgage on a £180k property would cost £665 a month at 4.95% over 25 years, so the difference between the rental dead money and the interest dead money is negligible. Is £15 a month worth it to be able to alter your own home as you see fit, not have the possibility of being thrown out in 6 months, etc? I would say yes. I would get a repayment mortgage on it, which at the above rate would be £938 a month - £273 into equity every month, which over the long term is likely to out perform investing £273 a month in a savings account.

Also apart from the additional cost mentioned by lynzpower - say £100 a month. There is also the 18k which has suddenly been lost. Which at 4% is 60 a month.

So you are £175 worse off a month if you buy.

cwcw

sm9ai wrote:

Also apart from the additional cost mentioned by lynzpower - say £100 a month. There is also the 18k which has suddenly been lost. Which at 4% is 60 a month.

So you are £175 worse off a month if you buy.

No, it hasn't "suddenly been lost". It has gone from a savings account paying about 3.9% net into equity in a house which, over the long term at least, is likely to out perform the savings account significantly.

I accept most of lynzpowers added expenses, although I'm still not sure they outweigh the fact that in 25 years time you'd still be paying rent whereas a mortgage would be paid off, and also, home improvements (uPVC windows, new driveways, new boiler, etc) add value to the property - sometimes more than what was invested, sometimes less.

sheraz2

tomstickland wrote:

Would-be FTBs are a mainly ignored section of society why only want to be able to buy somewhere to live for a reasonable amount. Yes, they resent seeing "investors" buying up the cheap property to let out. They also resent working hard and still not being able to afford even a basic property.

I've got a friend who earns £20K pa. There are NO suitable properties in the town for £60K, even 1 bed flats. Selfish !!!!!!! that he is he wants to buy somewhere to live.

You live in a capitalist society, yet to see it working in it's true glory, creates a feling of resentment? MAybe that is the problem here.

And no, it's not selfish to want a place to live for you and your family. But to view it throug rose-tinted specs and want a crash without taking in to consideration the problems everyone will face is selfish, to want to win, is human nature, to want the other mans downfall in order for you to get your foot in and win, is selfish. And selfishness is motivated by that desire to get something on the cheap and ease!

meanmachine_2

cwcw wrote:

No, it hasn't "suddenly been lost". It has gone from a savings account paying about 3.9% net into equity in a house which, over the long term at least, is likely to out perform the savings account significantly.

I accept most of lynzpowers added expenses, although I'm still not sure they outweigh the fact that in 25 years time you'd still be paying rent whereas a mortgage would be paid off, and also, home improvements (uPVC windows, new driveways, new boiler, etc) add value to the property - sometimes more than what was invested, sometimes less.

I find it hilarious how any bill related to a home is now classified as an investment.

That really is daft.

The boiler blows up - brilliant - I now have a chance to "invest" in a new one.

Excuse me while I "invest" in my beer belly and pop off to the pub.

cwcw

meanmachine wrote:

I find it hilarious how any bill related to a home is now classified as an investment.

That really is daft.

The boiler blows up - brilliant - I now have a chance to "invest" in a new one.

Excuse me while I "invest" in my beer belly and pop off to the pub.

I find it hilarious that you would think that's what I meant. I'm not talking about a newish boiler blowing up and needing replacing. But obviously if your house has a 25 year old heating system, if you replaced it then at least some of the cost would be recouped when selling the property as it is an improvement that adds value and attractiveness to buyers.

Hereward

cwcw wrote:

A 90% interest only mortgage on a £180k property would cost £665 a month at 4.95% over 25 years, so the difference between the rental dead money and the interest dead money is negligible. Is £15 a month worth it to be able to alter your own home as you see fit, not have the possibility of being thrown out in 6 months, etc? I would say yes. I would get a repayment mortgage on it, which at the above rate would be £938 a month - £273 into equity every month, which over the long term is likely to out perform investing £273 a month in a savings account.

In addition to the running costs mentioned above by lynzpower, there are also the one off costs of buying a house to factor in: Stamp Duty, Solicitors fess, search fees, mortgage arrangement fee, etc. These can add quite a bit to a property purchase.