House ownership - Selling yourself into a lifetime of servitude

SandC

I'd say your parents are not typical of couples today either though. I know very few couples who would start off in either the 1 bed flat or the 2 bed terrace and go straight for the 3 bed, so it's probably somewhere in the middle.

As for the above, the scenarios could also be reversed in that someone's fortunes could be positive rather than negative. Swings and roundabouts. Having said that, I am probably only in the fortunate situation that I am because I never met anyone and settled down and consequently never split up and had to start again either.

debtistheft

ukcarper wrote: »

Lets take the 95% mortgage would be 5% less so mortgage £121,600 repayments and go 25 year repayment. £792 +10=£802. So £150 more.

So renter saves £6400 deposit + £600 fees and then adds £1800 a year if he gets a rate of 6% he will have £135k at the end of 25 years.

If house prices only increase at 2% the house will be worth £210k.

With 2% inflation rent will be more than mortgage payments in 10 years time and the renter would actually pay £14k more than buyer would over the 25-year period.


So if we take into account renter will not be able to add to his savings after year 11 the renter would only have £95k after 25 years.

If the renter just put his £7k away (deposit & legal fees you mentioned) and received 6% compound interest, he would have 100822.37 after 25 years, let alone how much he could have gained from putting the equivalent of capital payments away.

Hmnn, that amortization calculator was obviously wrong! My apologies.

debtistheft

SandC wrote: »

I'd say your parents are not typical of couples today either though. I know very few couples who would start off in either the 1 bed flat or the 2 bed terrace and go straight for the 3 bed, so it's probably somewhere in the middle.

As for the above, the scenarios could also be reversed in that someone's fortunes could be positive rather than negative. Swings and roundabouts. Having said that, I am probably only in the fortunate situation that I am because I never met anyone and settled down and consequently never split up and had to start again either.

Perhaps it is you who are atypical if you have only ever bought one house. I also doubt that too many FTBers would be able to purchase a 3 bed house as their first home, certainly this was no tthe case in my parent's time when mortgages were not given out so freely.

http://www.buyassociation.co.uk/homes/why-do-people-move----claire-hose--moveminder.html

"Not so long ago it wasn’t unusual to move only once or twice in your life, but today the average person moves every six years; so what makes people move? Here are the main reasons why people up sticks

1. More Space – Most people’s first homes are small because that’s all people can
afford, especially in times like these. As time passes, and more ‘stuff’ is acquired (including children), people move to accommodate the need to spread out.

2. Upgrade/change – The need might not be there, but sometimes people move simply because they want something bigger/better/newer/nicer.

3. Schools – House prices near good schools are often highly inflated because we want our kids to get the best education possible. If that means moving into a different school catchment area, many parents are prepared to make the move and accept the related sacrifices.

4. “The neighbourhood’s changed” - Neighbourhoods change physically, socially and economically over time, and so do the people who live in them, so moving to a location that better suits their current needs. Noisy neighbours are a common complaint, especially for city dwellers.

5. Job relocation – You just bagged your dream job but it’s located 200 miles away... that’s a killer commute; the easiest option is to move. Some lucky folk are afforded a relocation allowance if their current job dictates that they have to move.

6. Coupling up – Moving in with your current squeeze is an exciting step. It might be one of you moving into the other’s place or both moving into a new abode.

7. Splitting up - If you’ve broken up with your partner, chances are you don’t want to stay living together (unless you’re very forgiving and open minded). This situation can be pretty complicated, especially if you owned a property together.

8. Less space – Once the kids have flown the nest the need for a big house is no longer there. Large houses can feel rather empty with only one or two people in them, so often parents choose to downsize – the prospect of less rooms to clean is also appealing!

9. Retirement – Many retirees opt for a simpler pace of life, but let’s not stereotype; some supergrannies/grandads might want to move nearer to an extreme sports centre with their new found freedom.

10. Health problems – Stairlift companies might prefer it if you adapt your current home, but many people prefer to move to a property that better suits their needs if physical capabilities change.

11. Work required – One person’s ‘do-er upper’ is another person’s nightmare, so some people leave it to those who want to take on the project, and move on to pastures new.

12. A project – Property renovation is more popular than ever, and with plenty of old houses in the country there are plenty to choose from! Similarly, building your dream home from scratch is also quite popular.

13. Family – Grandparents want to be near their grandkids, children want to look after their elderly parents, or you’ve just discovered you have a long lost family member that you want to get to know; all reasons for moving nearer to our loved ones. Conversely, moving away from family might make relations more harmonious.

14. Releasing equity – After saving all your life to pay off your mortgage you suddenly realise that that’s a lot of money tied up in bricks and mortar – where’s the enjoyment in that? Selling up and reaping the rewards is an option.

15. A change in lifestyle – Perhaps you’ve joined a wood/cave dwelling commune and no longer require a house, you’ve decided to emigrate to somewhere sunny or you’re sick of the city and want to live on a farm; all are good reasons to move (except maybe the living in a wood/cave one)."

ukcarper

debtistheft wrote: »

If the renter just put his £7k away (deposit & legal fees you mentioned) and received 6% compound interest, he would have 100822.37 after 25 years, let alone how much he could have gained from putting the equivalent of capital payments away.

I don’t know where you get your figures but £7k at 6% compound interests for 25 years is just over £30k.

SandC

debtistheft you did just say that your parents weren't adventurous with their 5 moves, yet the stats say they were not the norm, which is it? If people did used to only move once or twice then they were either buying bigger to start with, or buying small and only upgrading once or twice.

Anyway, no I am not atypical, but then your sweeping statement that house ownership is selling yourself into a lifetime of servitude isn't atypical either.

debtistheft

SandC wrote: »

debtistheft you did just say that your parents weren't adventurous with their 5 moves, yet the stats say they were not the norm, which is it? If people did used to only move once or twice then they were either buying bigger to start with, or buying small and only upgrading once or twice.

Anyway, no I am not atypical, but then your sweeping statement that house ownership is selling yourself into a lifetime of servitude isn't atypical either.

The stats weren't dated.

If you bought your house today, could you afford it?

Thrugelmir

debtistheft wrote: »

You dont have to be savvy at all to beat 6%. A crappy, bog standard tracker (http://www.google.co.uk/finance?q=MUTF_GB:BANK_OF_SCOT_1YJQE04) returned 19.28% over the last 12 months in the same time houses have dropped, what, 5%?

That's the same mentality as saying house prices rose 100% between 1999 and 2004.

There's no way of forecasting any such movement. As its the herd not you that ultimately makes the decision.

ukcarper

debtistheft wrote: »

If the renter just put his £7k away (deposit & legal fees you mentioned) and received 6% compound interest, he would have 100822.37 after 25 years, let alone how much he could have gained from putting the equivalent of capital payments away.

Hmnn, that amortization calculator was obviously wrong! My apologies.

what about this "
Originally Posted by debtistheft
Mortgage £121,600 @ 5.99% = £606.99 Interest Only
Repayment Part = £121600 / 25 /12 = £405.33

I don't know where you are getting £792 from because even with a 5% deposit I'm seeing a £1012 per month mortgage."

You could alter the compound figure above as it is 3x what it should be.

ukcarper

Originally Posted by debtistheft
You dont have to be savvy at all to beat 6%. A crappy, bog standard tracker (http://www.google.co.uk/finance?q=MU...F_SCOT_1YJQE04) returned 19.28% over the last 12 months in the same time houses have dropped, what, 5%?

Thrugelmir wrote: »

That's the same mentality as saying house prices rose 100% between 1999 and 2004.

There's no way of forecasting any such movement. As its the herd not you that ultimately makes the decision.

how good would a standard FTSE tracker be long term

FTSE-100 1985 1413 now 5858 4.15x
House price 1985 £34.5 now £165.5 4.78x

as you say you can't take any 12 months in isolation.

debtistheft

Thrugelmir wrote: »

That's the same mentality as saying house prices rose 100% between 1999 and 2004.

There's no way of forecasting any such movement. As its the herd not you that ultimately makes the decision.

No its not. It would be the same mentality as someone saying "Well, house prices didn't increase by much between 1999 and 2004" and someone replying "Well, actually they did, they rose 100% according to thrugelmir of the MSE board". I was answering a direct question about stockmarket performance over the past few year. I wasn't predicting what would happen in the future as well you know.