Repo's up and some startling numbers

RenovationMan

shortchanged wrote: »

So what did you sell your 4 bedroom house for?

£250k and my farmhouse cost me £450k in 2010 when it probably would have cost me £250k back in 1995. So a further £200k to pay on the mortgage. The delights of HPI.

shortchanged_2

RenovationMan wrote: »

£250k and my farmhouse cost me £450k in 2010 when it probably would have cost me £250k back in 1995. So a further £200k to pay on the mortgage. The delights of HPI.

So where has the large deposit you put towards your dream farmhouse come from?

RenovationMan

shortchanged wrote: »

You don't think that buying your first house in 2000 before the boom and rampant HPI since has put you in a favourable position then.

HPI doesn't put you in a favourable position, it just increases all other houses relative to your own. Unless you are downsizing or have investment properties you don't benefit from HPI.

If someone is maxed out on his mortgage and struggling to meet the monthly payments it DOESN'T help if HPI doubles the value of his house because he is still struggling to meet the monthly mortgage payments.

Overpaying puts you in a favourable position because it reduces your monthly mortgage payments and gives you more money in which to further pay down the mortgage. Eventually someone maxed out will be back in his comfort zone and easily afford his mortgage despite what happens with interest rates.

Overpaying, not HPI put ISTL in a favourable position.

RenovationMan

shortchanged wrote: »

So where has the large deposit you put towards your dream farmhouse come from?

From the huge amount of overpaying I did on my first house and my second house.

shortchanged_2

RenovationMan wrote: »

HPI doesn't put you in a favourable position,

It does if you got on the property ladder BEFORE the rampant HPI we had.

shortchanged_2

RenovationMan wrote: »

From the huge amount of overpaying I did on my first house and my second house.

And the 70K profit you made selling your 4 bed house.

RenovationMan

shortchanged wrote: »

And the 70K profit you made selling your 4 bed house.

All things considered I would rather have forgone the £70k 'profit' and £300k mortgage and instead have zero 'profit' and a £150k mortgage.*

Let's also not forget that the £70k 'profit' was subject to stamp duty of £13.5k because house prices have increased exponentially but stamp duty thresholds haven't. Let's also not forget the increased mortgage payments that you have to pay on a house purchase bloated by HPI. Not quite £70k profit anymore.

* Are you getting it yet?

RenovationMan

shortchanged wrote: »

It does if you got on the property ladder BEFORE the rampant HPI we had.

You keep missing the point. Does it put me in a better position than I would be if HPI hadn't happened at all?

Let's look at the numbers again:

Without HPI & with 100% IO mortgage (for ease of calculations)
2 bed house - £40k - Mortgage is £40k. Sells for £40k
4 bed house - £80k - Mortgage is £80k. Sells for £80k.
Farm house - £250k - Mortgage is £250k

With HPI & with 100% IO mortgage (for ease of calculations)
2 bed house - £40k - Mortgage is £40k. Sells for £100k.
4 bed house - £180k - £60k HPI deposit, mortgage is £120k. Sells for £250k.
Farm house - £450k - £130k HPI deposit, mortgage is £320k

So without HPI I would be looking at a mortgage of £250k
With HPI I would be looking at a mortgage of £320k

So, you have to ask yourself, have I benefited from HPI?

shortchanged_2

Well how come quite a few people I know who bought originally a couple years before the boom prices (they are only 3 or 4 years older than me) are now living in 4 or 5 bedroom executive houses and are virtually mortgage free. They also have had nothing to do with BTL's and don't earn massively more than our income.

geneer

IveSeenTheLight wrote: »

I've bought a number of properties over the years.
The first in 2000, the last a BTL in 2007.
I've even bought off plan and sold on completion to make a profit

As rennovationman alluded, it doesn't matter when I bought, the crux was I maxed out my finances at that time and every purchase has proven to be succesful.

You could liken to today, where a joint houshold income of say £30k, may max themselves out to purchase a £120k property.
think forward 5 years and are the likely to find that same propertymore or less affordable? (Let's assume the mortgage is fixed therefore negates any hypothetical interest rate increases to circa 10+%)

You made money flipping in a property bubble eh.
Aren't you a clever boy.
Not many people play that game.