How I intend to make £'000s

leftieM

Gorgeous_George wrote:

It's my belief that when some wives realise that they can take at least half of the equity with them, they are more tempted to give up on a marriage rather than work at it.

Is that right?
What time do the sols open on Tuesday?

franklee

cwcw wrote:

But likewise the rate would go up for the 7% mortgage after the initial fix too. The two situations are in parallel universes - one where a crash has happened and one where it hasn't. The point is that the homeowner will always pay a similar amount - the amount they can afford. If interest rates are higher, affordability is brought into reach either through wage inflation or lower house prices, or a mix of both. If interest rates are lower, people can afford too much, and hence the prices are driven up, as has been the case for the last 5 - 10 years.

Well I agree that it's the lower interest rates that have driven house prices up but what I'm saying is that it's a dangerous game to over borrow based on the initial monthly payments being "affordable" due to historically low interest rates. The reason being that rates can go up and then the repayments may not be affordable any more leading to falling behind with the mortgage and possible repossession.

It was only recently that rates were as low as 3.5%. A neutral rate is more like 7%, so that would mean a doubling of interest payments. But for someone who starts out at 7%, it's less likely that rates will go much further up or remain so. A doubling of rates would mean 14% which is extremely unlikely.

Also lower rates usually mean lower inflation and lower wage inflation so ones salary doesn't rise as much so the repayments remain a higher burden for longer.

Simply saying low interest rates mean it's OK to borrow more is misleading, but nevertheless a trap that many have fallen into.

jamesd

franklee wrote:

Depends where you are of course but round here gross rental yields are typically around 4%. This means that the rent paid is about the same as or less than the interest on a mortgage would be. So it simply isn't possible to buy a place where the mortgage payments are roughly the rent you'd pay unless you put in a large deposit or have an interest only mortgage.

I agree, it definitely varies. 82616 mentioned being able to buy a two bed terraced house for approximately 100000 so it may work there, depending on rental prices. Yield on a 120000 house in some parts here is in the 5.5% range and that's enough to pay 30 year repayment mortgage with a deposit of 20% and 5.5% interest rate.

franklee wrote:

With the large deposit you lose the "opportunity cost" of that capital, most simply the interest it could earn.

I agree - that's why I suggested going with 10% deposit and stocks and shares, or some other ratio.

natwill_3

Frankly prices could rise or fall, i'm in west london, owned for 7 years

if they fall great, move on up quicker, if they rise, well on the ladder so not too bothered

It all depends on your situation, but i suspect anyone who bought 2+ years ago wouldn't care

its not real money, its a roof over your head, and not having a landlord who can turf you out, or vile decor, its security for me anyway that counts

ceegee

Whatever happens to house prices in the future, some people will benefit. If they go up, it will benefit existing homeowners but be bad for people trying to buy their first home. If they go down it may not be so good for existing homeowners but will hopefully benefit FTBers.

As a homeowning mortgage paying middle aged person with 2 teenage daughters, I say that we homeowners have had it good re house prices for many years and that a crash would be a good thing for those poor FTBers who are struggling to be able to afford a home of their own.

No situation will be good for everyone, but it is time that FTBers had prices in their favour....I feel so sorry for them, I really do. We oldies have had our bite of the cherry, now let the youngsters have theirs.

Happy New Year!

cwcw

ceegee wrote:

Whatever happens to house prices in the future, some people will benefit. If they go up, it will benefit existing homeowners but be bad for people trying to buy their first home. If they go down it may not be so good for existing homeowners but will hopefully benefit FTBers.

As a homeowning mortgage paying middle aged person with 2 teenage daughters, I say that we homeowners have had it good re house prices for many years and that a crash would be a good thing for those poor FTBers who are struggling to be able to afford a home of their own.

No situation will be good for everyone, but it is time that FTBers had prices in their favour....I feel so sorry for them, I really do. We oldies have had our bite of the cherry, now let the youngsters have theirs.

Happy New Year!

What about we youngsters who have managed to save for a decent deposit and taken on a mortgage recently while our peers have chosen to spend £100s a month on alcohol instead, in the hope that prices will crash anyway? Collateral damage?

Alan_M_2

cwcw wrote:

What about we youngsters who have managed to save for a decent deposit and taken on a mortgage recently while our peers have chosen to spend £100s a month on alcohol instead, in the hope that prices will crash anyway? Collateral damage?

What relevance does this bear to your question?

If prices go up, it just shows how much more intelligent you appear to be than they are.

If prices go down, it shows how much luckier they are than you are.

Other than that it's wholly irrelevant, do you think they should be penalised in some way for choosing what they want to do with their money because you consider it wasteful? If you do, it's an incredibly blinkered position to be in.

cwcw

Alan_M wrote:

What relevance does this bear to your question?

If prices go up, it just shows how much more intelligent you appear to be than they are.

If prices go down, it shows how much luckier they are than you are.

Other than that it's wholly irrelevant, do you think they should be penalised in some way for choosing what they want to do with their money because you consider it wasteful? If you do, it's an incredibly blinkered position to be in.

No, it just annoys me that some people squander their money and yet complain that house prices are high. They are the very same people who will benefit the most if house prices crash. Their luck would be very much undeserved, IMO, whereas those of us who have "played by the book" are punished the most. C'est la vie.

Alan_M_2

What's playing by the book? What Book? Who says what's right and what isn't?

Lets take another point of view. Just for the sake of balance.

Buying at the highest level of house prices in history is dumb in the extreme, I'll sit tight and wait and see what happens because it's not beyond the realms of possibility that prices could drop. Anyone who's bought in the last 12 months or so deserves everything they get for being short sighted.

This statement is no less bigoted than yours, but equally valid.

btloptingout

cwcw wrote:

No, it just annoys me that some people squander their money and yet complain that house prices are high. They are the very same people who will benefit the most if house prices crash. Their luck would be very much undeserved, IMO, whereas those of us who have "played by the book" are punished the most. C'est la vie.

You seem adamant that:

• "People who believe houses are too expensive" are the same people who "squander all their money"
• "People who own a house" are the same people who "manage their finances very well"

A blinkered view i'm afraid...there are many other types of people including but not limited to:

• "People who believe houses are too expensive" who also "manage their finances very well"
• "People who own a house" who also "squander all their money"

The latest MEW figures seem to indicate that it is this last section of the community that is responsible for the countries consumer realted growth i.e. spending on non-essential goods and services:
http://money.guardian.co.uk/property/mortgages/story/0,,1979922,00.html

It should be noted that the majority of debt companies advertising on TV target home-owners....but hey "Life is for living" as Carrol Voderman tells us on her Ad.