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Debate House Prices
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House prices need to drop 40% to be affordable discussion
Comments
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The MAIN reason people take out IO mortgages is to reduce the monthly payment to enable them to afford to "buy" the house/flat that they otherwise couldn't afford.
This is 100% fact and I will not be replying to any suggestions to the contrary.
Its that old saying "Agree the price of the property now, pay for it in 25 years". You would likely balk at that for a depreciating asset but for one that is likely to appreciate (and with you only putting 10% out up front) its attractive to some.0 -
RenovationMan wrote: »I'm not sure where you got the £34k net gain TBH.
My mistake.
In fact its a net loss. As when selling the 2 bed originally you had £102k of equity. When repurchasing it, you are left with £72k. So £30k has been lost in the 28 years.
To calculate gains and losses. All costs and expenses have to be taken into account. Your example shows gross figures. Which is misleading.0 -
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Thrugelmir wrote: »My mistake.
In fact its a net loss. As when selling the 2 bed originally you had £102k of equity. When repurchasing it, you are left with £72k. So £30k has been lost in the 28 years.
And the £250k equity in the new 2 bed goes where? Up the chimney???0 -
Theres the old saying of "house prices only ever go up".
Which has of course been superseded by the saying "house prices only ever go up long term" in recent years.
Can you point to a period in UK history where house prices have not went up in the long term?
Out of interest and in line with the topic, can you point to a period in time when UK house prices dropped 40% nominally?:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Thrugelmir wrote: »My mistake.
In fact its a net loss. As when selling the 2 bed originally you had £102k of equity. When repurchasing it, you are left with £72k. So £30k has been lost in the 28 years.
To calculate gains and losses. All costs and expenses have to be taken into account. Your example shows gross figures. Which is misleading.
Sorry thrugelmir, I'm at a loss again with your maths.
I also don't understand your meaning with costs and expenses. As I have already said, these costs (stamp duty, legal costs, searches, estate agent costs) would also be borne by someone buying with a repayment mortgage. The only difference is the greater amount of interest paid, though as I said this depends on what the person with an IO mortgage does with the repayment portion that he is not paying to the mortgage provider.0
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