ONS- June: +2.3%

DervProf

ukcarper wrote: »

If you want to use repayment I will be £950 saving £50 a month on rent total over 5 years £3000

Capital paid of over 5 years £26k Total £29k

Interest only £555 a month saving £475 Total £28.5k

These are at 3.5%

　

Did I mention anything about the saving over rent ?

I don't think I did. Hamish didn't either at the point he asked me if everything was OK, so far.

Again, how much profit would I make after 5 years, given the example I outlined previously ?

DervProf

ukcarper wrote: »

Going back to Hamish’s example why do you keep mentioning interest free mortgage.

Sorry, I forgot to answer your question.

I mentioned "interest free mortgage", because that is what would be required to make Hamish's initial point valid (ignoring the other costs involved in buying a house).

And anyway, nothing changes the fact that the value of gold has risen far more than the value of Aberdeen property over the past 5 years. Cases can be made to show that the pofit from either property or gold were possible, and how likely an individual may have made those profits, but gold has over double in value, whereas Aberdeen property is only up ~6%.

I agree, that for a FTB who had a deposit, and was renting in 2007, buying a property would have been a better a more suitable and attainable option than investing in gold. For someone who invested a large sum into a BTL business back in 2007, an investment in gold would have proven to be more profitable.

It's all about risk and personal circumstances. I didn't want to invest in gold, even though I had the means to do so. I didn't like the risk involved. However, I'm still willing to admit that I should have done, and it would have turned out better for me than if I had bought a BTL property.

ukcarper

DervProf wrote: »

Sorry, I forgot to answer your question.

I mentioned "interest free mortgage", because that is what would be required to make Hamish's initial point valid (ignoring the other costs involved in buying a house).

Did you not understand my last post. Hamish's figures are correct. If you had argued that his interest rate was low or that he hadn't accounted for legal fees (which you will have to pay when you buy anyway) you would have had a point but Hamish is correct in only accounting for interest.

shortchanged_2

A little bit off topic but I've just seen something that made me chuckle somewhat.

I saw a house being advertised by an estate agent (been on the market for some time) where the EA has said 'reduced to £*** for a limited time.' :rotfl:

What.......for a limited time before it is reduced further. This is getting laughable now.

DervProf

ukcarper wrote: »

Did you not understand my last post. Hamish's figures are correct. If you had argued that his interest rate was low or that he hadn't accounted for legal fees (which you will have to pay when you buy anyway) you would have had a point but Hamish is correct in only accounting for interest.

Did Hamish account for interest ?

HAMISH_MCTAVISH wrote: »

In the last 5 years from today, Gold is up 147%.

So, lets run an example.....

A buyer in Aberdeen in 2007 takes a 10K deposit and buys a 200K house.

Today, that house would be worth £212K. So a profit of £12,000.

Had he instead taken the 10K and bought Gold, that Gold would be worth £24,700. So a profit of £14,700.

So far so good, right?

I don't think he did, and that's precisely the point I'm making. If I'm wrong about this, please can you explain why ?

BTW, If I have dropped a clanger, I shall be more than happy to apologise to both yourself and Hamish, and admit my misunderstanding.

DervProf

shortchanged wrote: »

A little bit off topic but I've just seen something that made me chuckle somewhat.

I saw a house being advertised by an estate agent (been on the market for some time) where the EA has said 'reduced to £*** for a limited time.' :rotfl:

What.......for a limited time before it is reduced further. This is getting laughable now.

Brilliant ! :rotfl:

"Nobody bought the property at the reduced asking price, so it's more likely to sell when the price goes back up again."

Or maybe they're expecting the economy or bank lending to improve in the near future. If they are, why reduce the price for a limited time ?

ukcarper

DervProf wrote: »

Did Hamish account for interest ?



I don't think he did, and that's precisely the point I'm making. If I'm wrong about this, please can you explain why ?

Why did you ignore the last half of his post they have to live somewhere and that is where the saving comes in my 3.5% repayment mortgage example they save £50 a month on rent and manage to pay £26k off thier mortage.

ukcarper

DervProf wrote: »

Brilliant ! :rotfl:

"Nobody bought the property at the reduced asking price, so it's more likely to sell when the price goes back up again."

Or maybe they're expecting the economy or bank lending to improve in the near future. If they are, why reduce the price for a limited time ?

Perhaps the vendor is having one last attempt to sell and intends to take it off market if it doesn't.

But then again who understands estate agent thinking.

DervProf

ukcarper wrote: »

Why did you ignore the last half of his post they have to live somewhere and that is where the saving comes in my 3.5% repayment mortgage example they save £50 a month on rent and manage to pay £26k off thier mortage.

I honestly didn't ignore the last half of his post, I simply looked at the first half, and answered his question by pointing out that I wasn't "OK so far". He made a glaring omission in his calculations, which doesn't change the conclusion to his scenario, but does show property purchase in a much more positive way than in the real world.

He, and yourself also go on to assume the potential purchaser of the property had to rent. Is it not at all possible that they may be living with parents while saving up for a deposit, or is that scenario so rare it is not worth mentioning ?

ukcarper

DervProf wrote: »

I honestly didn't ignore the last half of his post, I simply looked at the first half, and answered his question by pointing out that I wasn't "OK so far". He made a glaring omission in his calculations, which doesn't change the conclusion to his scenario, but does show property purchase in a much more positive way than in the real world.

He, and yourself also go on to assume the potential purchaser of the property had to rent. Is it not at all possible that they may be living with parents while saving up for a deposit, or is that scenario so rare it is not worth mentioning ?

If you are happy to live with your parents that is a reasonable idea . I think to invest all your deposit in gold would be rather silly it would have turned out OK but it could easily have not.

But I would like to know what omission Hamish made I already said you could argue against his points but his calculations are correct and you said they weren’t.