Any other home buyers in NI?

saverbuyer

motorguy wrote: »

I suggest you take this opportunity to 'draw a line' and comment no further on circumstances you know little about, rather than make yourself look even more bitter.

Bitter? Don't be such a narcissist Paul. If you think your debt situation can evoke such strong feelings in others, you're deluding yourself.

The only part about your circumstances we know little about, is your mortgage rate. You've described everthing else in some detail.

tara747

motorguy wrote: »

No. Again this is wrong. The asset has quite a high positive value, the liability against it - the mortgage - means that overall i was exposed to the tune of £40,000. I have worked to reduce this to approx £20,000 or less, and it is heading towards zero or +VE.

You say in another post that it could be £20K or £10K - I think I'd want to know which, if I were you.

It wasnt about putting eggs anywhere. It was about nullifying the risk and the exposure. Which he have done.

Fair enough.

Overall we have quite a low LTV on the new house, so if we had to 'liquidate our assets', we'd be in quite a healthy position. I guess then we could rent?

It was my recollection that the crash happened in 2008

http://www.marketoracle.co.uk/Article5563.html

Mid-2007.

Friends of mine bought at the very height of the market in May 2007, for £190,000. The best house in their street is for sale at £50,000 - no takers in the last 12 months. Their house is now worth £40,000 at most. They spent about £20,000 on improvements after buying, thinking that it would push up the value of the house. It hasn't.

However thats neither here nor there. Commitments were made to build the house that we were happy to go through with (the site for example). I dont think anyone could have predicted how bad it was going to be, and certainly we took evasive action when we had to. Ideally we would have been able to sell, but 'plan b' was always to rent.

As i said, we're not selling so its irrespective. Once the mortgage is cleared - or the next time the house is vacant - we'll take professional advice and review our options.

You dont seem to be getting it. It was an evasive course of action based on events at the time. It is NOT an investment option for us. We already have pensions, ISA's, savings, etc for investments. What we have done is merely a holding pattern until the situation improves.

Everyones house dropped in value. We're still well clear on the new house so we are not concerned about it.

Theres nothing to it. Money comes in, mortgage gets paid, repeat.

Again, you missed my point. We had probably £40,000 of exposure at the time which is the difference between the mortgage owed and how much we'd have had to "let it go" at for a quick sale. We opted not to do that.

We've been paying £7,200 a year off the mortgage (via the rental income) since then, so thats £28,400. I'd say based on even -30% RV (which would be a giveaway) the house is still worth maybe £90,000. Even if we have only paid another £10,000 off the loan amount (with the rest being interest) then you can clearly see we're approx £20K better off than we were 4 years ago.

No, no. If your mortgage payments are £600 a month, the capital is not reducing by £600 a month. You're probably paying off £100 of capital and the rest is interest. On a depreciating asset.

And people say that rent is ded money. :rotfl:

Don't get me wrong - if I were in your situation, I'd probably do the same as you and rent out the first house. I'm just saying that your repayments are mostly interest in the early years of a mortgage (which the bank explained to you, right?).

Therefore for minimal effort we have reduced our exposure by £20,000, or £5000 a year. Definitely seems worth it, wouldnt you agree?

£20,000
£10,000
£28,400

The real amount you've paid off is probably about £5,000.

Replies in pink above.

I am on record on MSE as saying that the market would crash, back in 2007. I predicted it about a year before, so my timing was off, but I knew with absolute certainty that there would be an almighty crash. And that's the reason that I didn't buy. I made a conscious decision to stay out of the market.

I'm lucky that I have a good salary and can afford to live pretty well, go on 4 holidays a year and still save.

I have added an average of £10,000 a year to my savings since then, so my net wealth (in actual cash) has increased to almost £75,000 while my friends who bought after 2002/03 have seen their net wealth (on paper) soar to ridiculous heights, then drain away to nothing.

Those who bought in 2006/07/08 have been decimated financially. Some would dearly love to move - mainly because they have too little space, or are in an area that they hate. I know a couple in a cramped 2-bedroom flat who now have a child and another on the way. :eek: Others bought in dodgy 'up and coming' areas in 2006/07, thinking that they could make a profit, sell up and move somewhere nicer. These people feel trapped and depressed. And they can't rent out their houses/flats and move - the rent wouldn't even cover the mortgage, let alone rates, insurance, maintenance etc. Besides, their lenders wouldn't allow them to rent it out as they have a negative LTV.

I feel desperately sorry for them.

tara747

p.s. £600 a month rent is on the high side for Waringstown, your old house must be a palace.

http://www.propertynews.com/search/246678093/Page1/?OrderBy=HighestPrice

saverbuyer

motorguy wrote: »

motorguy wrote: »

This seems hard for you?

No, it's very easy. It looks like, on the figures provided and paying the necessary tax, it's costing you money, every month.

Don't talk guff on the figures and no one will pull you up on it.

saverbuyer

motorguy wrote: »

Worked for a bank for 7 years BTW

I can tell.

saverbuyer

motorguy wrote: »

saverbuyer wrote: »

"Noone" is - just you and Tara. Everyone else seems to agree we did the right thing and fair play for digging ourselves out.

Irrespective, it seems infinitely better than "working to make up the loss" (of £40,000) which you think was the better option? :eek:

(Noone? what?)

Of course Paul, property letting isn't working.

You also have to top it up every month. I'm sure you tenants are really grateful you are subsidising their standard of living. I know I would be.

You have told the bank you are renting the place out? You’re not trying to do it on a cheap residential rate as opposed to consent to let?
P.S "dead money" is the interest you are paying on the debt you have taken out on two houses or the lost interest you would have had on saving had you waited or not rushed in.

tara747

tara747 wrote: »

Replies in pink above.

I am on record on MSE as saying that the market would crash, back in 2007. I predicted it about a year before, so my timing was off, but I knew with absolute certainty that there would be an almighty crash. And that's the reason that I didn't buy. I made a conscious decision to stay out of the market.

I'm lucky that I have a good salary and can afford to live pretty well, go on 4 holidays a year and still save.

I have added an average of £10,000 a year to my savings since then, so my net wealth (in actual cash) has increased to almost £75,000 while my friends who bought after 2002/03 have seen their net wealth (on paper) soar to ridiculous heights, then drain away to nothing.

Those who bought in 2006/07/08 have been decimated financially. Some would dearly love to move - mainly because they have too little space, or are in an area that they hate. I know a couple in a cramped 2-bedroom flat who now have a child and another on the way. :eek: Others bought in dodgy 'up and coming' areas in 2006/07, thinking that they could make a profit, sell up and move somewhere nicer. These people feel trapped and depressed. And they can't rent out their houses/flats and move - the rent wouldn't even cover the mortgage, let alone rates, insurance, maintenance etc. Besides, their lenders wouldn't allow them to rent it out as they have a negative LTV.

I feel desperately sorry for them.

motorguy wrote: »

Why?

Is it a case of 'monitoring the situation until it improves'?

We know we are still in negative equity, we have good tennants who have no intentions of moving on. As i have said repeatedly, when / if they move on, we will review the actuals then, seek professional opinion and make a decision based on that.



Sorry to hear that. I'm not sure of the relevance though?

It's relevant as a typical example of a 2007 buyer, of whom there are many. Property transactions were at an all-time high in 2007, so lots of people are in the same boat as that couple.


Jeez, you're as bad as saverloser. The very next sentence read " Even if we have only paid another £10,000 off the loan amount (with the rest being interest)"

OK, fair enough. I was just pointing out that you may not have paid off as much of the principal as you thought.

Renting is dead money.

It certainly is not. Renting a house in a falling market makes perfect sense. I have one payment each month: rent. My rent hasn't risen in 5 years, and isn't likely to in the foreseeable future.

If you have a mortgage, you're paying:
Arrangement fees
Interest
Council rates
Buildings insurance
Maintenance (the sort which won't add value to your house)

Plus, if you bought at the wrong time, you have negative equity. While this is only a paper loss until you sell, there are many LLs (I know some) topping up with their own money because the rent doesn't cover the mortgage, never mind rates and all the other costs.

If the rent you receive covers your costs, you're one of the lucky ones.


Uh huh. And i've already explained this isnt a new mortgage. Its now 10 years in. We didnt remortgage the old house.

(Worked for a bank for 7 years BTW)



Wow. Fantastic. Go you!

Thanks. I'm told almost on a daily basis that I'm 'so lucky' that I didn't buy. Well, it's not really luck. I made a conscious decision not to buy, having listened to the few sane economists at the time and made up my own mind. I'm an independent thinker in general.

Yes, its a great feeling isnt it?

Sure is. :beer:

So do i. Totally. A lot of terrible stories out there.

I guess what sums up my position is 'but for the grace of god go i'.

We took evasive action and we have good, well paying stable jobs, and we're weathering the storm.

Yes, I agree, and I understand why you did it.

I guess thats why i cant understand the negativity - I know our position with regards to our previous home isnt ideal, but we didnt let that drag us down and we've been able to move on with our lives.

Whilst we're all waiting for some sort of stabilitiy in the market, its the previous house is in a holding pattern, not us.

Again, I like to think that I've been very measured and fair in my comments, and I find your perspective interesting (even if I may not agree with everything you say).

Anyway. I can't actually remember how this conversation started and, as I've said, you seem to be making the best you can of a bad situation.

qwert_yuiop

[QUOTE=saverbuyer;6352



Prices dropped 5% in September 2007. I also think lots of people saw it coming.






[/QUOTE]

I'd like to claim bragging rights as the first to see the crash coming. I distinctly remember saying "this'll all end in tears" in 1997.

Also, I didn't buy a house when we came back from abroad in 2003. I attribute my brilliant decision to keep on renting to sheer laziness. We just never seemed to get round to it.

GlynD

tara747 wrote: »

Anyway. I can't actually remember how this conversation started and, as I've said, you seem to be making the best you can of a bad situation.

I see in the news today they're saying that the construction industry is out of recession here now. I'm sure a lot of this has been effected by the introduction of govt cash but I also see some former ghost estates near me coming to life again. Would you agree this is a sign of market recovery?

tommie

motorguy wrote: »

It was never done to "make money" per se. It was done because at the time we'd have had to firesale our house at about £80,000 to get it sold,

As i've said previously, ours is a four bed detached, end site, garage, brick driveway, high standard of finish, etc, etc.

This is the strange bit,.... a 4 bedroom detached property with garage etc etc can only make £80k in Waringstown!!!? What??!!
I know Waringstown very well and thats not even 2 bedroom Town house money there.

again over to you motorguy