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Debate House Prices
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UK Households wealthier than ever before
Comments
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marathonic wrote: »I could use it to fund a business start-up or, as referred to above, buy a BMW. After buying the BMW, I could sell the house at any time, paying off the mortgage and STILL hold 50k, less the cost of the BMW, in cash.
Wow, well thats genius.
You could have borrowed money on a personal loan for the BMW and have been in exactly the same position.....but hey, if you think you have been uber clever by borrowing it on the mortgage instead, well done you.
This mindset that borrowing from your house is somehow "free money" is utterly bizzare.
It's as if many think it's financial genius. It's no different to any other borrowing in essence.0 -
marathonic wrote: »Let's say you decide to rent and I buy. If my property increases in value by 50k, I am wealthier. I'm given more options in life because I can release some of that 50k for whatever purpose I see fit.
Yes, but you are not "releasing" anything.
Access to that 50k only comes about when you SELL or when you remortgage and BORROW 50k more,
I've had enough of this debt-junkie nonsense now.
I'm out.0 -
And just to finish off the point...
Your example of the renter and the owner marathonic.
The renter simply takes out a personal loan or car loan and buys the BMW. They still have just as much access as you do, regardless of your paper wealth.
The difference is, you being the genius that you are, are likely to have to pay remortgage arrangement fee's, which will add to your loan, increasing it further more.
The renter taking a personal loan doesn't pay that.
Your BMW has cost you the price tag AND the arrangement fee.
The renters BMW has cost them the price tag.
But hey, your the genius...I'm just the confused muddler without a clue.0 -
Graham_Devon wrote: »And just to finish off the point...
Your example of the renter and the owner marathonic.
The renter simply takes out a personal loan or car loan and buys the BMW. They still have just as much access as you do, regardless of your paper wealth.
The difference is, you being the genius that you are, are likely to have to pay remortgage arrangement fee's, which will add to your loan, increasing it further more.
The renter taking a personal loan doesn't pay that.
Your BMW has cost you the price tag AND the arrangement fee.
The renters BMW has cost them the price tag.
But hey, your the genius...I'm just the confused muddler without a clue.
Quite a big difference between mortgage interest rates and unsecured personal loan interest rates.0 -
Graham_Devon wrote: »Wow, well thats genius.
You could have borrowed money on a personal loan for the BMW and have been in exactly the same position.....but hey, if you think you have been uber clever by borrowing it on the mortgage instead, well done you.
This mindset that borrowing from your house is somehow "free money" is utterly bizzare.
It's as if many think it's financial genius. It's no different to any other borrowing in essence.
If I rent and get a personal loan, obviously I have no underlying asset to sell on if I wanted to repay that loan, for example, if I lost my job.
If I buy, like in my example above, I have many options open to me. True I have debt that I need to repay - but I can repay that via normal monthly repayments, via selling the house, via selling the car, via taking in lodgers or via some combination of the four.
True, it puts me in a position worse off than someone who bought the same house and didn't draw down equity - but I'm still in a much better position than someone who continued renting.0 -
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marathonic wrote: »If I rent and get a personal loan, obviously I have no underlying asset to sell on if I wanted to repay that loan, for example, if I lost my job.
What, apart from the BMW? Which would lose value just the same if you had taken a loan via a personal loan or adding to your mortgage.
End result = the same.
Apart from in this case you will have a mortgage redemption fee to consider (rememeber, you've signed up to a new product) and selling fees to pay. The renter won't.
We can go on if you like....0 -
Graham_Devon wrote: »Is there?
You may want to check that.
Tesco personal loans, £7.5-25k, 5.2%.
What do you call a "big difference"? Cus mortgages aint that much lower.
You'll only got to venture into the loans board to realise many fail to get the headline rate.Official MR B fan club,dont go............................0 -
Graham_Devon wrote: »The renter simply takes out a personal loan or car loan and buys the BMW. They still have just as much access as you do, regardless of your paper wealth.
A personal loan is much less likely to be approved than a mortgage increase - due to security for the bank and the fact that homeowners, in general, are ranked higher on the credit rating scale.
Also, if the renter loses their job, their only option to repay the loan is to sell the car -and come up with the difference out of what - benefits? I could sell the car, I could sell the house, I could take in lodgers, I could rent the house and move in with friends/relatives, etc.Graham_Devon wrote: »The difference is, you being the genius that you are, are likely to have to pay remortgage arrangement fee's, which will add to your loan, increasing it further more.
The renter taking a personal loan doesn't pay that.
The best buy tracker mortgage with no arrangement fee has a rate of 2.69%. The best buy personal loan has a rate of 5.1% up to £15,000 or 7.3% over it. Now, get your calculator out
Graham_Devon wrote: »Your BMW has cost you the price tag AND the arrangement fee.
What arrangement fee.Graham_Devon wrote: »The renters BMW has cost them the price tag.
And an interest rate 2-3 times higherGraham_Devon wrote: »But hey, your the genius...I'm just the confused muddler without a clue.
I wouldn't refer to someone that goes for the cheapest method of borrowing money as a genius... I just call it common sense!0 -
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