SOD IT!!! I'm giving up and having a damn good holiday instead!!!

Kaz2904

We got onto the property ladder by lying about our wages and buying a grotty flat. We did this flat up completely and moved nearly 4 yrs later with a £50k deposit. We struggled in that time as we could only just afford to do but our earnings increased.
When we moved we were looking at crummy houses in crummy areas. We lost £1500 on a sale that fell through but someone was looking out for us. The same week that my sellers EA told me "We cannot locate the vendor and you have young kids. You must start looking elsewhere before you lose your sale- even if it means us losing our commission..." my guardian angel found my home.
We were buying somwhere I hated and was only going to stay for 2 yrs - (with getting an extension costing £15k min) and found somewhere bigger in a better area for 14K more. It had been on the market for nearly a year and noone wanted it because there was sooooo much work to be done (no heating/ hot water when we moved in and the rest!). The second I walked in I knew it was my home.

I think that the original problem has come from the downsizing generation who are making a killing on property. People complain about wages now that 10-15 years ago would have been ample to lead a comfortable life and buy/rent. Nowadays people are earning more due to minimum wage and some can't understand why people complain- after all we've never had it so good right?
Maybe but each generation has it's hardships and right now I would hate to be trying to get on the property ladder.
OP, I say go and enjoy your holiday, spend a little and save a little and maybe in time you will find your home.

keeperbear

mikael wrote: »

You saying housing in London was as expensive in the 1990's - now it is so expensive even three teachers grouping together would not be able to afford a house.

You have to admit that your current large amount of equity has been received through luck rather than judgement. And there is no gaurantee that there will be the same outcome in future, all we can make decisons on is the facts as they stand now.

You are wrong. Please read my post again. I could only jointly buy in 1996, and it would still only take 2 friends to jointly buy the exact same property in 2007.

So if you invest in the stock market that is skill then? Nothing lucky about my 200k equity mate. As they are not making any more land, I was convinced that buying rather than renting was a good thing to do in West London. Those who choose to rent lost out due to their poor choice

Anyway, who cares about the equity? I was primarily focusing on the savings from owning rather than renting.

keeperbear

mikael wrote: »

Assuming rents will increase slightly over the next 10 years (they have not increased much in the last ten) you would have been able to save about £300 per month for ten years. With compounded interest you could have saved about 50k without any risk of home prices changing.

If a 200k flat bought today with an interest only mortgage is worth 250k in ten years time then the renter would still not have lost out financially.

What rubbish! Rents have only increased "slightly" over 10 years have they? Not in my part of London mate. In 1996, a 1 bedroom flat was £650 a month, but in 2007 you can get the same flat for £850 a month. That is a 31% increase. In addition, your 50k saving from renting over ten years is dwarved by the thousands of equity homeowners have built up over the last 10 years.

If you are going to compare renting versus owning do so over a reasonable 25 years period please. How do you pay your rent in retirement?

Dithering_Dad

keeperbear wrote: »

Quite frankly, it does get on my nerves that certain FTBs (such as the OP) whinge on about not being able to afford a 3 bedroom house with a garden. Who the hell can? I never could, and still cannot.

I don't understand why you say you still cannot afford a 3 bed house with a garden. If you are mortgage free and saving a monthly amount of £750.00, are only 35 and have 200k of equity. Can you not just get a mortgage for another 100k (or whatever £750 per month repayment will get you) and use the 300k to move to a larger house?

I can understand why people want to be mortgage free, especially if they have found their dream house and intend staying for good, that's why I started the "Mortgage Free in Three" challenge on the MFW board. However, if you are intending using your house equity to fund your retirement and want a larger house with a garden then I don't understand why you wouldn't keep moving up the housing ladder?

Perhaps SloppySaver was right when he said in his "Don't pay your mortage off" thread, that being mortgage free stifles people (I think you picked up on this, your nickname rings a bell, apologies if you don't know what I'm talking about ) - I could imagine that once I have gotten rid of my mortgage it would be hard (psychologically) to get another one. For me this wouldn't be an issue as I have a large house in a lovely village so don't expect to move anytime soon and I have never intended using my equity for retirement. At your age though, and with your stated wish to own a larger house and to use it to fund your retirement, you'd have plenty of time to clear another mortgage and then have 300k of equity (probably more) to fund your retirement. If you just stay put in your one bed flat, then I'm not sure how it will fund your retirement - unless you intend moving from London to (say) Hull and getting an equivalent sized property and releasing the equity.

Alan_M_2

All these conversations assume that the house/flat is an investment vehicle and that the tenant is choosing to do nothing else with the money they earn/have.

There's no point taking a blinkered look at housing only if you aren't considering their other investments/business commitments.

Example:-

I live in Surrey in a two bed semi in a very nice area, my rent is £800 a month and my landlady isn't interested in selling and indicated she'd be happy for me to stay for 5 years if it suited me. I pay on the button every month and everybody is happy.

The house is worth (depending on which agent you believe) somewhere between £250,000 and £300,000. So in reality my rent is almost half the interest only payment and probably a third of a repayment mortgage.

That may change in a few years time, and if it does I'll re-access the position.

However what this doesn't take into account is the fact I own a business, and that my business generates sales far in excess of the value of the property I live in every year. I don't want capital tied up a property when it could be working for me elsewhere - it' would effectively be dead money, not to mention the fact being strapped up with a mortgage would inhibit my ability to borrow for the business when I need stock finance etc.

A house for me is like another piece of equipment, I don't own my fork lift trucks, I don't own any vehicles, I lease them all on long term contract hire (rent basically).

Maybe I look at it all differently because I run a business, but I won't bother to buy a house until I can do so in full without a mortgage and it doesn't effect my business, for the time being I'm happy renting and having my money working for me elsewhere.

wisbech_lad

Meh, I am late thirties and have never bought either. And probably I won’t until I retire. I move countries every few years due to my job, and renting suits me fine. I’ve probably got as much equity as most of those who bought property – about 700k.

Guess it is what you are used too. Growing up, my parents always rented (because they lived in countries where foreigners were not allowed to buy) so I never had the idea of “my room” in “our house”. They bought (for cash) when they retired.

Where ever I lay my hat – that’s my home!

Graham_Devon

Alan_M wrote: »

All these conversations assume that the house/flat is an investment vehicle and that the tenant is choosing to do nothing else with the money they earn/have.

There's no point taking a blinkered look at housing only if you aren't considering their other investments/business commitments.

Example:-

I live in Surrey in a two bed semi in a very nice area, my rent is £800 a month and my landlady isn't interested in selling and indicated she'd be happy for me to stay for 5 years if it suited me. I pay on the button every month and everybody is happy.

The house is worth (depending on which agent you believe) somewhere between £250,000 and £300,000. So in reality my rent is almost half the interest only payment and probably a third of a repayment mortgage.

That may change in a few years time, and if it does I'll re-access the position.

However what this doesn't take into account is the fact I own a business, and that my business generates sales far in excess of the value of the property I live in every year. I don't want capital tied up a property when it could be working for me elsewhere - it' would effectively be dead money, not to mention the fact being strapped up with a mortgage would inhibit my ability to borrow for the business when I need stock finance etc.

A house for me is like another piece of equipment, I don't own my fork lift trucks, I don't own any vehicles, I lease them all on long term contract hire (rent basically).

Maybe I look at it all differently because I run a business, but I won't bother to buy a house until I can do so in full without a mortgage and it doesn't effect my business, for the time being I'm happy renting and having my money working for me elsewhere.

So then your business and personal life is solely responsible on repeat business, or new business.

You have absolutely no assets. So if the crunch did come and you folded business, you would have diddly squat.

Might be working for you right now, but if you lost a contract, you would be scuppered (generally speaking, I don't know your business or your finances, I know business can't run without clients tho as I run my own).

That's obviously up to you and your business risk and plan, which is working, so it's fine. But the person you pay rent to, has the rent coming in, and that 300k equity. Theres no comparison.

wisbech_lad

So, basically, no-one need work in UK, we can all rent houses to each other - because that is safer and more lucrative...

Renting a house out is just as dependent on new & repeat business. Voids and defaults hurt

Dithering_Dad

Graham_Devon wrote: »

So then your business and personal life is solely responsible on repeat business, or new business.

You have absolutely no assets. So if the crunch did come and you folded business, you would have diddly squat.

Wow! I've seen some sweeping generalisations in my time, but this has to be the biggest!! From one post, you deduced that the poster is living from one contract to the next and would be wiped out if he hit a barren spell! No thought to any stocks, shares, savings or other investments he may have. You also deduce (probably to fit your argument better) that the house he is renting is fully paid off and so the landlord has 300k equity. Perhaps his landlord is a BTL investor is barely covering the mortgage with the rental?

Most interestingly though, is that you think he will be more "secure" financially if he had, say a £200k mortgage debt around his neck?? I'd say he was in a better financial position to ride out a financial storm than a competitor who has large mortgage repayments to meet (plus other home ownership costs) and who's money is locked away in his house. Finally, there is no gurantee that if the business goes under that it wouldn't take the house and any other assets with it.

Personally speaking, I also have my own business and I have to say that I'd find it a lot less stressful if I didn't have the worry of a mortgage hanging over my head. My missus always says "well, if the worst comes to the worst, we could always buy a cheaper house". The trouble with this, is that we then have to pay estate agent and solicitor fees, have to sell the house quickly and so would take a huge hit financially. Maybe we'd be trying to sell in a housing slump and not be able to offload it, and end up losing it? Then if the business turns around and we want to get a better house again, this would result in yet more cost! Compare this to just temporarily moving to a cheaper rental property until the business picks up.

Doozergirl

Alan_M wrote: »

However what this doesn't take into account is the fact I own a business, and that my business generates sales far in excess of the value of the property I live in every year. I don't want capital tied up a property when it could be working for me elsewhere - it' would effectively be dead money, not to mention the fact being strapped up with a mortgage would inhibit my ability to borrow for the business when I need stock finance etc.

Maybe I look at it all differently because I run a business, but I won't bother to buy a house until I can do so in full without a mortgage and it doesn't effect my business, for the time being I'm happy renting and having my money working for me elsewhere.

This is me! It makes perfect sense to me. I will 'suffer' in rented accommodation if our money is working as hard as it can and allow us to buy outright sooner than working for someone else will. HPI won't help me buy a decent sized home for my family, so we have to beat it.

The fact that our money is put into other houses might seem a little odd though.

Obviously not to Graham_Devon though, because I still own a house. Does that make my business more secure