Interest rate rise leads to house price drop?

Dithering_Dad

If I were you and the free accomodation was Ok and I was single or at least without kids, I'd stay in the free accomodation forever while someone else rented my house and paid of the mortgage.

Saying that though, if I were you I'd high-tail it out of London and live somewhere civilised

beingjdc

I dream of living rent-free thanks to Camelot!

I'm not sure I understand, is your current free accommodation not very nice? I don't see why you would give the bank £11,000 a year if you don't need to.

I generally subscribe to the school that in the long-term house price interest payments will converge with rents. So the question is what £925 a month would get you as a rental (no stamp duty, EA fees, or repair costs).

http://www.findaproperty.com/displayprop.aspx?edid=00&salerent=1&pid=519623&agentid=02255

Pobby

For me it`s a no brainer.If you have indefinite free accomadation then I would take advantage of that position.Couple this with the fact you are taking out an interest only mortgage(renting from the bank) I cannot see why you are even thinking about it.

I can only guess that you are looking for capital growth.The last thing I would do now is invest in property.

lynzpower

I know a lot about Camelot, and yes if itr werent for the no pets rule Id be doing it myself.

NOt only is it going to cost you 800 quid- but you have to bank on having a lodger to pay it? have I got that righT?

seriously mate, I have made this mistake. I *bought* a place I could only properly afford with a lodger. Without the lodger, times were VERY HARD ( which Is how I ended up here put it that way!)

If you have to live with someone, what happens when they move on? Can you financially carry it.

Personally, I think you should bank the SUM TOTAL of what the flat+bills will cost you every single month without lodger. if you can comfortably save 1k a month and still have a life, then great go for it. If things are tight and you end up on beans on toast daily- you cant afford it.

I wish someone had given me that advice before I bought, is all i can say.

epz_2

let me get this right you are rent free and are going to rent from the bank(thats what interest only) at £800 a month and hope that the capital growth keeps up with previous trends.

think about it like this, you could bank the £800 a month and the savings would be equivelent of 5.3% growth, thats not including the 6% plus interest you would get on your savings.

now with interest rates going up very fast and a lot of places already dropping in price its likely not a good idea to mortgage yourself to the hilt in the hopes the market keeps growing cause the bank of england will keep raising interest rates till it stops.

my advice is stash the cash, after a crash its harder to get credit so people with bigger deposits get significantly better deals.

Generali

FWIW, I'd keep most of the money in the bank and have a small punt on some defensive stocks (cigarette companies and highish yield utilities). Forest Hill is a lot nicer than some of the surrounding area but who wants to pay to live in SE London?

margaretclare

Have a read of this:

http://news.independent.co.uk/business/comment/article2744890.ece

Margaret

red74

I seem to remeber reading somewhere that if you believe that house prices are going to grow by more than 2% then there is no point in saving to increase the size of your deposit you should just buy now. Now how much house prices will continue to rise by is a much debated question .

Am I right in assuming your current home is attached to your employment, so if you change jobs I assume you loose the roof over your head. It depends on how much you like your job/how secure it is, but personally if I could afford to buy then I would prefer the security of knowing my home is my own.

keeperbear

mattcook1978 wrote: »

The alternative for me is to continue living rent and bill-free as a live-in security guard and put the £800+ I would be spending on a mortgage into a savings account every month.

Seems a very easy choice to make, but will you instantly lose this perk should you lose the job? Even if you do, it seems better to wait.

wolvoman

Generali wrote: »

FWIW, I'd keep most of the money in the bank and have a small punt on some defensive stocks (cigarette companies and highish yield utilities). Forest Hill is a lot nicer than some of the surrounding area but who wants to pay to live in SE London?

And what exactly is wrong with SE London?!