House prices to rise 25% in next five years

padington

Landofwood wrote: »

Not exactly big gains. You'd be better to living with Mummy and putting your money in savings.

Sleeping under a Star Wars duvet in a single bed might not be the look your future wife is looking for though.

chucknorris

Landofwood wrote: »

Not exactly big gains. You'd be better to living with Mummy and putting your money in savings.

Correct! 4.6% per annum plus rental profit isn't big, it is bloody massive! I'd settle for over 1% above inflation, especially with rental profit on top.

Landofwood

chucknorris wrote: »

Correct! 4.6% per annum plus rental profit isn't big, it is bloody massive! I'd settle for over 1% above inflation, especially with rental profit on top.

Sure, if you're a cash buyer. Most people have a mortgage , and pay a shed load of interest.

My mortgage still has over 500k on it, and I pay £1500 per month in interest alone.

chucknorris

Landofwood wrote: »

Sure, if you're a cash buyer. Most people have a mortgage , and pay a shed load of interest.

My mortgage still has over 500k on it, and I pay £1500 per month in interest alone.

We have about £675,000 of mortgage. You are only paying about (you said over £500k) 3.6% on your mortgage, but your property would be going up 4.6%, and that 4.6% increase is on the full value of your house (not just the mortgaged part). So if you had an 80% mortgage (of the current value) that means your house is worth about £625,000 and would be increasing at an annual rate of £28,750 compared to an annual mortgage cost of only £18,000.

EDIT: As time passes and your equity rises (and mortgage % decreases) it just gets better and better.

[Deleted User]

It's pretty handy for reducing the percentage of the property you pay the mortgage on, and putting you in better LTV brackets for re-mortgaging.

martinsurrey

Landofwood wrote: »

Not exactly big gains. You'd be better to living with Mummy and putting your money in savings.

Buy a £200k house today, with a 25% deposit, so £50k investment.

Rent it out, and it covers the mortgage (probably more but lets be prudent)

5 years time, sell for £250k, pay off the £150k mortgage, 100% return on investment over 5 years.

house buying with a mortgage is a leveraged investment.

lisyloo

5 years time, sell for £250k

Guaranteed, no risk.
Where do I sign?

caronoel

If you want guaranteed no risk, stick to this: http://www.nsandi.com/our-products

The problem is that your £50k will make a max of 10% over the five year period with NS&I, compared to 100% with a decent BTL.

This is the difference between winners who take calculated risks, and losers, who sit on the sidelines focussing on the worst possible scenario.

lisyloo

This is the difference between winners who take calculated risks, and losers, who sit on the sidelines focussing on the worst possible scenario.

I agree with you that risks have to be calculated and that includes taking account of worse care scenarios for example it's quite normal to consider death, accident, redundancy etc. that's simply taking right and proper care of your family.
I'm sure you've done that in your business plans whether it's voids, bad tenants, repairs or HMRC investigation you've factored in.

I don't agree with you that those who take risks always win and those who don't take risks always lose. There are plenty of people who've taken risks in business and lost.

To spell it out - my point was that 25% is not guaranteed and plenty of people are talking about it as though it is.
FWIW - I do think property will rise over the next 5 years, but that doesn't stop me considering and factoring in the risks of that prediction being wrong.

caronoel

lisyloo wrote: »

... my point was that 25% is not guaranteed and plenty of people are talking about it as though it is...

Nothing in life is guaranteed, and the only people talking with certainty about house prices and interest rates on here are primarily the same doomsayers that have been peddling the same message for almost a decade now that we are all facing impending financial doom



It must be very frustrating for them sitting on their cash deposits, watching while others all around them take advantage of low long term fixed interest rates and appreciating house prices.