BOE MPC raises interest rates by 0.25% to 0.50%

Herzlos

HPC_Ghuol_Hunter wrote: »

I'd wager that the vast majority of those are renters. Homeowners at least have equity in their property portfolio. Renters have very little assets to their names.

It's very hard to get equity out of property without selling it. Even harder to do when you live in the only property in your folio.

So it's possible to be asset-rich and cash-poor.

Crashy_Time

chucknorris wrote: »

I reckon that you are smart enough to be putting some of that £1,500/month into ISA's and pensions, or it might be that £1,500 is available after investing in them?

Someone`s up early

Crashy_Time

chucknorris wrote: »

I know a couple that are struggling with cash flow, but they have approx £750k equity, they stretched themselves at the right time (about 18 years ago), I know because at that time I lent them part of their deposit.

Shouldn`t they have been building liquid savings/investments 18 years ago, instead of relying on property to cover their expenses?

economic

Crashy_Time wrote: »

Shouldn`t they have been building liquid savings/investments 18 years ago, instead of relying on property to cover their expenses?

its called taking risk crashy. ever heard of it?

Crashy_Time

economic wrote: »

its called taking risk crashy. ever heard of it?

It is just called poor financial planning, the equity in the house (if they can find a buyer) should be a bonus, not something they are relying on.

westernpromise

Crashy_Time wrote: »

Shouldn`t they have been building liquid savings/investments 18 years ago, instead of relying on property to cover their expenses?

No, because funding a property in which to live is the single largest expense most people ever face and the one around which it makes sense to plan. A mortgage is almost always a smaller commitment than a lifetime of rent.

If they had ignored this, and tried to accumulate cash, they would now have a small cash pile and would still face the cost of housing themselves for the rest of their lives. Sound familiar?

chucknorris

Crashy_Time wrote: »

Shouldn`t they have been building liquid savings/investments 18 years ago, instead of relying on property to cover their expenses?

They bought a house to live in and eventually bring up children. The reason that they don't have savings/investments is that they are big spenders, not something that I condone, but they live their live the way that they want to. Personally I think that when you are younger you should financially prepare for your later life/retirement by investing, they don't think that way. So they would have spent all that they had available whether paying a mortgage or rent, buying means that at least they have decent equity to tap into one day.