Will there really be a crash?

andrewf75

Crashy_Time wrote: »

Renting cheaply and building a liquid diversified portfolio of equities, bonds and cash etc. will mean you have plenty at the end and in between as well. The key thing is to have multiple years living expenses that cover your lifestyle expenses, whether you pay mortgage, rent or are mortgage free. Borrowing (especially somewhere like London) to buy at the wrong time can be very very costly, as many are now probably finding out, as they will be in negative equity plus have little chance of selling to move etc. IME people who talk about "getting on the ladder" and "getting into BTL" etc. tend to be pretty economically clueless, when the market turns (it already has) they will be rabbits in the headlights most of them.


Unfortunately (for the "get on the ladder" brigade) life is about more than living in fear of not being able to supply shelter for yourself in old age (lets face it, the state is going to do it anyway if people really need it) and many people don`t make it to old age anyway. The key is to understand the power of living within your means, the power of the markets, the power of a regular savings habit, and the power of renting cheaply and ignoring the brainwashing that says debt is good (because you will end up homeless when you are older otherwise :rotfl:) I might buy a house when there is value to be had, and it will be cash, no debt, and if value doesn`t appear I will keep renting and saving and investing

Your circumstances and outlook seem quite unique, maybe it works for you but its not really a strategy for the majority because its almost impossible for anyone on an average salary to save while renting, so people end up with no house and no savings. I know lots of people who rent and none of them have any savings, thats why they're renting! If you can save vast amounts to make up for not owning a property as security in later life then that’s fine, but your decision is about ideology not a financial one.

ukcarper

Where I am in south east the cheapest 2 bed house to buy is £210k a 90% mortgage over 25 years at 4% would cost £1008 a month. Cheapest rental 2 bed house £995 how much extra could you save in a rental property and if rents increase with inflation 2% a year after 10 years rent would be £1219.

PokerPlayer111

ukcarper wrote: »

Where I am in south east the cheapest 2 bed house to buy is £210k a 90% mortgage over 25 years at 4% would cost £1008 a month. Cheapest rental 2 bed house £995 how much extra could you save in a rental property and if rents increase with inflation 2% a year after 10 years rent would be £1219.

Maybe.... but if you are putting everything you got into a house deposit it can leave you short if another opportunity presents itself. Consider your age, how you make a living, your commitments and what not buying will mean to you.


For most people unless you need to move about and be flexible ideally you want to buy a house and not leave yourself broke IMO.



Side note: Not sure about getting a mortgage as i did not do that.

Herzlos

Most people don't move around that much, and transport links aren't bad. So picking an adequate house in a sensible area should cover most people.

Crashy_Time wrote: »

I might buy a house when there is value to be had, and it will be cash, no debt, and if value doesn`t appear I will keep renting and saving and investing

So are you making enough from your capital to compensate for the fact that after 20-30 years of mortgage the payments stop? Assuming you "get on the ladder" by 30, you'll be mortgage free by about 60 and still have another 20-30 years of free rent to go. That's a pretty major yield to offset what could be £300k+ in excess rent.

ukcarper

PokerPlayer111 wrote: »

Maybe.... but if you are putting everything you got into a house deposit it can leave you short if another opportunity presents itself. Consider your age, how you make a living, your commitments and what not buying will mean to you.


For most people unless you need to move about and be flexible ideally you want to buy a house and not leave yourself broke IMO.



Side note: Not sure about getting a mortgage as i did not do that.

Buying a house doesn't suite everybody you might need the flexibility to move on a regular basis but if you can buy in the course of your lifetime you will spend considerably less on housing costs.

ukcarper

Herzlos wrote: »

Most people don't move around that much, and transport links aren't bad. So picking an adequate house in a sensible area should cover most people.






So are you making enough from your capital to compensate for the fact that after 20-30 years of mortgage the payments stop? Assuming you "get on the ladder" by 30, you'll be mortgage free by about 60 and still have another 20-30 years of free rent to go. That's a pretty major yield to offset what could be £300k+ in excess rent.

I've been mortgage free for 9 years in that time I have saved over £100k in rent.

PokerPlayer111

ukcarper wrote: »

I've been mortgage free for 9 years in that time I have saved over £100k in rent.

Yeah probably spent like 100k on rent before buying. It turned out better that way for me though.

lisyloo

Yeah probably spent like 100k on rent before buying. It turned out better that way for me though.

Can you explain why?
Market timing or personal circumstances?
Without any other info sounds like this wouldn't be true for most people.


For most unsophisticated people it's going to make sense to buy when it suits their personal circumstances e.g. new relationship or job as opposed to trying to time the market (which you work out well but might also work out badly).

PokerPlayer111

lisyloo wrote: »

Can you explain why?
Market timing or personal circumstances?
Without any other info sounds like this wouldn't be true for most people.


For most unsophisticated people it's going to make sense to buy when it suits their personal circumstances e.g. new relationship or job as opposed to trying to time the market (which you work out well but might also work out badly).

Some reasons why we did not buy at the time years ago when we could have were:



- Did not want a mortgage. Always got a bad feeling about it each bank appointment or financial advisor appointment.
- Did not want to put 20k 25k deposit down (entire net worth at the time) and be broke.
- Wanted to be flexible area wise but also property wise.
- If you are buying lower end of the market its a bigger risk to end up with crap situation. Thats pretty important right?



If not luck then some of the reasons why this strategy worked out for us:



- Being self employed - so generally always looking for opportunity all the time. (Mrs had a job though)
- Having little commitments
- Age, better physical health, better energy.
- Fear of things not working out while you rent and dont buy is a strong motivator.
- Some portion of luck i guess

Jack_Johnson_the_acorn

PokerPlayer111 wrote: »

Some reasons why we did not buy at the time years ago when we could have were:



- Did not want a mortgage. Always got a bad feeling about it each bank appointment or financial advisor appointment.
- Did not want to put 20k 25k deposit down (entire net worth at the time) and be broke.
- Wanted to be flexible area wise but also property wise.
- If you are buying lower end of the market its a bigger risk to end up with crap situation. Thats pretty important right?



If not luck then some of the reasons why this strategy worked out for us:



- Being self employed - so generally always looking for opportunity all the time. (Mrs had a job though)
Having little commitments
- Age, better physical health, better energy.
- Fear of things not working out while you rent and dont buy is a strong motivator.
- Some portion of luck i guess.

Anything in red isn't a logical reason.