My obsession with not buying in UK - Prove me wrong

RobHT

Sistergold said:

RobHT said:

Sistergold said:

Just as a by the way real life example. In the last recession(Northern Rock 2008) straightaway my husband lost his job. Luckily our mortgage was such that you could withdraw with the click of the button any money paid towards capital. So if the original loan was £230k and balance was now £190k you could withdraw up to £40k to bring it back to original loan of £230k. Anyway as I was only one working from time to time if I was short of money to pay mortgage for instance I would withdraw necessary amounts of money from the mortgage to pay the mortgage or buy food or meet other direct debit. It was a tough 4yrs for us as a family(4 children) as was on one income. Not once did I need to talk to the bank about my mortgage and no we did not lose the house and no I did not need to miss payments despite not enough income. I could withdraw modest amounts to pay bills when I got desperate. 

There are so many different mortgage products to suit different people but I am not sure what products or arrangements there are in rental? 

Most homeowners and renters are sensible adults who know that you need to pay to stay. This again is not to say there will be no repossessions or evictions. Also repossession and evictions have been happening even without recession. Hard times do just hit sometimes I guess with what’s going on now hard times will be widespread. 

Interesting, but what you mentioned is unknown to me.
Certainly there are many mortgage products, but you know, I'm not lawyer or a professional real estate lawyer that can check all these things, plus in my country for example this would be seen as a attempt to trick the bank, with bad consequences because the bank still owns the house and you can't trick them .

In any case, no bank or financial institution in UK told me such thing before, so yours is one of a kind...
Thanks for the tip though, I'll try to find such mortgage, I'm pretty sure is much more expensive or it has some other weird downside.

I was never under the illusion that I was tricking them. Whenever I made withdrawals from the mortgage my repayment went up as it had to recalculate so that I can pay up the mortgage at the end of the agreed term. When times were good I also overpayed on the mortgage. A mortgage truly gives me financial freedom as I can reduce or increase my roof of my head payments as finances permit by increasing term, reducing term, overpaying, payment holidays, withdraw equity etc. all within reason and common sense. 

BUT! You are probably right and have it all worked out. 

Once you have the winning formula stick with it! 👋🏾

I'll look into this easy option to pull out the money, but I think it's not easy to find such mortgage, it must be expensive, or one of a kind.

Plus, you must be paying some fee every time you do it.
Just considering that re-mortgaging costs 300-500 punds... https://www.moneysavingexpert.com/mortgages/remortgage-fees/

How many times you do it? I guess quite a few times during your mortgage...
Plus, look at all the fees there.

The bank flexibility is not free, they need to make money over you, so they make sure to charge you for every service you get, or flexibility in this case.

RobHT

Elliott.T123 said:

RobHT said:

Elliott.T123 said:

I think we can all agree from a financial position only buying beats renting over a long period of time for 99% of people.
Yes there are situations where it doesn't and if you are a very conservative individual who is scared of any form of risk then buying a house is not for you.

From this thread I think we can make a fair assumption that RobHT is very risk averse, he has mentioned he has a fairly high income and high level of savings but is still worried about the risk of losing his house if he were to buy it. This leads me to assume either he is in a career that has a very high turn over rate, is unwilling to take on lower paid work if he were to lose his job or is risk averse.

So rather than trying to convince him that his obsession with not buying is incorrect I think we should be saying that in 99% of situations people should buy (if only looking at it financially) but in his particular situation no he should not buy as emotionally it is the wrong choice for him personally.

You got an important point, high pay jobs have high turnover.

I explained above what you would lose if you need to sell for emergency, all your customizations and improvements would be gone.
If you had to sell in the first few years, you are done, it's the majority of your equity.

Being a recruitment consultant with 15+ years focusing on jobs paying £80-200k (I do the occasional role paying above that, my record was a base salary of £956,000 with bonuses taking the role over £2M) I can assure you not all high paying jobs have a high turn over at all. I very rarely work with a candidate who has a career gap on their CV of more than 1-2 months maximum and as a generalisation most people I work with have been in their current roles for at least 4-5 years. Of course there are the occasional individual who has been out of work longer but that is the exception to the rule.

I do agree with you, some people in some situations will lose out but there are so many ifs and buts on that...

1. It will only happen IF they have stretched themselves on affordability, if they bought a house at the low end of their budget they have lots of flexibility
2. It will only happen IF they are out of work for an extended period of time, it is also a fair assumption to make that anyone capable of getting a "high paid job" is capable of finding a new one in a reasonable timeframe even if they need to take a bit of a pay cut
3. It will only happen IF they refuse to get a lower paid job
4. It will only happen IF they have only recently bought the house and have minimal equity in it
5. It will only happen IF house prices in the area have either fallen or only risen a small amount

Also I agree divorce is a factor that needs to be considered and can change circumstances significantly very fast but as this thread is about you and you have said your single I wont go down that rabbit hole today.

I am sure there are plenty of other ifs and buts I could find but I think you have to take a step back and say to yourself, do I believe that all of these things are going to happen to me? if you think the answer is no then financially you will be better off buying.

Amen to your post, you understood my situation .
I believe the ... will go down, so I've taken a conservative approach.

Plus, look my previous post about the owner costs.

RobHT

lookstraightahead said:

I really don't understand this paying the landlord's mortgage issue. When I first rented out my flat (years ago) all of the income went on interest as rates were high, and when I sold the flat I made a loss.
im not saying that's the situation now as rates are low and house prices have gone up, but being a landlord is a job so effectively you're paying for a service.
a good landlord spends hours a week on a property which could be spent on other work. 

There are millions of people in jobs where they are effectively making lots of money for their employer and just taking a small cut of it.

do we not all furnish the pockets of others for our lifestyle? It just depends what we want to spend it on.

Amen to you as well .

See, there is a trend, who has a low paid salary (that is being used by the employer or simply in low paid sectors), counts on buying the house, with the true believe that they own it straight away.

High pay salaries give you the freedom to make more reasonable choices at the right moment, plus, this usually translates in better financial education from the person that makes that uncommon choice.
(which is different of me not knowing every single financial trick on the mortgage side)

This comment is without the meaning of offending, I want to be clear on this, but I needed to clarify why this generally happen.
I was also thinking in the other way years ago, but now I completely changed.

RobHT

Emmia said:

RobHT said:

MobileSaver said:

RobHT said:

The landlord loves me, I always pay in time,

Of course your landlord loves you, every month you're paying his mortgage for him! LOL

.......
In 2y I'm here:
1. The owner had to fully replace the washing machine (500+ pounds)

2. Fully rebuild part of the things "consumed" by the previous guys, for example brand new carpets, print here and there and so on, probably 2k-5k, it's difficult to estimate, but this happened before I joined.

3. The garage door doesn't have much life time left, just another thing.

4. I also called the agency for a check to the kitchen, the call was paid by the owner but I basically need to live with the little problem that it has, not the end of the world.

5. The kitchen fan is quite noisy, I wouldn't be surprised to see it broken soon.

6. The owner paid also the repair of a water leak from the roof, that was expensive, it required many calls, probably 500 pounds...

7. The owner paid every year the boiler checks, I'm not sure how much it costs, but just saying.

8. Soon they water sink handler should be replaced in the kitchen, again, low quality stuff that need to be replaced.

9. I had a water pressure issue, the agency fixed it, I could have done by myself but the system was not clear at all here, so it required a call and some additional check up from a plumber. I could probably say that it was worth 100 pounds.

10. The boiler had very low pressure recently, I was quite scared, so I called the agency, easy fix and no problem detected, let's say 100 pounds.

All the above was handled by the agency in a matter of a few days.

In the meantime, how much have you paid in rent in that period? How much has the property appreciated in value?

Honestly I think you're scraping the barrel a bit to find things to justify your position - if you're happier renting then just crack on with it.

I paid 24km the house probably appreciated only 5% due to covid, Brexit, and now the war in Europe, it will crack down soon based on  my analysis.

The mortgage would have been 1400 pounds, or eventually 1200 for 40y but not everyone gives you a mortgage for 40y.
1400*24=33600 

All right, this would be my equity plus my deposit, let's say 18k (mortgage of 95% LTV)
I would have spent 33600+18000= 51600

These money, instead of being on my equity, have been paid for a service (renting). As you like to say, they are wasted, but wait for it.

In this occasion, I didn't spend 10k to make the house as I decently wanted, so let's say that I didn't pay 61600 in 2y here.
Plus house insurance of 700 pounds, so 62300.
In all this, mortgage fee, lawyer, survey, boh something like 7k? I just put down this number randomly, it could be more...
So it's 69300 pounds...


Now, the deposit of 18k, plus other side expenses of 7.7k (purchase fees) + 2k (fixes along the way) + 10k (ornaments and little refurbishment), it amounts at 37.7k.
These 37k are on an investment portfolio that will make much more than any house appreciation growth in any country of the world, in the last, boh, 120y ?

Don't forget to consider that the 30% goes to the bank in 30y, in 40y probably is gonna be 35%.

I didn't find the gold, but I feel that I'm in a better financial situation, with complete freedom and possibility to easily relocate somewhere in short notice btw, which will lower my moving costs due to rent loss of the previous house.

Talking about gold...
1. I'll soon manage my pension fund, lump sum and go to sleep on it.

2. Life strategy funds (like Vanguard) as a collateral for my remotely possible mistakes, sleep on it.

3. Cryptos? Sleep on it.

4. Some Penny stock that ended up in Nasdaq? Sleep on it.

5. Insurances paid for every uncommon reason, almost done, I'm missing a good PHI.

On top of this, in the last 5y all my money ended up in investments, so it's not only about the above, I was just mentioning what I did with the money that I didn't put in the equity of the house, plus the other initial expenses, maintenances etc.

Only with what I mentioned about this specific topic, I'd be able to buy one day almost all in cash, thanks to my pension too and the 25% lump sum benefit, which probably I won't take because I could easily rent forever as my grandmother did .
Of course, I'm wealthy so I can reason in this way, but I was also smart, it's not only luck, luck it's probably 1% of my life, really...

Over to you.

Sistergold

RobHT said:

Sistergold said:

RobHT said:

Sistergold said:

Just as a by the way real life example. In the last recession(Northern Rock 2008) straightaway my husband lost his job. Luckily our mortgage was such that you could withdraw with the click of the button any money paid towards capital. So if the original loan was £230k and balance was now £190k you could withdraw up to £40k to bring it back to original loan of £230k. Anyway as I was only one working from time to time if I was short of money to pay mortgage for instance I would withdraw necessary amounts of money from the mortgage to pay the mortgage or buy food or meet other direct debit. It was a tough 4yrs for us as a family(4 children) as was on one income. Not once did I need to talk to the bank about my mortgage and no we did not lose the house and no I did not need to miss payments despite not enough income. I could withdraw modest amounts to pay bills when I got desperate. 

There are so many different mortgage products to suit different people but I am not sure what products or arrangements there are in rental? 

Most homeowners and renters are sensible adults who know that you need to pay to stay. This again is not to say there will be no repossessions or evictions. Also repossession and evictions have been happening even without recession. Hard times do just hit sometimes I guess with what’s going on now hard times will be widespread. 

Interesting, but what you mentioned is unknown to me.
Certainly there are many mortgage products, but you know, I'm not lawyer or a professional real estate lawyer that can check all these things, plus in my country for example this would be seen as a attempt to trick the bank, with bad consequences because the bank still owns the house and you can't trick them .

In any case, no bank or financial institution in UK told me such thing before, so yours is one of a kind...
Thanks for the tip though, I'll try to find such mortgage, I'm pretty sure is much more expensive or it has some other weird downside.

I was never under the illusion that I was tricking them. Whenever I made withdrawals from the mortgage my repayment went up as it had to recalculate so that I can pay up the mortgage at the end of the agreed term. When times were good I also overpayed on the mortgage. A mortgage truly gives me financial freedom as I can reduce or increase my roof of my head payments as finances permit by increasing term, reducing term, overpaying, payment holidays, withdraw equity etc. all within reason and common sense. 

BUT! You are probably right and have it all worked out. 

Once you have the winning formula stick with it! 👋🏾

I'll look into this easy option to pull out the money, but I think it's not easy to find such mortgage, it must be expensive, or one of a kind.

Plus, you must be paying some fee every time you do it.
Just considering that re-mortgaging costs 300-500 punds... https://www.moneysavingexpert.com/mortgages/remortgage-fees/

How many times you do it? I guess quite a few times during your mortgage...
Plus, look at all the fees there.

The bank flexibility is not free, they need to make money over you, so they make sure to charge you for every service you get, or flexibility in this case.

BIG YES. The bank needs to make money and they do make it out of me. I don’t expect them to lend me money for nothing. Yes I pay fees am happy to pay for the flexibility, I would also be paying for renting. I just accept it’s a better gamble to be in contract with the bank as I like the security of tenure. To be honest when and if you can afford a mortgage you have accepted the expense and honestly speaking even if I kept all the money I will not take it to the grave and so don’t mind the expense. 

In all this yes the gamble might not pay but then I will still need somewhere to live so in the end even if I don’t gain from buying I would have gained in staying as long as I want. I don’t even mind making a loss. 

Slithery

RobHT said:

...counts on buying the house, with the true believe that they own it straight away.

They do. Even if you have a mortgage the bank doesn't own any of the property it belongs 100% to the purchaser.

RobHT

Slithery said:

RobHT said:

...counts on buying the house, with the true believe that they own it straight away.

They do. Even if you have a mortgage the bank doesn't own any of the property it belongs 100% to the purchaser.

LOL, are we doing some lexical challenge here?  

Gycraig

The stock market/pension comparison is frankly rubbish due to inflation/leverage. 

30k gets you a 300k house, and mortgage or not you get to keep any profit, your calculations are that your original investment will go up 12x it’s value in 35 years. The house would need to stay the same price 35 years to nearly match it, I’d it could easily triple or quadruple in 35 years.

let’s say it triples and goes to 900k landlords like to average at least 5percent yield, so 4k a month. Soon puts that 90k in interest into perspective. 

I’m not even slightly well off either and I have 6 months expenses saved in case of emergency. 

If it didn’t make more sense financially over a long term to own property people wouldn’t rent them out. 

Slithery

RobHT said:

Slithery said:

RobHT said:

...counts on buying the house, with the true believe that they own it straight away.

They do. Even if you have a mortgage the bank doesn't own any of the property it belongs 100% to the purchaser.

LOL, are we doing some lexical challenge here?  

Not at all, it's just that from all of your previous posts you seem to have no understanding of how mortgages actually work.

RobHT

Gycraig said:

The stock market/pension comparison is frankly rubbish due to inflation/leverage. 

30k gets you a 300k house, and mortgage or not you get to keep any profit, your calculations are that your original investment will go up 12x it’s value in 35 years. The house would need to stay the same price 35 years to nearly match it, I’d it could easily triple or quadruple in 35 years.

let’s say it triples and goes to 900k landlords like to average at least 5percent yield, so 4k a month. Soon puts that 90k in interest into perspective. 

I’m not even slightly well off either and I have 6 months expenses saved in case of emergency. 

If it didn’t make more sense financially over a long term to own property people wouldn’t rent them out. 

Thanks, but I'm not exactly sure where you stand though, for the simple reason that I already mentioned, in the initial post and following messages, that buying over renting is convenient over time and if everything goes well in life, renting always makes you pay more, but what I pay more is an insurance to certain things in life, the way I see it.
Then someone mentioned how these beautiful mortgages plans to cash out wherever you need or want to, as well as sellign the house whenever you want, to me it seems Disney Land and I refrain from such things, but I'll evaluate.

The economy moves, and if it doesn't move up substantially, neither the real estate market does it, as well as salaries, unless if someone wants to "make dirty profit" with idiots that buy for crazy prices, like now as 20% up in only 2y.

If you compare the house prices in 1950 to today, you get shocked but it's about 72y and after the WW II, where the previous one was just 20y before, plus many conflicts in the between.
Any comparison need to be meaningful, and I don't have a way to predict the future, I only know the past, so I can't look back and ahead and be sure about my considerations because they influence each other and one of those is not in my control/knowledge, I can only account risks.

It's possible that these people that love to buy will lose all their equity due to the house price drop in case of a new WW, which honestly is due, if their lifetime will be the next 30y, which is most luckily the case, they will never see a gain on their investment, just their children probably, they will just own that place, paying most probably more than me, and I keep renting as usual, nothing changes, I may just pay less.
Just a quick note about the price increase, the houses mainly increased due to the economy evolution and growth, it wasn't just about the war that has put the prices down and then they skyrocketed.
So, it's the economy that moves and rules mainly, the economy will move with the same criterias and my salary will be enough to expense my life.

I don't know the future, so I keep myself dynamic, this is how I based my life at the moment.