£200k inheritance, property ladder or not?

jimbog

ReadySteadyPop said:

Herzlos said:

ReadySteadyPop said:

Herzlos said:

ReadySteadyPop said:

Why would a landlord want tenants to "move annually as contracts expire"? That doesn`t make any sense.

I said it's no longer a thing. Back when I last rented, we moved every year because there was no shortage of renters and they could sting us on a deposit every time. I think that was around the time you sold your flat to start renting to try and cash in on a crash that was never going to happen.

Of course since then I've gained about £80k in equity (after weathering 2 recessions where rents didn't go down) instead of paying £200k towards someone elses mortgage without anything to show for it except a happy landlord.

Have you been in the same bedsit for the whole time? That's kind of impressive, but I don't think that's the norm.

Anyway, short term a mortgage may be a bad deal if you buy at the wrong time. Like when I bought about a week before the 2007 crash and was in negative equity almost immediately. But over the long term it's really hard to lose out, like the aforementioned £80k in equity and becoming rent free when I hit 65.

I was a bit upset about having bought come 2008 but now I'm happy that I did. I dread to think what the rent would be on my current house, but the mortgage on my last house was almost certainly less than your rent.

You are assuming that the future will be like the past, classic investing mistake, overpaying for a house now could potentially mean big losses in future depending on interest rates/inflation, jobs etc. I am not saying don`t buy a house, I am just saying don`t automatically assume that any money that comes your way should be immediately thrown into property because it is a one way bet (as most of the advice here seems to assume?) the 200k should be treated separately as money that didn`t exist before, wasn`t part of your planning on whether to rent or borrow a house, and has the potential to create a very strong cash cushion that makes you financially independent, again, once the money is "in a house" that financial independence is gone. Being "rent free" maybe 30 years in the future if you manage to pay your mortgaged debt off isn`t being financially independent, having 200k saved or invested and growing NOW is.

I think it's a safe assumption that the future will be like the past. Houses are only going to get more expensive. Rent is always going to be due unless a mortgage is paid off.

If you were talking about a 2nd house as an investment I'd agree with you that it's a bad idea, but since you need to live somewhere, buying a 1st house is the best investment anyone can make.

"Being "rent free" maybe 30 years in the future if you manage to pay your mortgaged debt off isn`t being financially independent, having 200k saved or invested and growing NOW is."

Why is rent free in quotes? Do you not agree that once a mortgage is paid off, the payments drop to £0? How is that not financially independent?

Having £200k in a savings account is great, but you'd need to be hitting something like 10% APR to cover the rent payments, well beyond retirement, whilst still having the downsides of renting. It's madness.

Overpaying on a house is no big deal in the long run at all. In a very specific set of circumstances (overpaying and needing to sell whilst in negative equity) it can be pretty bad, but in general you're fine. I overpaid on both of my houses, and it's not caused me any real difficulty.

"I think it's a safe assumption that the future will be like the past"

That is why I would be wary of your advice and keep the 200k in a safe liquid investment, not property, by it`s nature the future is unpredictable, the best investors/money managers always acknowledge that (even if only to themselves)

I wouldn't be so confident on just how liquid investments would be in times of crisis. As you experienced yourself at the start of Covid, investment accounts can be locked at any time to stop a run

newsgroupmonkey_

Just going back to it, there's a poster in here giving lots of advice about not investing in property.

Shall we go back to their original account? (Which they're about 4 or 5 in, having previously been banned a number of times)

In 2003, they had a property and apparently predicted a house price crash, therefore they decide to sell their property and move into a bedsit.
In 2024, they're still telling people that property is a terrible investment and that it's a horrible place to be.

In 2019, I found myself finally in a place (having been divorced and lost everything) to buy a house. Despite this person above (I'll not name them, because I got banned last time for doing so), were absolutely swearing blind that buying a £260k house with just £26k was a complete waste of my money and that I should spend more than my mortgage cost on rent.

As an aside, the place I was renting is now around 10% more than my mortgage, even though I've just locked in at 3.95% for another 5 years.

Now, that sounds like a decent rate I'm sure you'd agree.

That's because my £260k house is now worth £370k. And because I've been aggressively paying my mortgage off, I now own OVER 50% of my house, despite only putting down 10% 5 years ago.

How about that?

As a complete aside, my ex-wife bought me out in 2006 of our previous property which at the time was worth around £160k. It's now worth nearly £400k and she's mortgage free. Imagine if this person had done that back in 2003.

Herzlos

newsgroupmonkey_ said:

In 2003, they had a property and apparently predicted a house price crash, therefore they decide to sell their property and move into a bedsit.

Ouch, I thought it was later than that. That means they've had 21 years of paying rent which could have cleared their mortgage completely. Even ignoring house prices they'd have been much better off.

Of course, I'm hoping he'll come on and tell us exactly how his plan is better than all of ours. The fact he isn't means he knows it's been a disaster.

newsgroupmonkey_

Herzlos said:

newsgroupmonkey_ said:

In 2003, they had a property and apparently predicted a house price crash, therefore they decide to sell their property and move into a bedsit.

Ouch, I thought it was later than that. That means they've had 21 years of paying rent which could have cleared their mortgage completely. Even ignoring house prices they'd have been much better off.

Of course, I'm hoping he'll come on and tell us exactly how his plan is better than all of ours. The fact he isn't means he knows it's been a disaster.

Sadly, he spends his days in threads like these telling everyone how the market is going to crash next week and always advises people not to buy houses.

You'll see him a couple of posts before mine giving this advice.

horsewithnoname

Used to be housepricecrash or something like that. Hopefully no one takes them seriously 

Herzlos

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

BikingBud

Herzlos said:

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

There's quite a difference between investing in property and buying somewhere to live!

The former has screwed the pooch and means many people cannot afford the latter.

As much as we want to theorise about why, the fact is, from the linked BBC article, that:

The latest data shows that two in five new mortgages have terms that see homeowners still making payments in retirement.

We are building up a whole world of problems, as a generation massive amounts of cash have been transferred based upon capital appreciation, to banks in excess interest, to the government in increased SDLT and looking forward there will be a claw back of IHT all because of excessive HPI.

And many thought it was all a good thing!

Herzlos

BikingBud said:

Herzlos said:

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

There's quite a difference between investing in property and buying somewhere to live!

Fair point, that was badly worded by me. Though buying somewhere to live in is still an investment of sorts.

ReadySteadyPop

BikingBud said:

Herzlos said:

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

There's quite a difference between investing in property and buying somewhere to live!

The former has screwed the pooch and means many people cannot afford the latter.

As much as we want to theorise about why, the fact is, from the linked BBC article, that:

The latest data shows that two in five new mortgages have terms that see homeowners still making payments in retirement.

We are building up a whole world of problems, as a generation massive amounts of cash have been transferred based upon capital appreciation, to banks in excess interest, to the government in increased SDLT and looking forward there will be a claw back of IHT all because of excessive HPI.

And many thought it was all a good thing!

Yes, it was never designed to benefit ordinary people, anyone getting the chance to be gifted 200k should get that safely away from property and into safe liquid investments, the yield/interest would pay for a cheap rental letting you free up salary for more intense saving.

Herzlos

ReadySteadyPop said:

BikingBud said:

Herzlos said:

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

There's quite a difference between investing in property and buying somewhere to live!

The former has screwed the pooch and means many people cannot afford the latter.

As much as we want to theorise about why, the fact is, from the linked BBC article, that:

The latest data shows that two in five new mortgages have terms that see homeowners still making payments in retirement.

We are building up a whole world of problems, as a generation massive amounts of cash have been transferred based upon capital appreciation, to banks in excess interest, to the government in increased SDLT and looking forward there will be a claw back of IHT all because of excessive HPI.

And many thought it was all a good thing!

Yes, it was never designed to benefit ordinary people, anyone getting the chance to be gifted 200k should get that safely away from property and into safe liquid investments, the yield/interest would pay for a cheap rental letting you free up salary for more intense saving.

Maybe they don't want to live in a cheap rental hoping that house prices will collapse.

Given your reluctance to brag about how well your sell up and rent a bedsit plan went, I think we can all infer that it's been a disaster. You must already be about £200k worse off due to that genius move.