Interest only mortgage
Hope it sells when kids leave home and they downsize?
Even shitholes have nice streets with big houses.
I live in one of those.
move out of London!
we sold our tiny 2 up 2 down terrace in brentford for way more than we paid for it and waaay more than it was worth- we did get lucky buying just after the crash and did a fair bit of work on it
we now live in a much bigger house in a nice part of Milton keynes
Cheap car?
No Carribean Holidays?
No kids?
No expensive hobbies?
Harsh Scotroutes
I thought he was talking about me 🙂 There are lots of things people don't really realise they're spending money on that others aren't. Just from that list of headings I haven't had a proper 2 week holiday of any sort since 2005. Since then once in every 2 or 3 years we might have a one to two night break - last one was some free Eurostar tickets 2 nights in an IBIS and a three days walking around Paris from dawn til dusk occasionally having a coffee. We don't even take whole weekends off for most of the year. We buy cheap, cheap to run cars and keep them for a long time. Her car is 15 years old (she's had it for 10 of those) mine is 10 years old was given to me for free. We don't have kids. I ride an expensive bike that I bought 6 years ago and don't fanny about with serial upgrading.
We don't go to restraunts or pubs or the cinema or theatres, don't have sky packages or other subscriptions, seem to have a lot less in our trolley than anyone else in the supermarket queue because we don't buy ready meals, desserts or snacks or drinks.
Its not some frugal, belt-tightening ascetic drive. It just never really occurs to me to do any of those things, and I think its just as much the case most people do all those things and more and don't give it much thought, or consider it all to be necessary.
I am mortgaged to the max for my 3 bed house. its crippling. me and the missus have a career earning very average incomes.
however the guy behind me has 5 houses and drives a taxi.
my mate is living in a 600k house in cambs and looking to upsize. his theory is max everything out and then downsize when you retire. the increase in cost is corrently outweighing the market increase!
My mate has an interest only mortgage - massive house, wife works part time. She's happy with the 'situation' (i.e. not really owning or paying for the house) but she is awaiting his parent's to croak it as they are minted. One of those things.
We've managed to pay off the mortgage now, so time to save for some nice stuff - we've only a modest 3 bed semi.
We're part of the over mortgaged 40 something posse (we'll I'm 39 still).
The equity/value increase from our first house (we were there about 9 years) sale pretty much covered the deposit (about 1/3rd of the purchase price) and stamp duty on our new one which is much bigger, and hence pricier than our previous one, but we needed the space as we've two kids and now a MIL to accommodate.
The mortgage is fixed for five years (ats pretty silly low rate) and is affordable at just over 1/3rd of my monthly pay (but we both work) we are of course mortgaged until old age, but obviously the longer term plan is to overpay when we can and once the kids are gone (probably a decade away at least) we downsize and move somewhere more picturesque (missus liked Cumbria)
We moved in October and we love the new place, but I cannot face moving again this side of 2030, so hopefully we'll be able to ride the equity again and retire early (yeah right)... 😀
I've got 2 friends like this, I'd love to know how the hell they make it work! In at least one case I can rule out lottery wins and huge inheritances, as I've known them both since school! I can only assume it's happiness with a higher level of debt and not spending money on shit like I do!
More than the bullying responses the thing that annoys me with threads like this is the insinuation that there's anything wrong with taking on loads of debt and having a huge house/nice car whatever. If that's what makes people happy WGAS? I'm not fussed about paying off my mortgage, it'll happen at some point. Never understand the sanctimony from some.
I have a tip: Don't get divorced.
I've plenty of friends who don't appear monied but are loaded & plenty the opposite too....
One of my mates worked for a former utility company and retired at 50 and bought a large house. Cashed in shares of about 750k. I’m back from abroad and haven’t bought yet. Gulp, I’m in trouble.
Its true about making savings
I lived & worked in London for 10 years b4 we bought our 1st house there and I was earning the national rather than london average wage!
but pretty much every day for 10 years I cycled to work rain or shine & made my own sarnies for lunch, doesnt sound like much, but thats a grand saved a year on lunch, even getting the tube now & again and maintaining a bike to commute saves £2k a year compared to a travelcard., for the 1st 5 years I lived 10 miles from the centre, in a room in a house that was dirt cheap, but also probably ilegal in so many ways!.....
I never bought a new bike, never bought any kit that wasnt on sale or off ebay, no Sky or any of that.
I know Im sounding sanctimonius but do get frustrated when I hear friends & colleagues complain about not being able to afford a house, but would never sacrifice what Id consider luxuries
* What did they do before they became an uber
* Inheritance
* Old enough to luck out with housing
* Earn lots and you don't know it (proper big house needs 200k in SE nowadays - more in london - if doing it with salary alone)
What did they do before they became an uber
sometime its what they didn't do. A lot of people go to college on the basis that it'll get them a better paid job in the future. But it means that people who didn't go to college start earning, saving, getting on property ladders a lot younger. They have a 5 year head start and don't begin their career with a debt to pay off.
Or you can do what I did and get a degree that on average yields a career with earnings of less than they would be if I hadn't had an education at all. 🙂
bullying responses
I don't know if that's supposed to be aimed at me but I'm just trying to highlight the choices folk make. Of course there is also financial/investment "gaming". I've a friend who is mortgaged to the max but has no kids and no one to leave an inheritance to. She'd rather be living in a nice house so is paying interest only in the knowledge that the mortgage will be paid off when she pops it. On the other hand, some folk don't really care much about the house they live in as long as they can live the lifestyle they want, eating well, going abroad regularly etc. These are all valid choices (as long as they don't involve criminality I guess 😉 )
Maxed ourselves out 30 years ago with 100% mortgage at 3x earnings to buy our first property, a 2 bed semi. Filled it with junk shop furniture / hand-me-downs. Drove around in a £500 2CV for a few years and never went on holiday. Mortgage rates were 9% and payments were about 2/3 of our income. Starter home prices locally are now £250K+ plus so you need a couple of above-average earnings and £50k cash to buy. We moved 4 years later to a detached house 2 streets away but staying put since and now have no mortgage. There's a huge amount of development in this area - mainly £500k detached houses, clearly to house all those "immigrants" LOL. We'll probably cash-in in the next 5-10 years by downsizing / moving to Scotland. Housing market and Govt policy in the UK clearly in favour of existing home owners / developers in order to artificially sustain the economy. Lack of investment in social / affordable housing along with Brexit will lead to the detriment of the country - increasingly ageing, 'entitled' population living in empty houses with no-one to wipe their ar$es
due to inflation, buying the biggest house you can get on an interest only mortgage is often the most financially profitable (albeit risky) thing you get do. for example
borrow 300k over 25 years on a 3.5% interest rate (probably average over a 25 year period), costs £1500/month
the same monthly payment\interest rate on interest only would get you £515k - 71% more to spend (and thus 71% 'better' or bigger house).
If, over that 25 year period, houses go up by 4% a year on average, at the end the small house is worth £770k, and the big house worth £1.32m. You can sell the big house, pay off the £515k mortgage, and be left with £805k - enough to buy the small house, and pocket £35k (which probably pays for the extra running costs of having twice the house for the last 25 years).
effectively, you've got to live in a house thats 71% bigger (so a large 5 bed at 1700sqft vs a small 3 bed at 1000sqft) for 25 years, for free. Its a gamble, if prices rise by less than 4%, you lose out at a time in your life you might be ill-prepared to afford to do so, but if they go up by more, you're massively in profit.
House prices in the last 25 years have risen by an average of 7%, so if you'd followed the above technique in 1994, you'd have ended up with £575k profit from living in a bigger house for free.
I am no way reccomending the above approach but the sneering at interest-only is amusing when it could be the smartest financial decision you make in your life
I am no way reccomending the above approach but the sneering at interest-only is amusing when it could be the smartest financial decision you make in your life
Yep, it is what I did.] to good effect.
They don't spend £15 on shower gel.
insinuation that there’s anything wrong with taking on loads of debt and having a huge house/nice car whatever. If that’s what makes people happy WGAS? I’m not fussed about paying off my mortgage, it’ll happen at some point. Never understand the sanctimony from some.
Speaking for myself, I didn't state there was anything wrong, I'm just curious as was asking "how".
When I lived in Walthamstow from 1981 to 85 I considered buying a maisonette in a nice square for £75,000 but thought it was a bit too much. Now those same maisonettes are selling for £750,000. Maybe the OP's acquaintance made a similarly good investment.
Plus, there's never been a cheaper time to have a mortgage. And brokers are still breaking the rules when selling mortgages.
I agree with a lot of posters above about inheritance, lucky or smart property moves earlier in life and just plain old hard work and saving.
However, I think there's a lot of illusion going on as well. A lot of folk are just renting their lifestyle and there's just a big pile of debt they will address "one day".
We’re part of the over mortgaged 40 something posse
Yep, same here - 46 and have a mortgage that runs until i'm 67.
We've done quite a lot of work to the house, and it is now worth double what we paid for it.
Neither me or the Mrs are in line for any inheritance, so at some point we'll need to decide if we stick or twist.
Speaking for myself, I didn’t state there was anything wrong, I’m just curious as was asking “how”.
Yes sorry, my comment wasn't aimed at you, or anyone in particular actually, there's just an undertone that taking on lots of debt is bad, and living in a 1-bedroom studio in Sunderland so you can clear your mortgage is vastly better. If you (meaning 'one', not Kryton) wants a big house, and is happy to take on that debt, who cares?
I'd rather have debt and nice things.
If one keeps it in ones pants, one has more money and less need for a large dwelling
LOL!
We're certainly not going to get any inheritance - just about getting ready to pay through the nose for Nursing Care costs for the MIL, that will soon burn through the value of her property.
It was a bit of a shock to hear my mate with their interest only mortgage - no wonder they can afford regular overseas holidays - but relying upon an inheritance at 'some point' - I know his father is terminal, but his mum is in good health.
nick1962
Member
They don’t spend £15 on shower gel.
Yes
If you (meaning ‘one’, not Kryton) wants a big house, and is happy to take on that debt, who cares?
I’d rather have debt and nice things.
Thing is, you can't service that debt forever so you need a pretty good plan for what to do when your income runs out.
They don’t spend £15 on shower gel.
If only that's all it took. I don't spend £15 on shower gel either, and yet I still don't have a big house. I think perhaps that's what the OP was talking about rather than asking for meaningless platitudes.
And in any case, I'm willing to bet that a large proportion of people in big houses also buy £15 shower gel, £150 jeans and £30k cars.
£150 jeans
Not more guerilla marketing for HEBTROCO 😉
i try not to worry about stuff like that
So much this. ^^^
Luck can play a part in it I guess.......6 years ago I bought a small 3 bed semi in Stoke with my ex wife, our combined income was well below the national average.
Now, I'm divorced, own a little terrace that I'm doing up and will, live with my girlfriend whom also owns her own house and we're doing a barn conversion on an 8 acre farm in Cheshire too.....lucky for me her family is well off and own a large old farm!
Her grandad original afforded it by being a very good business man.....he grew up in a council house and went on to be very successful.
It's all just luck really though isn't it.....I'm not doing much different now than I was 6 years ago but have had a very lucky upturn in fortunes I guess.
Thing is, you can’t service that debt forever so you need a pretty good plan for what to do when your income runs out.
Sell house, pay off mortage, buy smaller new house with proceeds.
there’s just an undertone that taking on lots of debt is bad,
Some of us (and I include me) are certainly wired that way. In my case it was due to my mother's experiences when she was a child and then her passing that on to me. I see all the arguments about debt being OK if you've a means of clearing it at some point but it's hard to overcome so many years of conditioning. It would also play havoc with my already chronic anxiety...
Borrow £100k, buy £120k house, sell 20 years later at £360k, assuming paying back double the mortgage amount profit = £120k.
Borrow £300k, buy £360k house, sell 20 years later at £1.08m, profit £360k.
Borrowing more isn't necessarily bad when it pays off more than it costs you.
NOTE this is not advice, house prices can go down as well as up - just an illustration of how borrowing more COULD be a good investment. This is how companies grow also.
The "just curious" thing is a sure sign of a massive chip on shoulder thing.
Thing is, you can’t service that debt forever so you need a pretty good plan for what to do when your income runs out.
Sell house, pay off mortage, buy smaller new house with proceeds.
Fine if you live in posh house and are willing and able to move to something cheaper. Not so fine if you live in a shit hole and ran your debt up on fast cars, flash bikes and foreign holidays.
(I know this thread is about posh houses but I think NJee20 was talking about ANY debt)
Sell house, pay off mortage, buy smaller new house with proceeds.
This is my view - I could be mortgage-free and get a decent 3 bed detached in the same area as I am now but I think I would rather enjoy being in the larger house whist we have a growing family + dog + rabbits at home...
Sell house, pay off mortage, buy smaller new house with proceeds.
Better yet if you are willing and able to move to a smaller house in a different (cheaper) area those proceeds will go further still.
We're in the SE, so transplant our house to certain parts of the NW or Scotland (very pretty parts IMO) and it would be about half the price!
Which to me seems insane but as long as that there London insists on unbalancing the housing market, people like us will want to up sticks and use potentially stupid housing equity to retire to a nice little cottage by the sea, probably pissing off the locals in the process...
The “just curious” thing is a sure sign of a massive chip on shoulder thing.
It really isn't, you should see the shit piece of a car he drives.... 😉
The “just curious” thing is a sure sign of a massive chip on shoulder thing.
Or perhaps he thinks he is missing a trick. And possibly he is - it sounds like he may not have considered bumping off the MIL
Better yet if you are willing and able to move to a smaller house in a different (cheaper) area those proceeds will go further still.
Yeah I have considered buying a smaller house with holiday lets within the grounds (which we could do if we moved towards the east coast - Whitby area, but inland slightly) and for the price of a 3 bed detached in Harrogate we could get something pretty decent and get an income from the letting. I wouldn't do this whilst our girls are at school though, so that's one for a few years down the line.
Or perhaps he thinks he is missing a trick. And possibly he is – it sounds like he may not have considered bumping off the MIL
MIL owns three houses one of which is in Barbados all mortgage free. I decided a while ago being nice to her and her daughter was a better strategy .
However I'm not one to rely on others, hence yes I wondered if I was missing a trick within my financial and moral means.
I doubt it. You seem like a decent head screwed on type IMO with a propensity for a bit of “what am I missing out on” in your veins.
If it was a healthy balance, then I’d think nothing more of it. However there have been many posts written by you that always seem to steer towards the “why can’t I? Etc.
I dont think that’s healthy, I don’t mind telling you that because over the years I think you’ve done more than most to combat those slightly errr on the negative side of life thoughts.
And, I honestly treat you like a freind. So happy to pick up on some of your comments.
Like them or not, the less you think about others situations or lifestyles the better. You’ve got a lovely family, you work hard, you ride hard, you’ve combatted some inner demons and I for one applaud very loudly for you.
Enjoy the weekend.
🥳
