Mmm. Yet someone might have been paying interest for 20 years then at the end of it, find that they now owe the bank several hundred K to buy it. Unless they’ve saved hard, they’re stuffed.
But they will only owe what they borrowed so they would be pretty hard-pressed (historically) to have bought a house that hasn't increased in value in 20 years. And if (for example) they bought a house for £200k and it is now worth £400k they could sell it and have £200k profit to put into a new house (smaller and bought outright) or perhaps just put it towards a rental.
bought a house for £200k and it is now worth £400k
I bought a property 10 years ago for £125k.
It's still only worth £125k.
Where's my £50k growth?
Ten years is half 20 years.
We bought a bigger house, later in life (just turned 50). No plans to retire yet, I actually enjoy my work. Both have decent pensions building up.
Would have been mortgage free, in a modest 3 bed semi. With a lot of spare cash we’d just not have saved though, certainly not to match the mortgage we’ve taken on. But it’s a calculated move that will see us down size st the point our boys will be buying, with a 50% deposit on something decent each.
We did the same when they were born, going interest only for a period, that allowed them to enjoy a parent at home full time for a few years.
Life’s too short to miss that kind of stuff. If we’d not have taken on this new place we’d probably have brand new cars each, foreign trips a few times a year, but we don’t miss it. Wife has a new motor but I’m happy doing the bangernomics thing.
But remember though, that bigger house comes with substantially bigger bloody Council tax bills. !!!
I bought a property 10 years ago for £125k.
It’s still only worth £125k.
You still have 10 years to go and looks like you are a bit of an outlier (made a really bad choice in your purchase/overpaid). And even given that, you are still actually no worse off than renting.
I think you will find most people who bought a house in 1999 now have a house which is worth many times what they paid. I bought mine in 2001 and the value has increased by over £300K.
Where do you keep all your bikes? Isn’t that what the extra bedrooms are for? 🤔
In the garage, along with all the other outdoor and gardening stuff. it's 30k for another bedroom, I'll not bother thanks. 🙂
I can't read all this, but I love people's made-up fantasy life story explanations. The bottom line is that people live in large houses because for whatever reason, they can afford to. You can go nuts creating fantasy background, secret Lottery winner, retired drug dealer, invented the internet / pork pies / tubeless tyre technology / put 1p in a jug every time they swore hypotheticals, but whatever you come up, there's always another option. The bottom line though, is that they have more money than you, sort of.
The bottom line though, is that they have more money than you, sort of.
Or less.
On account of having spent it all on a big house.
Or less.
On account of having spent it all on a big house.
Meanwhile Kryton is embarking on a new part-time career as a drug dealer and frantically filling in Lottery slips and looking for magic beans. It's all STW's fault.
The bottom line though, is that they have more money than you, sort of.
Or it could also mean they have borrowed more money.
So many ways people manage it. People in my age group are usually mortgage free, but a good few I know aren't. They blag it and have no idea how they'll pay their debts off, and basically they don't care and have a very good life and sleep well at night. I'd be cacking my pants.
IME if its' not been down to sheer hard work, good jobs, canny investing or inheritance. It's been down to lying about income with the help of your company, and hiding your debts.
Basically just don't judge a book by it's cover, people lives are just too weird. I for example have been divorced twice. It's cost me the shirt off my back, literally had nothing left. Now I've got one year left on my own place. We're in a position to take on a house down south with no mortgage, and keep mine to rent. She has a nice Merc AMG line, I drive a £200 Renault. I work two days a week, she retires next year aged 52. Absolutely **** knows how that happened, when four years ago I was going to top myself because I lost everything.
A bloke my age has a gernormous house a 100k car on the drive, and we've had to give him money for food and heating, yet he's still doing the same work he did when he bought the house and car?
Or it could also mean they have borrowed more money.
Yes, that falls under the 'sort of' section of my original post 🙂
I have a couple of friends who have similar patterns, i.e. buy house in Cambridge about 15 years back, one did a LOT of work to theirs, the other had housemates to help with the mortgage.
10 years on both sell up at decent profits, one moves to a house in the country that needs a LOT of work, the other moves to a house in Yorkshire that needs a LOT of work. Both do all this work, one sells on at a decent profit once again and how has a big house, 4 acres, and no needs to move again. The other completed work on the house, then renovated the barn that came with it, that is now a holiday let that has about 85% occupancy for the year and pays for itself plus a bit more too.
Essentially they are both in really nice places to live, have manageable mortgages and comfortable lives. Some people just do things differently to others.
Thank god i'm a millennial, I'll never have to deal with any of this!
On account of having
spentINVESTED it all on a big house.
FIFY
Just been talking about 'that bloke'. Just goes to confirm that you can't judge a book by it's cover.
Got parents to release equity so he could keep his house. That ran out.
Got parents to then sell their house and move into his. Parents handed over everything.
Strange enough that's when a BMW M6 appeared on his drive.
Hasn't worked for two years.
Went on holiday for a month this year.....Three trips to Twickers the last few weekends stayed in hotels every time.
So where there's a will there's a way. That said apparently his topping himself when the debt it hits a million.
My mate has a lovely house, then asked if i could come round and help him sort out his old one. I presumed that he'd sold it to buy his new house... No, he had a few hundred bitcoin that he'd mined back in the days when you could do it with a PC for a bit of a laugh.
If you and/or your parents were in the right place at the right time from ~1985-2005, there was a killing to be made on getting rich through buying/selling property; buying to rent; crazy good pension deals; computers; internet; both partners in a couple working; stocks and shares; bitcoin; lottery wins etc. and then having plenty to pass on to your future generations.
Not quite on a Mansa Musa scale, but more than enough to live very comfortably!
I knew a guy that used a carrier bag that looked about five years old same tracksuit bottoms all the time. Turns out he has hundreds of thousands of investments providing income and travels round the world following the England cricket team. As above never judge a book. The opposite is also true with illusions being created with crippling debt.
In the garage, along with all the other outdoor and gardening stuff. it’s 30k for another bedroom, I’ll not bother thanks. 🙂
But the garage came for free?
My garage is the most expensive cycling accessory I have!
We have developed a huge liquidity issue in the UK as part of our obsession with buying houses “because property always makes money”.
****s sake. I can't stand the way people on here criticise people who want to buy houses. Like we're all mercenary materialistic middle class bastards or something.
The reason for buying a house is that your monthly accommodation payments go towards YOUR OWN ASSET instead of someone else's. Is this somehow a bad thing? I was desperate to get on the property ladder, cos I was sick of lining someone else's pockets and ending up with nothing.
And over a 20-30 year time span, houses nearly always do make money and lots of it. I know someone who bought his first house for £70k in ooh, 2000, with a little help. If they'd put their gift in the bank and continued renting they'd have enough now to buy a reasonable car. They put it into a house, prices rocketed, they released equity in it to buy another (modest) house, then they sold the first one at big profit, invested that money in a company, now they're loaded. They're secure for life and so are their kids.
Buying houses is nothing to do with 'obsession' it's just bloody good sense.
@Molegrips You forgot to mention landlords! They're loved in equal measure \o/
Interest only: borrow 400k at 2-3% on an asset growing at 5-7% means 3-4% growth on money that you don’t own. Sell house and downsize to repay debt. What’s not to like? That’s a net gain of £130-140k over 10 years. You could buy a house somewhere (cheaper) with that. Google financial gearing.
Molgrips
Our proportion of owner occupiers to rented is far higher than in many other European countries. Many folk in Germany for example prefer to rent. why? somone else has to pay for all the upkeep and maintenance, moving is easy but then they also have a much more regulated rental market with much stronger renters rights.
Property making money is a function of the deliberate housing shortage in the UK - done deliberately to keep prices rising to keep the middle classes happy. Most people will never see this money anyway as they can't sell the house as they need to live in it.
Our obsession with owning property is pretty weird when seen from others viewpoints.
Our obsession with owning property is pretty weird when seen from others viewpoints.
Why though ?
I’ve paid less in Mortgage payments since 1999 than I would have paid to rent similar properties. Moved a few times (whenever I needed to)
Now I have a £250k+ Asset
Would be weird to deliberately not want to do that really.
because in other countries they do not have the artificially supported and unsustainable above inflation house price rises and proper rent protection and controls make renting easier and cheaper. so in many European countries a house is seen as a burden rather than an asset and renting seen as sensible because its cheaper. more flexible and somone else has the burden of maintaining it.
You say you have a £250 000 asset but its not one you can actually use tho is it? You can never get that money.
Our obsession with owning property is pretty weird when seen from others viewpoints.
I can pay off my own mortgage, or someone else's...?
in many European countries a house is seen as a burden rather than an asset and renting seen as sensible because its cheaper. more flexible and somone else has the burden of maintaining it.
And as counterpoint to what I just said: it's like leasing a car. You get a new car plus warranty, breakdown cover...
I've never understood the argument to rent vs buy, rent is more than the mortgage and taxes as long as you had a deposit, and all this invest instead forgets you still need somewhere to live so have to spend the money on rent you would have used on a mortgage
Only reason to rent is if you know/think you are going to move regularly for work or travel and don't want to be tied down
My idea of hell will be retiring on a fixed income and not having my own home
Is it me or is everyone ignoring the fact that Interest only works fine while your house value is appreciating, but becomes an issue if it depreciates and you don’t have financial cover?
hence, its more of a risk? Those sitting on interest only mortgages with a house value to equal or exceed the loan might be in a very different world if there was a crash tomorrow.
Or job loss.
Illiquid asset. Even less so if it's not appreciated yet.
Not like you can over pay and retrospectively draw down on an interest only.
While the facts as they are presented here -make sense.
I've watched too many people do it and fall fowl half way through and lose the house.
A secure home to bring up my kids was my priority over making money.
Is it me or is everyone ignoring the fact that Interest only works fine while your house value is appreciating, but becomes an issue if it depreciates and you don’t have financial cover?
hence, its more of a risk? Those sitting on interest only mortgages with a house value to equal or exceed the loan might be in a very different world if there was a crash tomorrow.
It is a long term thing. Over 20 years your house is not going to be worth less than it was when you bought it. If it goes down a year or two after buying (or due to a crash) so what, just keep paying the mortgage and living in it. You don't have to move because your house value has decreased do you?
And if you have a job loss how is that any better if you rent?
Over 20 years your house is not going to be worth less than it was when you bought it.
Yeah. We all thought that before the tech bubble burst.
As I said, I've seen no growth in 10 years now.
You can't guarantee that growth, therefore it is a risk.
I really haven't a clue what my house is worth, as I've no intention of ever selling it! paying inflated rent into retirement is a sobering thought btw.....
Financially speaking, renting is a fools game and a deeply unpleasant experience in the whole. I rented for 10 years in a range of shit flats & houses. Any defects raised generally not rectified until you move on & not allowed to decorate and no scope to improve your living conditions. The one flat I was allowed to decorate - I paid for the (only magnolia allowed) paint, done the work myself and then got my rent increased as the flat was now worth more on the open market!
Now bought a house and live in a 3 bed detached house in leafy suburbs of Balerno. Speaking to my cousin last night & she is spending the same as we do on our mortgage on rent for a small 1 bed & box room in Granton. This is through a housing association, so she has bedroom tax on top as she's a single twenty something so overall she is spending more than we are. It's crazy.
Kerley there are more options than just interest only or rent ....
But then that wouldn't fit the argument.
I'm very much on that path - using a decent salary while I have it to pay down the Mortgage, with a view to downsizing with the capital when/if the kids leave home in 12 years time.
As above, my view is that if I can retire without a mortgage, everything else is a little easier to manage.
I've no idea whether thats right or wrong, its just the path I decided to follow.
Financially speaking, renting is a fools game and a deeply unpleasant experience in the whole.
In the UK yes. It doesn't have to be like this. Why do so many rent across europe? High rental standards properly enforced and controlled rents. Most places its much cheaper to rent and also nie and secure with high quality property
Our obsession with owning property is pretty weird when seen from others viewpoints.
Thank you Margaret Thatcher.
because in other countries they do not have the artificially supported and unsustainable above inflation house price rises
that is often the argument, but I believe it is specious. If you look at property prices in another big capital (say Berlin, or Paris), they seem broadly similar to London, which is the one place in the UK which espouses price inflation
https://www.rightmove.co.uk/overseas-property/property-61075524.html
https://www.rightmove.co.uk/overseas-property/property-79861547.html
I'm sure we can find examples of where british prices are higher, however they are not orders of magnitude higher which would be the case if we had been running much more inflation than our european partners for years and years.
A lot of the cultural difference is aversion to, or appetite for debt. The germans generally don't buy anything on credit - the reason the €500 note exists is so they can buy cars in cash. Generally, the pattern there is that you save whilst working (and renting) then buy a house (in cash) towards the end of your life when you have enough cash.
The real financial advantage of buying is it locks in your monthly payment, whereas renting will generally inflate over time. Even if you're only talking about a in-line-with-inflation 3% annual rent increase (which is generally how the german rent controls work), after 25 years your rent will have doubled (taking home the same proportion of your household income) whereas your mortgage payments will have remained broadly flat, taking up half as much of your income as they did when you got the mortgage
Yeah. We all thought that before the tech bubble burst.
As I said, I’ve seen no growth in 10 years now.
You can’t guarantee that growth, therefore it is a risk.
The risk is based on data. I will bet that you cannot show me a period in the last 50 years where a house is worth less than it was 20 years before.
And as I said before you have only been there 10 years and you may have just made a poor choice of house, overpaid or purchased at the absolutely worst time possible. I am not saying you don't need to put some basic thoughts into the purchase but as long as you do then 20 years later you will never have a house worth less than purchase price.
Make it longer than 20 years and it is impossible to lose. My parents house cost them £2,800 50 years ago and is now worth around £250,000. Do you seriously believe that the value of their house could ever go back below £2,800 ? (i.e the price of a half decent bike)
I think commuter villages will see a huge price drop over the next 50 years as commuting becomes non viable due to the constantly rising cost and inconvenience of car driving
"I think commuter villages will see a huge price drop over the next 50 years as commuting becomes non viable due to the constantly rising cost and inconvenience of car driving"
I would suspect that will be more than offset by the increase in home / agile working.
I think commuter villages will see a huge price drop over the next 50 years as commuting becomes non viable due to the constantly rising cost and inconvenience of car driving
No they won't. A house in 50 years will NEVER be worth less than it is today, this is some basic stuff here.
No matter how much it's worth its still an illiquid asset in times of crisis.
I think commuter villages will see a huge price drop over the next 50 years as commuting becomes non viable due to the constantly rising cost and inconvenience of car driving
You're getting your desires mixed up with reality again.
