General expense

molgrips – I actually question the wisdom of this, even though I’m guilty.

Advantages to ownership:

1) after 25 years of paying you end up with a very valuable asset
2) you can modify it
3) your landlord’s not going to kick you out
4) no landlord to be an arse if you chip the walls etc
5) no random intrusions

Disadvantages

1) harder to move
2) deposit needed
3) more commitment (see 1, harder to move to a cheaper place)

hanging thread thingy bump

My parents first house was £4,000. Now they are sitting on a quarter of a million. Not too stupid was it?

Your parents lived through a period of more or less constant population and economic growth, Molgrips. People getting constantly richer and more of them fighting over a housing stock limited by green-belt policy.

Inflation adjusted that price rise roughly equates to the increase in what people can borrow over the period. From 4 x the man’s earnings over 25 years in the sixties based on a wage slip to over 5 x self-declared combined income over 30 years now.

Anything that limits home buyers’ ability to borrow will impact property prices. The other factor is buying to rent. When people can’t afford high rents they live at home longer or share accomodation thus reducing demand. landlords have trouble renting out and put property onto the market increasing supply.

Your parents lived through a period of more or less constant population and economic growth, Molgrips

As for inflation – a fair point, but compare with renting. If they’d rented, SOMEONE ELSE would be sitting on a quarter of a million… And that’s the key point.

When they die my kids will benefit from a decent chunk of financial security. When my grandparents died I got nothing.

They were positively encouraged to invest in bricks and mortar on the grounds that it represented extremely sound investment

It is, in the long term.

No it isn’t – if you’re stuck with negative equity, your financial circumstances change, and your home is repossessed. In those circumstances it is an extremely bad investment.

It seems to me that you’ve been sold the very dream which you claimed no one had been sold, ie, you refuse to accept that investing in property can be anything other than a good investment.

I’m not saying your parents made a bad decision, Molgrips, they had every reason to believe society would get richer in their lifetime. I’m saying that you can’t expect the same gains going forward because I don’t believe Mr Average is going to get richer – inflation adjusted of course. If inflation does take off your mortgage repayments will suddenly be much higher than renting as interest rates will rise and house prices will decline.

Taking out a mortgage is a risk, a bet if you want, on low interest rates. I’ve chosen to wait till there has been enough in the bank as I feared periods such as mid to late sevenities when servicing mortgage interest became a major issue for many.

In my own case I started saving money for the first time in 1992. I didn’t buy as interest rates were high and property prices falling in real terms. Other asset classes were also doing very well so saving was a good option. I bought when I had the cash in 94, 95, 99 and 2000 but sold one in 04 and have spectated since.

No it isn’t – if you’re stuck with negative equity, your financial circumstances change, and your home is repossessed. In those circumstances it is an extremely bad investment

Of course – but I said in the long term. Like 10 years or more. If you’re in negative equity and you sit tight you’ll come out ahead before too long. Provided you can pay the mortgage of course, but that’s a different issue regarding personal budgeting.

I don’t think I have been SOLD a dream.. I made a decision based on the options at the time.

I can’t see what’s so good about renting. You never see your rent money again, and you have to live with whatever crap the landlord forces you to deal with.

Advantages to ownership:
3) your landlord’s not going to kick you out

the real owner (the bank) can kick you out if you fail to keep up with repayments.
according to this graph somebody who purchased at the 1988 peak would have waited until 2002 until prices rose again to those 88 levels and possibly faced repossession or the inability to move/sell.
I know people who purchased at the last peak with 100% interest only mortgages who are in deep sh*te. for every property millionaire there is somebody who wasn’t so lucky.
the up/down rollercoaster looks like it’s only heading one way at the moment.

the real owner (the bank) can kick you out if you fail to keep up with repayments.

Likewise landlords, afaik.

I’m in a bit of negative equity, it just stops me from moving. Can still afford the mortgage same as before.

for every property millionaire there is somebody who wasn’t so lucky

I reckon that the majority of homeowners are still stitting on a big fat chunk of equity.

I’m renting, off the bank. If I keep up my repayments for 30 years, they’ll give me a house. If I don’t, I get nothing, kind of like if I’d been renting from a Landlord…

To me the value isn’t important, it’s the ownership at the end.

There are markets that have suffered inflation-adjusted, long-term downtrends. Check out a Nikkei chart or house prices in any area that has lost its economic reason to be. How is the UK going to generate wealth when North Sea oil and gas have gone and Frankfurt is the financial hub in Europe?

How is the UK going to generate wealth when North Sea oil and gas have gone and Frankfurt is the financial hub in Europe?

with debt.

When they die my kids will benefit from a decent chunk of financial security. When my grandparents died I got nothing.

Why is this so important to people/parents? Is it actually overriding the purpose of buying?

I’m just looking at this from the perspective of someone who’s done the house-owning thing for decades and now wondering if it was actually worth doing.

When they die my kids will benefit from a decent chunk of financial security. When my grandparents died I got nothing

Assuming that the property doesn’t need to be sold to cover their health care costs.

^^ wot he sez

Better than not having a property to cover healthcare costs…

A pension won’t go so far when you still have to pay rent out of it!

I have been lucky enough to pay my mortgage without any problem over the last 15 years and it should all be paid off in 12 years time and I will be 52 then.

The thought of having to keep paying rent when I am mid to late 50s plus and through my retirement turns my stomach to be honest.

Come my 52nd birthday my wife and I are going to be in the money as we will have an asset (albeit fairly illiquid and we do not know what the value will be) and we will not have to pay any more money to the bank/building society so we will end up about 750 pounds a month better off.

If you can afford it then buying your own property does make sense. Who wants to worry about the landlord doing an inspection when you are retired and in your 60s/70s?

Pretty similar to ho hum, but I will be 59 (unless I keep overpaying as I am now and I’ll be about 55. Then I hope to work only part time and enjoy myself before I am too old …

How is the UK going to generate wealth when North Sea oil and gas have gone and Frankfurt is the financial hub in Europe?

I’m glad there are clever people than you working on that 🙂

Why is this so important to people/parents?

Well – I could either be able to give my kids/grandkids a big chunk of money one day, or I could NOT be able to. Which would you rather?

i’d rather you gave it me.

am i in the frame ?

Are you a landlord perhaps? 🙂

i too am in the same boat with the mortgage situation – do i dont i ….

the way im lookin at it – in the north east of scotland – a 2 bed 10/20 miles outside the city can be had for circa 130-140k a mortgage on that with my deposit is 650ish at current rates

a 2 bed in a similar area to rent is 850-1000. – thats quite a rise in interest rates before im loosing out – even if the property market does crash – ok no one likes to loose out on money bt surely if you were to be paying it out anyway its collateral damage.Doesnt mean im not holding off as long as possible if things keep going the way they are i wont be based from the uk in the next couple of years.

you dont have to travel far from aberdeen to get into the opposite situation though – its MUCH cheaper to rent in arbroath than have a mortgage at current prices 375/400 for a 4 bed house !

I guess its like salaries relitively everyones happy they have the best deal they are going to get from their company deal till they find out the guy sitting next to them doing the same job is on 2k a year more