iolo,

Spot on can’t fault you what a way to live, keep it up.

House prices will always go up long term, no question, but the rate of rise is like lying a Toblerone on a table with one end resting on top of a book – in other words, there are plenty of peaks and troughs along a rising path.

Right now it feels like we’re nearly at the top of one of those big peaks, with a big downhill likely before we start going up again.

“Jambo has it right on Clodhoppers post. For most people mortgage and debt free is the pot of gold at the end of the rainbow.”

I think Jambo has actually missed the point I was trying to make, which is; live sufficiently within your means to be able to absorb any potential disasters that may occur, such as losing your job, serious injury/illness/disability, structural failure etc. Buying a home is a serious investment and should be approached with a careful plan, not just borrowing the maximum the bank wants to lend you. Lenders have a vested interest in you making large regular repayments rather than smaller ones.

Taking this approach has led to us being debt-free, and having very low living costs. My wife works part-time in a job she loves, and I’m semi-retired. We have sufficient investments to provide us with enough to maintain our current lifestyle. We could work more, earn more, buy more, but we feel that our situation enables us to have a much better quality of life. We can easily afford all we need, and don’t feel compelled to spend needlessly on shit that is of no real benefit or importance. We can afford nice holidays when we want, and don’t have to worry about school holidays etc. We have made choices that give us the life we want. I’m sure there are many who think we’re daft for not wanting bigger/better/more, but we’re pretty happy as we are.

I’m reading things like ‘bigger house’, ‘nicer area’, ‘better schools’ etc, and wondering if some people really have got their priorities right. If living in a smaller house means you don’t have to work such long hours, for so many more years, in order to have more free time to relax in, isn’t that something worth ‘suffering’?

I’m also somewhat alarmed by the naivety shown by some, towards the future. ‘Disasters are only something that happens to others, I’m bullet-proof and water-tight’. Well, good luck with that.

“52 years old & tired from long trips working away putting it bluntly F*&in knackerd”

Was it all worth it?

“if I were to have my time again”

It doesn’t work like that. As you’ve discovered.

I’m reading things like ‘bigger house’, ‘nicer area’, ‘better schools’ etc, and wondering if some people really have got their priorities right. If living in a smaller house means you don’t have to work such long hours, for so many more years, in order to have more free time to relax in, isn’t that something worth ‘suffering’?

Think about it the other way around, you could have bought a bigger/better house, had all the benefits of that, watched it’s value go up, then sold it, downsized to your current house, pocketed the profit and semi-retired even earlier.

And it still depends where in the country you are, £300k in North Yorkshire buys you a farmhouse and 20 acres. £300k in Reading buys you a 3 bed in Whitley (where ‘Road Wars’ was mostly filmed). Low supply / high demand means anyone living within 60min of London is probably going to have a big mortgage. They don’t necessarily want a big mortgage, but it’s that or Whitley.

300k in North Yorkshire buys you a farmhouse and 20 acres.

I wish

http://www.rightmove.co.uk/new-homes-for-sale/property-34654932.html

Yeah, but Harrogate is to North Yorkshire what London is to the entirety of the South East.

“Think about it the other way around, you could have bought a bigger/better house, had all the benefits of that, watched it’s value go up, then sold it, downsized to your current house, pocketed the profit and semi-retired even earlier.”

Crap idea. Would have involved working more/longer hours initially. We’d probably not yet have paid it off. Which defeats the object. Not to mention potential risk (my wife had to have a lot of time off work for medical treatment). The money saved went into investments which have yielded a decent return. Current value of our place is ridiculous. No, we made the right decision. We were lucky to be in a position to do so when the market was a lot lower than it is now. I sympathise with anyone trying to buy a home now; their debt wil be relatively far greater and they’ll have to work a lot longer to pay it off. I doubt wages are going to rise to a level where housing costs are as proportionately low compared to incomes as they were 10, 20+ years ago.

Not needing a bigger house (no kids see?), means we started off in a place the perfect size. I have a nice little workshop. There’s less to clean and dust. Fitting new windows was cheaper than it would have been with a bigger place. It’s all about having realistic, attainable targets, than chasing rainbows.

bit of light reading for you.

mr money mustache

while he is very extreme it shows what is achievable.

We’re in a more fortunate position than most, as we have a house and a very manageable mortgage.
But, first time buyers in the South east where i live (Brighton) would need around 10-12 times salary loans to afford even a small house here (if you take average salary-average house price). That, is definitely un-sustainable. The effect of this however, will be more about moving population around and ‘Ghettoising’ our towns and cities.

We should not forget that all of our problems are first world ones and look to the benefits we have, over many others.
We have a mortgage of around 10% earnings, but would consider going up to around 25% if we wanted to have some bigger or in a better area. I’m old enough to remember the dire position may were in in the 1980’s, enough to remember that this stuff does happen, so we would be very cautious with overstretching.

A great read for anyone who wonders if they have the right approach to money and saving, would be a book called ‘Rich dad, poor dad. It challenges you to look at risk and reward in a non-emotional way.

Bigger, better, more. Not my values on which to judge success.

Bigger, better, more. Not my values on which to judge success.

I think for most people it isn’t about showing success but to have a nice(r) place in which to live. After all, we all spend much of our time in our houses so why not have somewhere you love?

For me, having somewhere bigger meant my girls get to have a room each and we can still have guests. As they get older they can have privacy in their own bathroom (we have an en suite), we have a garden so they can run about outside with our dog, play on their climbing frame, wendy house or trampoline. I can grow vegetables and we can actually sit out in the sun on a nice day.

Then, when I die, they can share out that little bit of wealth I accumulated and buy themselves something similar (very much in the same way I had the money to buy our bigger place – through an inheritance).

we made the right decision. We were lucky to be in a position to do so when the market was a lot lower than it is now. I sympathise with anyone trying to buy a home now; their debt wil be relatively far greater and they’ll have to work a lot longer to pay it off

So the short story version of your advice is, that your advice is 20 years out of date and wouldn’t work for anyone buying today?

I can see how buying at the bottom of the market is a brilliant plan, but it’s not really advice to give people is it? You’ve not stumbled across the secret of financial freedom, you’ve gotten lucky. What should people do now whilst they wait for this crash. Bearing in mind we’ve been ‘crashing’ since 2007, it’s now 2016 and not much sign of prices dropping (5year CAGR in Reading is >5%).

The problem isn’t some sort of one-upmanship keeping up with the jonses that those suffering a bout of inverse snobbery would believe, it’s simple lack of supply and over demand in the South East.

Hopefully (and I’m saying that in spite of being mortgaged to the eyeballs) the change in planning permission rules which is freeing up office space for conversion to flats will be the silver bullet, pushing up commercial rents, putting the brakes on the SE’s economy and reducing demands for housing as company’s opt to locate elsewhere in the UK.

“So the short story version of your advice is, that your advice is 20 years out of date and wouldn’t work for anyone buying today? “

No. The short story is; set your sights lower, and live within your means. IE; if you can comfortably handle a £300k mortgage, yet your lender is offering you up to £500k, which would see you stretched to the limit financially, then it would be stupid to borrow so much. The lenders aren’t interested in your potential ability to continue paying, they are protected by law and will get their money one way or another. They won’t lose out. Which is why they’re happy for you to incur massive debt.

“Hopefully (and I’m saying that in spite of being mortgaged to the eyeballs) “

You seem to be particularly optimistic, at a time when perhaps measured pessimism would be the more intelligent approach. Why are you mortgaged to the eyeballs? Have you taken the maximum loan you could get? Why? Could you not have found somewhere cheaper? Somewhere a bit less ‘desirable’? Maybe a slightly smaller (yet still adequate) house? Have you considered what will happen if you end up in a situation where your mortgage becomes too big a financial burden for you to handle?

“I think for most people it isn’t about showing success but to have a nice(r) place in which to live. After all, we all spend much of our time in our houses so why not have somewhere you love?”

I think too many people are thinking about ideals, rather than realities. And I think too many people want to live in a ‘nice’ house somewhere ‘nice’ with ‘good schools’ and ‘good transport links’ etc. IE, the moon on a stick. And too many simply cannot accept the fact that they will struggle to achieve that ideal, and put themselves under extreme financial strain. We have friends who bought a stupidly expensive place; they now have to work stupid hours, never have any free time, hardly get to spend time as a family, have suffered considerable emotional strain as a result, all to have that ‘dream’ home. When they could have saved themselves from all that, and gone for something within their means, and ended up with a better quality of life. You pays your money you takes your choice. Caveat Emptor.

House prices will keep going up and up……..

o dear me.

I just took a look at my old one bed flat in a not super high demand area but still half way between Glentress and Edinburgh, bought for 78k in 2004, sold for 115k in Nov 2007, its been on the market for around a year or so now, currently at offers over 97k, ooof! not sure what the point was… but I guess that place after 9 years is still very much in a dip.

Just thought this was worth throwing into the mix for those who think the current situation is either a) sustainable b) a positive for the wider population and wider economy. ITEM CLub generally well-respected.

E&Y ITEM Club

A couple of interesting highlights

‘Supply and demand’ or deliberate policy?

It seems clear that the low interest rates and high equity prices engineered by central banks in response to the financial crisis have encouraged households to invest in housing rather than low-yielding financial assets.

‘Note use of the term ‘social cohesion’ – do you think angry, skint, Millennials are going to ruin their lives with heroic amounts of debt to fund the retirements of the older generation or are they going to just refuse to play the game and refuse to pay your asking price?

And ‘financial stability’… can we actually afford another bust?

in our view the high level of house prices relative to income does pose a risk to financial stability. Affordability also poses a risk to social cohesion, threatening to lock younger generations out of the housing market.

This is also interesting, as I’ve not seen reference to it before. The banks and pension co.s are now complaining about superlow interest rates – for the banks it means they can’t cover their costs when they lend money out and for pension companies it means they can’t meet their liabilties ie: pay our pensions. But this reference to the banks wanting less money going into property is not something I’ve seen before. IIRC the banks got what they wanted in 2008…

The British love affair with property remains undimmed. Investing in homes was by far the most popular investment choice last year – perhaps unsurprising given the continuing low interest rate environment we’re living in. The financial services industry will be watching this flight to bricks and mortar with alarm given the negative knock on effect this has on their assets

Whilst I appreciate all the analysis the reality on the ground in my specific area there are only a couple of decent properties available and they are available for silly prices. I’ve broaden the search area by 30 miles and it’s the same. We’ve saved and planned have substantial equity and savings, I am not some numpty just borrowing as much as I can….frankly a decent family home on a decent wage is looking like a pipe dream without a massive mortgage

It is possible to pick up 10 year fixed at 2.99% so bank analysts aren’t expecting rates to be changing drastically in the next decade.

I’m mid-application for a Lifetime discount mortgage (3.69% discount off the SVR) which currently works out at 1.95% with no early redemption fees.

We are taking some equity out to extend the house, leaving a mortgage of 340,000 over 18 years. The payments are 20% of our joint salary.

in our view the high level of house prices relative to income does pose a risk to financial stability. Affordability also poses a risk to social cohesion, threatening to lock younger generations out of the housing market.

What do they mean “threatening to”, it’s already happened in the South East!

It is possible to pick up 10 year fixed at 2.99% so bank analysts aren’t expecting rates to be changing drastically in the next decade.

Nothing to do with what they think, just a function of their funding cost for that period, you could argue it is what the market thinks though.

I just took out a mortgage yesterday to buy my mum a house – 120k at 1.95% on an offset. I did get a decent discount and there was a 995 quid fee but I thought that it was quite sharp.

If I pay off an extra 10% a year and have 8 years left repayment, how many years will that shrink to? My guess is 5 painful years. Is this correct?

found the answer