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Nijo

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Everything posted by Nijo

  1. These are very good points, thank you. I think my problem (which is one of inexperience) is that I sometimes can't see beyond the superficial finish of a house. I like shiny things. Plus... you don't think that EA's know the softening trick? It's a good one, but my suspicious self sees it as kind of obvious.
  2. A thread somewhere else mentioned asking the agent for the credit details of the landlord (as well as them asking for yours). Seems reasonable but I don't know whether they'd agree.
  3. Check for other rentals in your area. I've just finished a 12 month contract and am now on a month by month pending a decision about whether to move. A quick glance around various websites confirms that there are several similar properties 'to let' nearby and that the landlord is in a way lucky to have me. If he asked for a 6 month I'd be looking for -£50/month.
  4. I've wondered about this recently TTRTR, and you might be a person with insight. Yes I'm chain free and have a mortgage secured. I can go around and offer -30% if I want to. If accepted this would presumably eliminate the risk of any potential HPC and represent a bargain, even for the bears. But why would anybody accept that (from me!) right now? If a vendor were willing to take -30% I'm sure there are 10 other people that would gladly make an offer of -15%. Is it just down to luck? Or picking properties that are not the cream of the crop?
  5. Yes, it seems to be that a HPC must be accompanied by a recession, but if that's the cyclical way of things then so be it. I see it like a forest fire. Being self-employed it's a risk to my income, but at least I can't be fired....
  6. Well you don't want all your potatoes in one basket - the idea is to find negatively correlated investments to limit your volatility. I'm currently 1/3 cash (online savings), 2/3 equity (various funds bought through a fund supermarket, slightly UK biased but +10% since April 6th) which is somewhat high risk. Talk of the FTSE peaking around about now and a possible upwards gold break is leading me towards a 1/3 cash, 1/3 equity, 1/3 gold mix. Maybe more cash and less gold while I learn the ropes. I do have a EUR account (from when I was working in Germany) but I've found that the banks get a little ansy when I transfer >3k at a time. Sorry, bit of a ramble but the point is that you should mix it up a bit. /2 units
  7. Right, remember though that this is a forum for sceptics (or realists as they prefer to be called). I come here because I'm naturally optimistic and need to read about the potential downside before I do anything silly. You should also do your own research/thinking to try to come to a balanced view: if you only read this forum you'll end up buying gold coins and stuffing them under the mattress - not necessarily the least volatile strategy.
  8. Being in a similar-ish position (I need to move from my current rental to somewhere more expensive and must choose between another rental or a purchase - HPC aside I would be buying as we speak)... I have decided to rent in the new area for the time being. I'll compromise for a smaller rented flat than I would buy - but at the same time I'll really get to know the area well and will know what to buy and for how much when the time comes. That's my position. Edit: Oh yes if you can get a -30% offer accepted that would be nice, but don't count on it just yet.
  9. Like StF, if that were in Greenwich I'd at least view it, maybe. We need Cornish prices in London! You can have London prices in Cornwall if you like - sounds like a fair deal to me...
  10. Agreed, Plasma's and LCDs tend to suck with normal broadcast TV - in fact the worse the source the worse the TV seems, compared to a CRT. Try out HD though and it's a different story... £600 HD-ready LCD TV
  11. Well yeah, technically I got a mortgage approved in Q2 but I didn't go through with the purchase... similar to the story in this thread. As an FTB the first thing I do is speak to the bank and get their randomly plucked figure approved. Then I go to the EAs, take a look at the properties, say holy sh!t that's a lot for a 1 bed flat and walk away. I want to see the LR figures.
  12. Indeed, ML Gold & General rose 3% yesterday. In fact, my funds rose by more yesterday (one day!) than the annual loss that I would have incurred due to -0.25% if I held everything in cash. Twice that the day before. Now, obviously that's unrealised profit... but so is any HPI for BTL holding property.
  13. Quite right. If I did take out that 5.5x mortgage the repayments (25 years) would be 2/3 of my net income. If IR went to 10% it would be 100% of my net income. Bear in mind that I'm self employed so even that income is dubious. Risky. The 1/3 rate you propose leads me to a 3x multiple on a 25 year mortgage, but personally I'd take 15 years on a sub-£250k property. Anyway, the moral of the story is this: despite the looming HPC, I shouldn't be eyeing the £500k house by the park. It may come down to £400k at the bottom of the cycle, but (a.) it's still a high monthly payment and (b.) the banks wouldn't lend it to me anyway. The trick to avoid (b.), if you don't mind the high payments, would be to make the low offer in the falling market, before it bottoms out: be ahead of the curve downward.
  14. Right now the banks are offering mortgages at 5.5x income - I know this as I've been offered it myself (almost fell off my chair). PE Ratio Now what happens in the case of a HPC? Do the banks realign themselves to 3.5x or is 5.5x the new norm? How is the 'correct' multiple calculated? Is it a function of anticipated interest rates? I guess my real point is this: At the moment, with my STR deposit and 5.5x income I can afford slightly more than £400k. If there's a HPC, my STR deposit and 3.5x income means I can afford slightly less than £300k. Assuming that the crash turns out to be around 25%, that means I can now afford to buy exactly the same house, albeit with lower payments. So although a HPC increases the affordability of any given house, it does not increase my ability to buy a nicer house*. Did I get that right? * That does assume that I was willing and able to take on the 5.5x mortgage. If I stuck to a 3.5x principle my ability does increase.
  15. Yes, my view is that VCTs should be considered once you've got all the other bases covered... although I do admit to being bad at holding out on long term investments. Hello I'm Nijo and I have day-trader tendencies. - Day traders annonymous.
  16. Those with a chunk of STR cash should at least look at these tax efficient funds - but does anybody actually have experience with them (positive or negative)? Example VCT Fund Quick explanation of the tax benefits Although the 40% looks very nice (wipe out income tax!) you have to hold them for 3 years, plus the average return is decidedly dodgy - investing in unlisted/start-up companies. Then again, it would need to drop 40% before you make a loss, right? Following an EU directive, VCT funds should be available again in the autumn. Thoughts?
  17. How do you reduce margins in such a labour intensive industry without redundancies? I can't imagine that there could be a HPC without a massive knock-on effect in VI sectors.
  18. http://news.ft.com/cms/s/b136134c-f506-11d...000e2511c8.html
  19. Of course, investing in stocks, gold, bonds, whatever might not bring you 5.5% net either but that's what risk is about...
  20. That said, council tax *is* meant for local services. Wouldn't CGT on primary residence serve your purpose better? Or perhaps having a valuation every year and you pay CGT on any growth or get credits for a fall.
  21. It does depend on your requirements but there are certainly many cases where the higher rate on an offset mortgage puts me off. If the rate is 5.5% then yes, sticking all my savings in there is equivalent to getting 5.5 NET from a normal savings account, which can't be done if you're higher rate. But if I'm willing to take a little risk (which I am) then I can easily beat that. Start with ISAs, obviously, then use up your annual CGT allowance (£8k, or 16% growth on £50k). When I was investigating offsets it seemed to me that I'd be better off *not* putting all my cash in the mortgage, but investing tax free in a basket of funds. And in that case, why bother with the offset in the first place?
  22. Thanks for the feedback. The bottom line is that I'm in no rush to buy so I can afford to sit back and watch the market for a while. My deposit is sitting in stocks, bonds, gold and cash so hopefully that's not likely to head too far south... my feeling is that I'll probably get more growth renting + investing than getting a mortgage and paying interest (although I still need to run that calculation). By the way, I'm self employed and got a confirmed mortgage offer of 5.5x projected income without even showing my accounts. Is that normal? One more question: what's the recommended tool for analysing a local market? Rightmove and their average sale prices or something else? P.S. No, I wasn't going to take the 5.5x. I'm not stupid....
  23. Ok, this is my first post - I wanted to mention that the forum and (especially) the "you are here" graph stopped me a few days from making a silly offer. Good job. So last week I viewed about 20 properties in the Blackheath area. Prices were £250k - £280k for 1 bed and £280k - £350k for 2 bed flats. None of them were what I would call outstanding: £330k for a small 2 bed over Pizza Express and on a main road, for example. Feedback from the agents... "prices in Blackheath never go down", "the vendor rejected offers £5k under asking", etc. They did admit to business being slow and I've noticed some classic snow-covered photos of properties (in the "sought-after" Paragon). However, my suggested offers of -10% weren't going to get me anywhere. Reading this forum I've decided to continue renting (sold my house in Q3'04) and see what happens. Cheers all!
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