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Jonnybegood

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Everything posted by Jonnybegood

  1. During the housing cycle there are times when renting is financially a better option and times when buying is. At the moment in the short term renting is probably a better option for many, However when you look over a longer term in almost every case buying is the better option financially and for personal reasons. 25 years of paying rent = Nothing , 25 years paying a mortgage = House 25 years of paying rent = A number of moves , 25 years paying a mortgage = Your choice stay put or move on 25 years of paying rent = Not getting the house you want , 25 years paying a mortgage = A home the way you want it 25 years of paying rent = Nothing , 25 years paying a mortgage = Security 25 years of paying rent = Increasing rental payments , 25 years paying a mortgage = Decreasing mortgage payments Yes there are the arguments about flexibility to move on and no maint work and getting a better house than compared to a mortgage on the same house and in many cases these are valid points but over the longer period buying in my eyes will always be the better long strategy. When I left university 14 years ago I continued to rent (£60pw) I was young and had no intentions of doing DIY , replacing Loose guttering , re painting etc it suited me just to come and go and get myself set up in the world of work. Many of my friends did the same and we were are very happy, 2 years on I decided to buy where as a few of my other friends continued to rent, That was the best move I ever made. 12 years later I am in a position to pay off my mortgage tomorrow, where as one or two of my friends are not. My property is now just the way I always wanted it whereas they are still doing alterations etc on theirs. At 36 things are now different for me and priorities have changed, I now need the security of what buying a house has brought me, Me and the wife have worked hard and spend alot of time and money in making the house as we want it (A place we can call home), If we were renting firstly this would not of been possible and secondly if we were to buy within the next 2 years the thought at my age having to go through it all again with 2 kids running around.No thanks Buying today is slightly different due to recent years of HPI, But would someone be saying the same thing 12 years down the line? I do not have the answer. As for landlords they do vary, the one I got just after leaving university was great and did all the jobs required on an annual basis, painting , Guttering , Drains etc. But there were many of my friends who had leaking pipes, Damaged windows , Loose worktops and the landlord was very hard to track down and get him to do anything, He basically knew the rent he offered was far less than a mortgage and other rentals so they had little other options but to wait for the jobs to be done. Looking at the current situation, the comments made about the landlord being your slave could not be further from the truth, Probably the main reason I would not rent ever again is the idea of lining some other guys pockets and seeing him drive around in some flash car just because he signed a piece of paper with the bank to buy the roof over your head, Ok with a mortgage your paying the banks instead, But you cannot see that to a certain degree, With a landlord living around the corner you can.
  2. I have to agree with time, Women don't tend to see money the way we do they just want their 'Home' you know the nice bits and pieces here and there. I don't know how much your looking to spend but with a £50k injection from the family it should offset any falls should they happen. What if prices do continue rising, she'll never forgive you. At least if you go along with her and prices rise you are both winners if not at least she will know it was against your wishes. Its a tricky one, I dunno if this helps but I think at worst we will have 20% nominal losses over the next 4-5 years so if your looking long term then it may be worth taking the plunge.
  3. Now that average prices are above £170,000 I don't think we will ever see them below £100,000 again. So what we are now finding because everything is based on percentages, IR , HPI , Inflation, the growth made is that much more. As you see from 2007 to 2011 (4 years) the growth is likely to be £25,000 based on 5% per annum. However based on the same growth of 5% back between 1995 and 2001 (6 years) the growth was only £23,000. Once things correct themselves YOY we should begin to see larger growth based on percentages.
  4. 10% minimum deposit with reservation fee 2 years Option A 2 years Option B 3 years 5 years 10 years 25 years Initial rate 5.44% 5.28% 5.64% 5.44% 5.44% 5.59% Followed by 6.74% 6.74% 6.74% 6.74% 6.74% 6.74% The overall cost for comparison is 6.7% APR 6.7% APR 6.7% APR 6.4% APR 6.0% APR 5.8% APR Reservation fee# £499 £999 £499 £499 £499 £599 Nationwide still got an attractive line up (25 yr fixed included)
  5. I called in my mates house tonight on the way home from work as he's converting the attic and wanted a hand removing a few items, He was thinking of selling and moving up the ladder due to his wife being 5 months gone but the hassle and costs involved decided to convert the attic and gain a further bedroom instead as the area they live in they like and have many friends. Anyway whilst removing a few boxes we came across some valuations he had on the property going back to 1995. He bought the property 14 years ago (1993) for £48,500 then had to spend around £6,000 on instant improvments, Bathroom , Kitchen etc. He got the property valued 2 years later in (1995) at £65,000 and remembers the estate agent saying it would not be on the market long at that price as the work done was to a high standard. 6 years later (2001) they had the property valued again after the arrival of their first child and that was £88,000 (He did say that another estate agent valued it slightly higher) but this was the only one we found in the box. Then January this year (2007) he got it valued at £165,000 (one sold 3 doors down for £163,000 last month was on the market for £166,500) Anyhow I wrote all the details down and when I got back home started to number crush a little to really see how prices have gone (At least in the area he lives) over the past 12 years. Heres what I have come up with Working on the assumption that inflation is running on average 2.5% over the 14 years and HPI is 2.5% (2.5% most will agree is a steady healthy growth in the market that most economists work from) 1995 = £65,000 Growth of 5% per year for the next 6 years to 2001 = £87,100 (The valuation we found was £88,000) Growth of 5% per year for the next 6 years to January 2007 = £116,700 (The valuation he got was £165,000) Approx 30% overvalued Now the most interesting thing is if i continue the 5% growth for the next 4 years it becomes £141,800 by 2011. (This tends to be scale many are saying we will see the bottoming of the market fall) £141,800 is still £24,000 or 14% less than a valuation given only 3 months ago So would a 15% nominal drop in prices over next 4 years be about right for the market to correct itself. With inflation taken into account anything up to 30% This would vary from town to town , area to area , type of property , Supply and demand but as a guide an average overall.
  6. So a nominal drop in house prices may not happen after all then
  7. I have to disagree, A newspaper by many is taken with a pinch of salt. Anyone you speak to will know the Sun type jokes of it must be true then if its in the sun. Also many have their favorite paper the only one they buy and read and will only trust from past experience whats in that paper and forget/Ignore the rest. The papers were last year reporting HPI of 10% yoy, However I never seen those gains in my neck of the woods, but the papers said so. Finally and probably one of the biggest reasons why I disagree is that many papers have a VI in a crash not happening, Its their job to sell papers and any down turn in the economy will be felt by the papers as any other business. Many of their reporters, editors etc will have an interest in property somewhere along the line The recent overly bearish reports are scare tactics to try and get people to ease up on their spending before its to late. For many it probably already is!!
  8. IR can also fall just as quickly as they rise, Unlike house prices. It does seem odd that the banks are still pushing fixed rate deals in all financial sections, It does make me wonder how they see the next few years panning out.
  9. Are there still those with £50,000 plus mortgages on SVRs, I would love to know the figures. With so many different options it does begger belief if they are Surely not at this level How many have mortgages at this level, it may be the average price of a property but does not mean its what people will need to borrow to buy it, For many its probably the next step on the ladder and not a FTB house. I love the papers
  10. When I travel through europe I do see vast amounts of open land that no ones seems to bothered about, I have my holidays in the canaries and travelling from the airports see plenty of baren land then I get back home to the UK and suddenly realise there is not a great amount of land available primed for building. Ok we still have many green fields but this is not the kind of land I would like to see new builds going on, We still needs to have a balance of greenary rather than a concrete jungle. And then when you do find the right site there is the small problem of planning permission.
  11. It is better but something we are not going to see unfortunately, a 50% fall in nominal values is going to take us back to 2001 prices (6 years ago) Time quickly moves on hey!! That would equate to a fall of around 65% in real terms.
  12. Alot get mixed up with the idea of 50% falls in values is 50% off current prices, its not. When people say 50% they mean off current prices of around 30% but with inflation blah blah its a 50% drop. So in your example you could be looking £140k bottoming at around £98k, However it depends on area and the demand for that kind of property etc. Being a flat it could well drop 50%
  13. At the moment IR are low and so many see little alternative to property as an investment, when IR start to rise and banks start to offer 14-15% growth over 1-2 years on bonds etc with no risk many will look at thier £20-30k deposits and an uncertain economy and think, House, 10% IR mortgage = Risk Bonds, Savings etc 14% return = No risk. Wheres your money gonna go?
  14. Your right if your jobs gone thats it, But that would be the same no matter what house prices were for as long as you owe the bank money there will always be the chance of being repoed. Now at least with this mortgage deal you can arrange your finances each month as the payments on the mortgage will remain the same for the life of the mortgage, on a SVR which would be the only options if credit started to tighten, you may lose your job and see increasing mortgage payments each and have no control over it.
  15. A 50% fall in house prices seems highly unlikely in real terms and for many wishful thinking, A property today for an average £180,000 will not become £95,000 more like £125-135,000 but this would represent a fall of 50%. However if it did happen, which it may in certain areas/ type property for a fall of this magnitude you can expect 10% IR and back to 3x single income or 2.5x Joint with a min 20% deposit. An averaged priced house would be £125,000 with a 20% deposit (£25,000) leaving £100,000 mortgage (£34,000 single wage or £40,000 joint) At 10% that would be £918pm so for many it would still be a big step to take and probably in an uncertain economic climate. Then as things get better and IR start to lower then your new breed of LL starts to come back to the market and it all starts over again
  16. Just done some number crushing with regards to the 5.5% nationwide mortgage against an average 8%IR over the next 25 years with a house 30% cheaper (Its what many predict to be the correction) and heres the result £100,000 at 5.5% repayment = £621.24 £70,000 at 8% repayment = £546.45 Its worth thinking about when you think £80 a month or £24,000 over the life of the mortgage difference you buy now and start to pay off capital instaed of maybe renting and waiting for what some predict will take 4-6 years for prices to bottom out.. As long as you keep your job etc there is no worries about future rate rises, you can change after 10 years if better deals are around. I am not a mortgage advisor , Estate agent or anything linked to property, It does seem quite a good alternative if you wanted to buy now especially if credit does tighten and fixed deals get withdrawn
  17. Very very hard to predict, If I could then I would be buying my next house for cash from my betfair winnings. We are currently seeing steady rises in IR and its the BOE job to control inflation so on that note I can see another rise before the end of the year taking us somewhere between 5.75-6%. I think the overall average for IR has been around 5% and G.B will be aware of this and keeping close to it. The BOE did not rise last month and have only increased each time by 0.25% instead of 0.5% this does say that they are hoping these 0.25% rises will cool things and really don't want high IR unless forced as a last option. 6% will probably be tops for a good few years unless unexpected global activity says otherwise.
  18. Yes but thats only a snap shot of the rate for that period, If she was to start from May 1988 to May 1989 then you would see an IR rise from 7.5% to 14%. On a £40,000 mortgage thats an increase from £299pm to £485pm in just 1 year (just over £185) and throughout that period it got more expensive each month. On £100,000 today 4% to 5% is £533pm to £591pm an increase of just under £60 Today it is possible for people to prepare, they know when the fixed rate ends and what the new rate will be. It just does'nt happen overnight Due to the lack of Fixed rate mortgages in the late 80s this would of happened on mass, everyones mortgage went up the same way, Today it would not happen that way, there are so many different kinds of deals that some get hit less than others, IR to a large percentage of people are now almost irrelevent has many fix for the remainder of their mortgage.
  19. £280 a day must be few areas of the country, Where I am from prices have levelled off since last August. Estate agents still advertising new property at higher prices but they are not moving, Only if it sensibly priced will it sell around here, i.e 10-15% below estate agents valuation
  20. I am pretty shi*e with predictions, But from some of the number crushing I have done I tend to go along with FP and think it will be somewhere near 2011/2012 with an average fall of 25-30%. So average price around £150,000, But it depends on IR and inflation and the economy etc at the time. So take it with a pinch of salt as we may not get a crash anyway.
  21. What must be remembered in the late 80s early 90s fixed rate mortgages were almost non existant, Most were on SVR and hence saw their repayments increase 50% in a short period of time, Any person with a bit of sense would be looking at minimum 5 year fixing of a mortgage these days if not just to avoid high fees to remortgage. We have seen an increase from 3.5% to 5.25% past few years but there were very few who secured a mortgage under 4%, So even today there are still sub 5% mortgage available meaning that many have only seen a 1% increase on their mortgages, thats approx £60pm increase on £100,000 Back in the 90s £40,000 increasing from 10% to 15% would of meant £367pm becoming £515pm almost overnight, Plus whatever the banks added for their SVR so quite a bit more
  22. Your gut instinct is probably the best one to follow, If it tells you things aint right then hold off a while. Speaking from experience it has always worked the opposite way for me, It seems that every time something seems likely to happen it does'nt. It (The market) will crash when the last bear turns bull, it normally happens when least expected, Now that HPC is making BBC news slots and tabloid headlines the chances decrease, actually changing people perceptions that property does not continue to rise forever and forever may actually save the market from crashing, not altogether but on a lesser scale.
  23. There has been a downturn in the number of premium bonds but this ad campaign has been around a while promoting the 50th anniversary 5 jackpot draws http://money.guardian.co.uk/saving/story/0,,1933250,00.html http://www.mad.co.uk/Main/News/Articlex/62...mium-Bonds.html
  24. It was not meant to sound bullish, I just keep getting the feeling things are different this time. Logically things cannot continue, but to date they are. Since the Bush administration took over the US has isolated itself far more prefering to look after itself, there was an embargo on steel when a threat to the industry was realised a few years back, I think that many countries have learnt not to rely on the US like they have done for the past 30 years. Even the tighting of their borders and visas have led other countries to turn their back to a certain extent. Its still a massive player but at the level it once was
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