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Just Completed Today Our Purchase From Landlord

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Thanks to the wise on Houseprice crash, you’ve saved us tens of thousands over the past 4 years. Today we’ve just completed on the purchase of our country cottage from our Landlord.

I’m estimating that coming to this forum has offered me an education that has saved us to the tune of 50 grand.

Rather than just immediately berating me for stepping back in I will outline my circumstances in order that you might take on board my opinions in the same manner that I have learned from others, to my benefit.

Our deal was 35% deposit over 10 years fix at 4.99 at 3x single salary.

I believe house prices never really went up, it was money that got cheap.

At 4.99% that’s damn near free money, if like me, you believe in likely inflation through QE.

A 1% shift upwards in interest payments would equal a 20% increase in my monthly payments, interest rates aren’t going any lower and they will only go one way. So, over a ten year period at some point I’m likely to be paying more for our debt if I don’t fix the deal now, hence I’m at the bottom of the housing “mortgage monthly payment cost†cycle.

Ok, I accept that house prices will fall over the next year or so, maybe ten percent more, but two years into our ten year fix I think we start to see a return on our gamble.

I’m a bit of a TFH type. Its no bloody accident that we’ve bought a little cottage in Rutland, away from the great unwashed,(of which I am one), should social trouble erupt. I can see many tensions developing in the UK, plus many other potential issues such as disrupted food supply, pandemics, terror attacks, fuel crisis, in fact you name it I fear it. But not only do I fear it, I take steps to protect ourselves from it through a stable geographic location that the landlord cant boot me out of.

Maybe my biggest point of all is…… and its taken me long enough to realise this. Please forget all this bull about we must return to a 3.5 times multiple. Just forget it. We all have the tendency for looking at graphs and thinking what must happen next through extrapolation, well lets look at a bigger graph, a 2000 year graph.

Lets say, to be on the safe side, property ownership began 2000 years ago in the UK with the iron age tribes. And lets say that home ownership has only really taken hold in the UK for the last 40 years. So, by my maths, home ownership by the masses has only really existed for 2% of that time.

I fear this minor incursion by the masses into home ownership is nothing more than a blip. The other 98% of the time all the homes are In a very few fat pockets. Over history the masses were never able to afford their own patch of dirt so stop thinking about 3.5 x being some sort of rule. Where the hell was it ever written down 3.5 x a swineherds wage for a semi dilapidated mud hut with open sewer and herb patch? The idea is by those who have money that you pay them rent.

Being a TFHatter I also considered that the chances of the banks actually folding up is still pretty reasonable. They can hold my debt but not my assets in that case. The money we will loose in houseprice depreciation over the next year is a good enough insurance premium for us not to get wiped out in a banking collapse.

Spotting market mania is an interesting thing, it stuck in my mind that when the last bear turns bull the markets turn. Well, the bad news is the last bull turned bear about 3 months ago because there were no bulls. They’ve started cropping up again now. I’m not fussed about talk of bull trap, when referring to the houseprice crash graph we all know and love there were no previous bull traps.

Years ago there were some very sharp and insightful posts on here, not by myself as I am a very infrequent poster, and I am indebted to those chaps. A few are still around, but most of the old timers seem to have wandered off, GEI seems to be a haunt. Most people posting here today seem to have joined post credit crunch. What I’m trying to say delicately here is try to listen to the old boys, because they saw this coming, and bothered to find a place on the net to discuss their ideas. New posters with one line quips and insults who don’t offer constructive arguments are not worth listening to, and I’m afraid that makes up a large number.

To summarise, I expect a further ten percent drop in house prices, but a bigger than 10% increase in cost of borrowing. And I’m gambling on inflation getting close to and hopefully overtaking my 4.99% interest rate over ten years.

Most of all we have bought a home.

Good luck folks.

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