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If I Had Bought A House When Recommended...

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In about 2005 my uncle (capitalist c***) gave me some advice on buying a house. He said "borrow as much as you can, really stretch yourself, and take out an interest only mortgage". Thankfully my parents, whilst not particularly aware of economics, were much more cautious, and had always advised me to play it safe.

I never did buy a house, and I'm still waiting for prices to drop to 2000 (ish) levels. If I had taken my uncle's advice...

  • I would now have a house worth 10 grand less than I paid.
  • I would have only being paying interest all this time
  • My repayments would have been consistently more than I've paid in rent
  • I would own none of my house (because I could not have afforded to save any money toward the capital part of the mortgage)
  • My property (not that I own it) would be a s**thole, because at the time of purchase I could not have afforded anywhere half decent
  • With a baby on the way, I would be trapped in somewhere too small for raising a family

I would be f****d

I am so glad I ignored him and rented :D

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What does your uncle have to say now you've ignored him and "missed the boat"?

(un)fortunately we haven't had any contact for several years since then... he will be a bull until the day he dies, so I would not try and convert him.

Not Gordon Brown... thankfully!

DP.... yep!

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I got sucked into housing mania, bidded over the odds on one flat... and backed out of another. Decided things were a bit too expensive, something must be wrong. That's when I found this site. If I'd have bought either of those flats I would be in serious financial trouble right now. Words CANNOT express just how relieved I am.

EDIT: I wont deny I was almost desperate to get a place, it was actually quite sickening..

Edited by guitarman001

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In about 2005 my uncle (capitalist c***) gave me some advice on buying a house. He said "borrow as much as you can, really stretch yourself, and take out an interest only mortgage". Thankfully my parents, whilst not particularly aware of economics, were much more cautious, and had always advised me to play it safe.

I never did buy a house, and I'm still waiting for prices to drop to 2000 (ish) levels. If I had taken my uncle's advice...

  • I would now have a house worth 10 grand less than I paid.

  • I would have only being paying interest all this time

  • My repayments would have been consistently more than I've paid in rent

  • I would own none of my house (because I could not have afforded to save any money toward the capital part of the mortgage)

  • My property (not that I own it) would be a s**thole, because at the time of purchase I could not have afforded anywhere half decent

  • With a baby on the way, I would be trapped in somewhere too small for raising a family

I would be f****d

I am so glad I ignored him and rented :D

In 2005 I got the boot from my former landlady when I declined her generous offer to flog me the flat I'd been renting at 2005 prices. I looked at the market, and found to my surprise I could get a big mortgage at low interest. At the time it would've been extremely subprime[1].

If I had bought somewhere then on a £150-160k 100% mortgage Northern Rock were happy to advance[2] without my even having applied for it[3]:

  • I would now have a house worth maybe £10k less than I paid.

  • I could've paid off the mortgage by now and own outright (at the expense of missing out on all the tax breaks I've used). But I think I'd still have preferred to put "40%" money into a pension instead, so,

  • I would now qualify for a bailout twice over: once in zero interest rates, once in SMI.

  • My repayments would be consistently less than I've paid in rent.

  • My home could've been somewhere significantly nicer than where I've been renting.

[1] My income track record was £7k in 2004 and a lot less in earlier years (I felt rich on £7k at the time, though what remained after rent was less than the dole). My substantial income above that in 2005 was backed by nothing more than a contract which the Client could terminate at any time without notice.

[2] It never even occurred to me to ask about the possibility of more than 100%.

[3] I got collared in an estate agent and given an instant quote on a hypothetical purchase.

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In about 2005 my uncle (capitalist c***)

Says more about you then the rest of your post. Do your nephews refer to you as the socialist C***? Nice family.

Edited by Greg Bowman

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In about 2005 my uncle (capitalist c***)

Says more about you then the rest of your post. Do your nephews refer to you as the socialist C***? Nice family.

He values money more than anything else, and will trample over anyone/anything (including family and friends) to earn it. I feel my description of him is perfectly valid. If he chooses to call me a socialist xxxx, I would be flattered.

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He values money more than anything else, and will trample over anyone/anything (including family and friends) to earn it. I feel my description of him is perfectly valid. If he chooses to call me a socialist xxxx, I would be flattered.

to be honest - i have met socialists and capitalists who are greedy c*nts, and also stupid property bulls of both types; but also, from both camps, people who are decent and genuine - I think 'greedy ****' would be a more appropriaty term for this chap, avoiding the political affiliation which I think is irrelevant

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to be honest - i have met socialists and capitalists who are greedy c*nts, and also stupid property bulls of both types; but also, from both camps, people who are decent and genuine - I think 'greedy ****' would be a more appropriaty term for this chap, avoiding the political affiliation which I think is irrelevant

Agreed... my uncle is a greedy c***.

Anyone like to comment on their relief/regret at buying/not buying a house in the last few years? :)

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In about 2005 my uncle (capitalist c***) gave me some advice on buying a house. He said "borrow as much as you can, really stretch yourself, and take out an interest only mortgage". Thankfully my parents, whilst not particularly aware of economics, were much more cautious, and had always advised me to play it safe.

I never did buy a house, and I'm still waiting for prices to drop to 2000 (ish) levels. If I had taken my uncle's advice...

  • I would now have a house worth 10 grand less than I paid.

  • I would have only being paying interest all this time

  • My repayments would have been consistently more than I've paid in rent

  • I would own none of my house (because I could not have afforded to save any money toward the capital part of the mortgage)

  • My property (not that I own it) would be a s**thole, because at the time of purchase I could not have afforded anywhere half decent

  • With a baby on the way, I would be trapped in somewhere too small for raising a family

I would be f****d

I am so glad I ignored him and rented :D

Well it obviously worked for you so well done.

Me on the other hand sort of followed your uncle's advice in 2005 and did borrow as much as I could (6x to be precise courtesy of GMAC no less) and now I live in a flat which I couldn't possibly afford, despite my salary having quadrupled since then. If I were to rent my flat it would cost me 35x my current I/O payment and I wouldn't be building up a significant cache of PMs which will pay off a good chunk of my mortgage in a few years.

Don't get me wrong, I'm sure your decision worked best for you, as mine has worked out well (thus far) for me, but what's best for you or me isn't always the best for everyone else.

Edited by SEW247

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In about 2005. He said "borrow as much as you can, really stretch yourself, and take out an interest only mortgage".

He got two things wrong, the year and the type of mortgage........history shows that with a good deposit, and a wage multiple of 3 times annual income repaid by way of a repayment mortgage, buying was the best way.

It all went peter tong when it became 5 or 6 times income, little or no or even worse a borrowed deposit repaying the interest only not the loan......you couldn't make it up quite frankly. ;)

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Agreed... my uncle is a greedy c***.

Anyone like to comment on their relief/regret at buying/not buying a house in the last few years? :)

I did buy one in 2006...moved up the ladder pyramid....it was the worst thing I ever did.

It was a nice house but on a busy main road, big house too. I was taken in by all the property porn I think. It was a pig to heat and I got fed up rattling round it. I was burgled once. They area turned out to be pretty rough too. I put it on the market within 6 months of moving in. I eventually sold it for £10K more than I paid for it. I sold it a week or two before the norther rock collapsed !!! I was sooooo happy the day I handed the keys over.

Since then, I've moved 3/4 times for work and lived in Paris for the best part of a year, so it worked out well. I'm currently renting a really nice place for half what it would cost to buy it. My landlord seems a decent chap.

The house I sold right at the peak in 2007 is on the market for 2K less than they bought it off me. It's been on the market for over a year now I think. The market is down 20% locally since then, so in reality they should be advertising it for much less, the agents must know this. It looks like they are hanging on till they get their money back..even though said money is now 15% less with inflation. :lol:

Getting rid of that house was the best thing I ever did. If I tried to sell it 5 years on...then as with the people trying to sell it now are finding out, it's worth less than I paid for it in 2006, maybe £60 less. I look forward to the day they actually sell it so I can find out how much better off I actually am :lol:

Buying a house is great if you are well off can can afford somewhere nice, you're not likely to move for work, you can afford to pay the bills, can afford to heat it etc etc etc. Otherwise, you're only helping prop up the prices of them with the nice houses. It's my unbiased and balanced opinion that they, can go f*** themselves. :lol:

Edited by TheCountOfNowhere

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Well it obviously worked for you so well done.

Me on the other hand sort of followed your uncle's advice in 2005 and did borrow as much as I could (6x to be precise courtesy of GMAC no less) and now I live in a flat which I couldn't possibly afford, despite my salary having quadrupled since then. If I were to rent my flat it would cost me 35x my current I/O payment and I wouldn't be building up a significant cache of PMs which will pay off a good chunk of my mortgage in a few years.

Don't get me wrong, I'm sure your decision worked best for you, as mine has worked out well (thus far) for me, but what's best for you or me isn't always the best for everyone else.

so you're heavily leveraged in assets that produce little or no income and interest rates haven't gone up yet...

Edited by Si1

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Well it obviously worked for you so well done.

Me on the other hand sort of followed your uncle's advice in 2005 and did borrow as much as I could (6x to be precise courtesy of GMAC no less) and now I live in a flat which I couldn't possibly afford, despite my salary having quadrupled since then. If I were to rent my flat it would cost me 35x my current I/O payment and I wouldn't be building up a significant cache of PMs which will pay off a good chunk of my mortgage in a few years.

Don't get me wrong, I'm sure your decision worked best for you, as mine has worked out well (thus far) for me, but what's best for you or me isn't always the best for everyone else.

Excuse me being blunt but that sounds like nonsense.

Can you give us the exactly numbers please, e.g. what you paid for the flat, what your income is, area, type of flat etc.

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I had a similar but opposite experience. In 2005 I told my nephew not to buy because IMHO houses were over-priced, and would eventually fall to 2000'ish levels. He disagreed, went ahead and bought a 3 bed semi.

  • His house is now worth much more than he paid for it, even with falls
  • He took an interest only mortgage, and after 2008 started paying off large chunks - much more than a repayment
  • His mortgage payments at 2% are about 1/3 of what he was paying in rent.
  • He now owns a big chunk of the equity
  • With a public sector job, he had the spare time to do the place up to make it nice.
  • He had a couple of babies and now values being able to stay put, and not having to move because of landlords

He is so glad he ignored me and bought.

But then he lives in a commuter village just outside London. And I guess the OP doesn't live near London.

Even if house prices suffer utter collapse by 2015, he will own his house by then, have had 10 years security for his family, and have the massive security of not needing to pay rent each month. He bought in his home town, where his friends and family lives, and really enjoys living there.

For me, by the time prices fall in London, those who bought in 2005 will have had years of cheap mortgages and inflation. Eventually the bears will be right, but in the meantime some of the bulls will have got on with their lives.

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We sold a house in 2005 for £250k, the last house that sold on that street in December 2010 sold for £390k and was smaller than ours, it's all down to location and the good ones will not drop from what i have seen, but I can find you houses in Sefton that have fallen 50% and the owners would still make 200% profit on what they paid for it.

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We sold a house in 2005 for £250k, the last house that sold on that street in December 2010 sold for £390k and was smaller than ours, it's all down to location and the good ones will not drop from what i have seen, but I can find you houses in Sefton that have fallen 50% and the owners would still make 200% profit on what they paid for it.

The London anecdotes remind me of pre 2007 chatter....from what I see of London a huge correction is needed and unavoidable. The rest of the country will end up pay for the stupidity of those in the city, bankers and idiot buyers alike.

Edited by TheCountOfNowhere

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Excuse me being blunt but that sounds like nonsense.

Can you give us the exactly numbers please, e.g. what you paid for the flat, what your income is, area, type of flat etc.

Not when you a tracker below BOE. It's no one's business exactly what I earn but I know it's impossible to buy a 2 bed Victorian conversion with outside space for what I paid for it. To fair I have done a bit of work on the place and I really do live in the best part of my N19 area.

I now know that 6x multiples borrowings is wrong and rising house prices are not good and HPC has helped me see the error of my previous ways. but the fact is that my situation just provides a flip side of the coin to the OPs and that renting is not always the best option. Had I followed his way I would be well and truly ******ed and would never be able to live where I do now.

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We sold a house in 2005 for £250k, the last house that sold on that street in December 2010 sold for £390k and was smaller than ours, it's all down to location and the good ones will not drop from what i have seen, but I can find you houses in Sefton that have fallen 50% and the owners would still make 200% profit on what they paid for it.

the 'I just can't see it myself' fallacy vs abstract logic

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Not when you a tracker below BOE. It's no one's business exactly what I earn but I know it's impossible to buy a 2 bed Victorian conversion with outside space for what I paid for it. To fair I have done a bit of work on the place and I really do live in the best part of my N19 area.

I now know that 6x multiples borrowings is wrong and rising house prices are not good and HPC has helped me see the error of my previous ways. but the fact is that my situation just provides a flip side of the coin to the OPs and that renting is not always the best option. Had I followed his way I would be well and truly ******ed and would never be able to live where I do now.

flip side of the coin infers a 50/50 chance, in reality you are in a tiny minority who did well out of this scenario

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I had a similar but opposite experience. In 2005 I told my nephew not to buy because IMHO houses were over-priced, and would eventually fall to 2000'ish levels. He disagreed, went ahead and bought a 3 bed semi.

  • His house is now worth much more than he paid for it, even with falls

    [*]He took an interest only mortgage, and after 2008 started paying off large chunks - much more than a repayment

  • His mortgage payments at 2% are about 1/3 of what he was paying in rent.

  • He now owns a big chunk of the equity

  • With a public sector job, he had the spare time to do the place up to make it nice.

  • He had a couple of babies and now values being able to stay put, and not having to move because of landlords

He is so glad he ignored me and bought.

But then he lives in a commuter village just outside London. And I guess the OP doesn't live near London.

Even if house prices suffer utter collapse by 2015, he will own his house by then, have had 10 years security for his family, and have the massive security of not needing to pay rent each month. He bought in his home town, where his friends and family lives, and really enjoys living there.

For me, by the time prices fall in London, those who bought in 2005 will have had years of cheap mortgages and inflation. Eventually the bears will be right, but in the meantime some of the bulls will have got on with their lives.

This doesn't stack up for me, can you provide figures. How big was his deposit on an IO, also if he's only been overpaying since 2008 he will have little or no equity. I doubt he is being allowed to suddenly be able to pay off large chunks without huge penalty clauses (especially as he's shifted over from an IO.)

I'm calling bullsh¡t on this one.

Edited by Jack's Creation

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Not when you a tracker below BOE. It's no one's business exactly what I earn but I know it's impossible to buy a 2 bed Victorian conversion with outside space for what I paid for it. To fair I have done a bit of work on the place and I really do live in the best part of my N19 area.

I now know that 6x multiples borrowings is wrong and rising house prices are not good and HPC has helped me see the error of my previous ways. but the fact is that my situation just provides a flip side of the coin to the OPs and that renting is not always the best option. Had I followed his way I would be well and truly ******ed and would never be able to live where I do now.

What are you going to do when interest rates hit 12%?

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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