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£150K Mortgage In Perspective


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This thread seems relevant to my personal circumstances. Saved up a very substantial deposit while overseas. Came back in 08 and watched house prices tumble then stabilise. That, and this site, convinced me not to buy. So we keep saving...

I am into risk free savings (so nothing too shiny thank you). Here's the thing though. I'm gettting an unspectacular 3% in the bank. Given that the savings are for a house and they are nominally falling, I don't consider that I am losing out against RPI etc. However, there are a few bog standard terraced properties round me that I could buy with cash. The potential yield would likely be double the interest rate on my savings.

Everything in my heart and on this site says not to buy a place and rent it out. Doing the maths, my head's struggling to agree though...

Rantnrave,

Risk free savings?

Tell me more about this risk free? I know not of it.

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This thread seems relevant to my personal circumstances. Saved up a very substantial deposit while overseas. Came back in 08 and watched house prices tumble then stabilise. That, and this site, convinced me not to buy. So we keep saving...

I am into risk free savings (so nothing too shiny thank you). Here's the thing though. I'm gettting an unspectacular 3% in the bank. Given that the savings are for a house and they are nominally falling, I don't consider that I am losing out against RPI etc. However, there are a few bog standard terraced properties round me that I could buy with cash. The potential yield would likely be double the interest rate on my savings.

Everything in my heart and on this site says not to buy a place and rent it out. Doing the maths, my head's struggling to agree though...

Funnily enough I have been thinking along the same lines, like you I have my savings in the bank at just over 3% but I could comfortably afford to buy a dive that I wouldnt want to live in round my way for cash, but I am hesitant to do so as when somewhere comes up that I want I will no longer have the money to buy it.... If only we all had crystal balls we would be laughing!

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Also don't forget if you're talking paying back a mortgage, that 150k as a general rule of thumb becomes 300k of repayments.

Around 2007 a work colleague of mine told me about someone he knew who had recently sold their property. They sold due to a relationship breakdown, and her share of the profit from the property once the mortgage had been paid was around 100k. He then went on to say that it 'wasn't a lot of money' and that he expected her to have got more. He was earning between 25 to 30k at the time and had just 'bought' a new build 2 bed flat with a 95% ltv. I asked him how long it would take him to save up 100k. He laughed, and said it would never be possible for him to save anything due to his mortgage payments.

This is the kind of thinking we are up against. He was educated to degree level.

In economics.

He sounds like the perfect candidate for a job at the Government Economic Service :unsure:

Edited by mason
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So lets say the average mortgage in the UK is £150k, how long woud it take you to save that kind of money?

That probably includes an awful lot of people who bought ages ago. In the pricier parts of South East you are looking at maybe affording a 1 bed flat for that and a 50k deposit, though it might need to be in a place that floods every few years. It would take the average earner significantly longer to save for a family home than the average lifetime, I suspect. Even high-earning couples would probably be past reproductive age before saving up enough for somewhere big enough to have kids. And that is why the only way for inflation-adjusted house prices is up.

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This thread seems relevant to my personal circumstances. Saved up a very substantial deposit while overseas. Came back in 08 and watched house prices tumble then stabilise. That, and this site, convinced me not to buy. So we keep saving...

I am into risk free savings (so nothing too shiny thank you). Here's the thing though. I'm gettting an unspectacular 3% in the bank. Given that the savings are for a house and they are nominally falling, I don't consider that I am losing out against RPI etc. However, there are a few bog standard terraced properties round me that I could buy with cash. The potential yield would likely be double the interest rate on my savings.

Everything in my heart and on this site says not to buy a place and rent it out. Doing the maths, my head's struggling to agree though...

I have much the same thought process. Large sum of cash in the bank.

Around here you could buy a couple of terraces for 70k , rent on those could be circa £800 pm. Trouble is it doesnt solve my housing dilema! Also these houses are not in places that I personally would want to live.

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However, there are a few bog standard terraced properties round me that I could buy with cash. The potential yield would likely be double the interest rate on my savings.

Everything in my heart and on this site says not to buy a place and rent it out. Doing the maths, my head's struggling to agree though...

I'm looking at NE England, and the worrying part is that prices have fallen around 9% in a year- so of your 150k investment you only have 135 left in a year's time or just over 125 adjusted for inflation. I am guessing this doesn't fit with your idea of risk free savings. Unless you're looking at the LONG term?

On the other hand getting a 10 year mortgage fix at 3.99% with 70% LTV could be a good move if you're thinking ahead (not sure if this is for BTL though- i guess not). Must admit.it was that figure that made me start checking primelocation this weekend.

I don't think that capital appreciation is going to be a factor. You'd have to be prepared to see the value go down over the next few years (I'm used to that with my ISAs anyway so not that bothered!).

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£150K; with my bare hands, alot of blood, sweat and toil. A long time, because by the time you have saved the £150K pieces of paper, in ten years, one old £1 unit will be worth £0.1.

Imagine trying to walk up the escalator that is moving down against you.

Therefore one must put one's labour in savings vehicles that retain their value (and not necessarily increase in value). Passive income would be a bonus.

Notice how this boomer falls onto the escalator, he has some problems with inflation and falls back a step (extends the mortgage).

Although he fell onto the escalator when there was high interest rates, and the only way was up. Modern escalators have stop buttons and can be driven in reverse.

Better to stick to a sturdy built stairwell, or live in bungalow in area unlikely to suffer from floods!

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Contrast that to a young guy, who tried to get on the (ever upwards) ladder!

Drunk on BBC property porn, he jumped onto the ladder and promptly fell. His advice, don't do it.

When climbing the property escalator, be careful, make sure you hold on tight, and have a good footing. And jump off at the right time. Don't let anybody push you onto it, steadily approach and make a clean step from grounded to moving. Remember everybody makes the mistake of running too fast at the end of the ride! Don't be the fool that falls over.
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Once upon a time in a bygone era that no-one remembers, we were told if we wanted something we had to save for it.

So lets say the average mortgage in the UK is £150k, how long woud it take you to save that kind of money?

House prices are only this high due to mortgages. Is that the point you are making?

My mortgage is about £150K. I won't have to pay rent over the remaining 22 year term and the monthly payment is around £720.

If you are asking how long it would take to save £150K whilst renting (and supporting a family) then probably never.

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So lets say the average mortgage in the UK is £150k, how long woud it take you to save that kind of money?

About 10 years.

However, houses were never among the items that people were expected to save for.

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6 years with no deposit. 3 years with. If i include the OT then we could probably reach it in just over a year of continued saving.

Not sure what the rush is to buy though. My brother is only 24 and is trying to buy a slavebox down south on a 25 year mortgage that he can barely afford with interest rates at a historic 300 year low. Joint income of course and working in a job he hates. Seems very strange to me. Property is a depreciating asset in real terms and will continue to be so for many years.

I have totally changed my mind on this - it used to make me so angry - the boomers had it so easy comparatively. I really don't see the attraction of taking on a huge debt and paying it back plus a huge amount of interest to the bank over half your productive life. Surely it is much better to save and rent more modestly for a few years and then buy outright instead - if ever.

This isn't even discussing the massive potential of capital growth of your funds as you go. I like the german approach in this respect.

Sod the banks!

Great post. Exactly. IF you've the option of much cheaper rents or staying at home etc....

The thought of buying a house, unless it's with a small mortgage (<£80k) now just fills me with dread.

As for BTL versus a savings account, what are you on about? You said you are a risk-averse saver (no gold etc) so this is just as bad an idea! All sorts of maintenance factors, house prices could come down, and the general hands-on approach of renting out to others (never mind it being morally wrong)... I wouldn't ever think about it unless I was very well off, if at all.

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I struggled for nearly 10 years to pay off a similar mortgage. The best thing that happened is I got made redundant. At first I was very worried, but then I got a lump sum redundancy and a consulting job on 3x the previous rate, and paid it all off instantly. I have now gone from £0 discretionary income to many £k's a month. I am working with my old team, but now buying all the drinks.

I kept the same lifestyle, and am now less worried about money. The best thing is my partner and I never ever row or even talk about money. I keep thinking I should move to a better area, go abroad on holiday, but I now feel at home living cheaply. I work now just to pay the utility bills and council tax.

However, if my employer had gone bust, then I may well be homeless now. Life turns on such things.

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  • 433 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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