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Mortgage Advice From Colleague


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Got to add a +1 to the renting. We found a company rather than an individual and therefore haven't had to move on. Been here years and will be for years to come. Cheap as chips (half what the mortgage would be), posh area, excellent schools and commuting links. Life is definitely not on hold here.

My point is, all those things that buying a house is 'supposed' to provide can be had with renting. And it can be way cheaper too. The old myths still get trotted out at parties and it just makes me smile.

Horses for courses though.

And circumstances, too. You yourself have pointed out the benefits of being at less risk of having a landlord pull the rug from under you, as it were. You've been really lucky. In it for a quick buck landlords have caused serious problems. In the area of London that I live in, homes are traded like something on a monopoly board. One bed flats go for upwards of £900 a month.

Renting is going to be a fact of life for people from now on. It shouldn't be a matter of luck to find a good landlord and a bit of stability.

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Just a thought, if interest rates sky rocket, won't rent rates pretty much track it?

Unless you can pay cash for a house you're pretty much at the mercy of higher beings.

I'm in the 7 th year of a 30 Year mortgage, bought at the peak but I'm lucky that my house is worth pretty much what I paid. Scared of interest rate rises? .... I certainly am!

What are the choices, line a landlords pocket or try to own a property that I can sell at retirement or leave or my daughter?

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Got to add a +1 to the renting. We found a company rather than an individual and therefore haven't had to move on. Been here years and will be for years to come. Cheap as chips (half what the mortgage would be), posh area, excellent schools and commuting links. Life is definitely not on hold here.

My point is, all those things that buying a house is 'supposed' to provide can be had with renting. And it can be way cheaper too. The old myths still get trotted out at parties and it just makes me smile.

Horses for courses though.

If anything happens to the company that you rent from, your "home" is simply an asset that will be sold on to the highest bidder.

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Just a thought, if interest rates sky rocket, won't rent rates pretty much track it?

Do explain, I'd love to understand how my rent is determined by the LL inability to pay his mortgage (although I hope mines is paid as his ex house and bought 14 years ago)

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Do explain, I'd love to understand how my rent is determined by the LL inability to pay his mortgage (although I hope mines is paid as his ex house and bought 14 years ago)

If interest rates rise significantly, people will generally not take out mortgages... But will still need somewhere to live.

There will be a bigger demand for rented properties (nothing to do with landlords paying their mortgages), as demand increases so will the monthly rent rates as there will be panty of people queuing up to rent and pay the going rate.

Simple principle of supply and demand surely?

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If interest rates rise significantly, people will generally not take out mortgages... But will still need somewhere to live.

There will be a bigger demand for rented properties (nothing to do with landlords paying their mortgages), as demand increases so will the monthly rent rates as there will be panty of people queuing up to rent and pay the going rate.

Simple principle of supply and demand surely?

I know what your logic is but the supply demand has broken down what with the destruction of the value of the currency causing real inflation far higher than official numbers as a consequence joe muppet only makes it 3 weeks of the month on his pay cheque cannot pay higher mortgage/rental costs. I think we'll see more families turfed out when they cannot make the mortgage payments moving back in with their parents. The knock on of this being that rental demand collapses and as you say supply/demand but I think rents will fall.

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The concern is that the BoE will continue to print money like there is no tomorrow. They will continue to debase our currency to 'inflate' our debt away. What we have is a 'FIAT' currency that is back by nothing and worth nothing (in an intrinsic sense).

While stagflation could lead to biflation, (where we will have a fall in prices in debt based assets (i.e. real estate) and a rise in prices in commodities (i.e. food and fuel) in the short term), the long term trend is that an increase in money supply will inflate the prices of every things.

If you want to hold out until the biflation occurs, you need to seriously think about how you are going to protect your deposit. BoE will rob all your saving if you leave it in cash.

In fact, there are not very many sound options.

1. Gold is fairly overpriced and unpredictable (but not as overprice as many think)

2. Shares and Bonds - when the PIGS and Euro imploded, the share market will collapse like the Soviet Union!!

3. US dollars, Euro, Yen are all fiat currencies and their central banks could not be trusted.

I would put money on farmland and natural resources but you will need substantial amount of capital to invest in them properly.

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If interest rates rise then at some point it will impact rents, but that doesn't mean that they'd go either down or up.

I'd like to know just how much of the rental market is owned out right and how much is "mortgaged". My feeling is that when rates rise the property market will tank. That will mean a large number of properties ending up in the hands of their owners ie the banks who'll want to reduce their losses. One way of doing that will be keeping them rented.

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I know what your logic is but the supply demand has broken down what with the destruction of the value of the currency causing real inflation far higher than official numbers as a consequence joe muppet only makes it 3 weeks of the month on his pay cheque cannot pay higher mortgage/rental costs. I think we'll see more families turfed out when they cannot make the mortgage payments moving back in with their parents. The knock on of this being that rental demand collapses and as you say supply/demand but I think rents will fall.

I have no idea how it will pan out if interest rates take a hike.

I do know that many if not most home owners will do everything they can to keep their home, extra jobs etc...

If you simply cannot keep or own your own home, the next best in the hierarchy is renting which is what people will look to do.

It would be a very last gasp for many to move their family in with parents and would only ever be a short term solution, with people looking to rnt or buy as soon as they could.

The hysteria, uncertainty, instability and damage that hiked interest rates woul cause leads me to believe that rates will remain low ( fingers crossed!) for many years to come!

I would imagine rent rates will track the interest rate proportionately as a large %age of rental properties will not be owned outright and landlords aren't going to let at a loss? Owned rental properties will not need to lower their demands as there will be a going rate set by the mortgaged rental properties with potential tenants a plenty ready to fill them.

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I got a 2% pay rise, after the 0.2% the year before. I plan my life not expecting a pay rise, if it happens, it's a bonus. This is a good attitude to have.

Those are both pay cuts measured against inflation though. Is your performance waning? Is the company stock value falling? Why are you settling for less? This is not something you should be approaching in a laissez-faire attitude, as I assure you your boss will be smiling as there are in fact (if the company is ticking along ok) several percentage's worth of inflation adjusted payrises over 2 years going spare for himself.

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And these new renters will find the money for rising rents from the place they couldn't find the money for rising mortgage payments? Or do you suppose at the same time rates are rising the HMG will continue to borrow at ever growing figures, I think not as rates will be rising not through choice.

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And these new renters will find the money for rising rents from the place they couldn't find the money for rising mortgage payments? Or do you suppose at the same time rates are rising the HMG will continue to borrow at ever growing figures, I think not as rates will be rising not through choice.

People will simply not be able to afford to or be allowed borrow

There are plenty of people who could just about meet rental payments, but no way could they afford this plus a massive deposit, solicitors fees, or surveys, their own property maintenance etc... Nor would many want to borrow at a base rate of 10%+ with a chance of it going higher still!

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But what do you think might have happened to your rent by the time interest rates hit 12%?

The last time Base Rates were 12% was April 1991 i.e. 21 years ago.

If they take that long to go back there (and they might well) Aunt Sally will have just about paid off her 23 year mortgage by then so won't be worried if renting would be cheaper at that point.

If Japan is anything to go by, most of us on here could be retired and still won't have seen base rates above 2%.

Of course, a lot might happen to the FTSE and house prices in the mean time if so...

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There are some people on here who wouldn't recognise basic good manners if it ran them over in a car. Might be something to do with the anonymity. Anyway stuff 'em and don't be intimidated by them. As one of my kids like to say 'they've got issues'. What makes HPC so interesting is the range and perspectives of opinions on offer so don't be afraid to give yours. There are some fantastic posters and I've learned loads.

Aw thanks. I know what you mean. I too have learned a lot from this site which is why I will continue to "lurk" . :D

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TTRTR and all that BS ended the second the LHA levels were dropped to the 30th percentile.

Now rents are on a slow arduous marathon to the bottom.

And that's before you cut LHA for 25-35 year holds to shared room rate or think about cutting lha for under 25s.

The rental market is about to have it's ar$e ripped out from the bottom.

The rental market was support by 50th percentile LHA and pay-what-they-ask housing benefit, both of which are gone

Throw in people short of cash looking for lodgers and it's game over for btl.

Edited by RufflesTheGuineaPig
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Throw in people short of cash looking for lodgers and it's game over for btl.

People taking in lodgers will never account for any meaningfull number of people, nor will couples be able to find lodgers readily never mind familys finding somewhere to lodge!

People who can't affor to buy will surely aim to rent eventually?

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But you will have seen house prices drop by 60%.

Trust me Japan is not the example that we will go by.

These are the following reasons.

1. Japan has enjoyed a trade surplus for decades with a positive cummulative current account.

2. When recession hits Japan, the rest of the world were still doing reasonably well. At present, we have the PIGS and Euro about to implode. While the American's sovereign's debt crisis about to surface, China's also slowing down with high inflation.

3. Japan has a strong industrial base. At the time, they continue to manufacture goods that the world continues to buy. In our case, when our banks (manned by incompetent bankers, bailed out by corrupted politicians) go belly up, we have nothing to sell. Our service section will collapse.

4. Japan is nowhere 'printing' (a.k.a. quantitative easing) as much as we did / will.

Our situation is more like Zimbabwe!!

inflation-zimbabwe.jpg

post-19903-0-85686400-1340841513_thumb.jpg

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