IPOD Posted November 9, 2005 Share Posted November 9, 2005 "and you are using your interest to pay off your landlord's mortgage"!!!!!! Not if your landlord has an interest-only mortgage and your rent only covers the interest payments. In that situation you as the tenant are not "paying off your landlord's mortgage" (ie reducing the principal outstanding) by one iota. Quote Link to comment Share on other sites More sharing options...
29929BlackTuesday Posted November 9, 2005 Share Posted November 9, 2005 In fact I believe the question is, why do you lot bother? Like saying "YOU you mean" at primary school! Quote Link to comment Share on other sites More sharing options...
Si1 Posted November 9, 2005 Share Posted November 9, 2005 Not if your landlord has an interest-only mortgage and your rent only covers the interest payments. In that situation you as the tenant are not "paying off your landlord's mortgage" (ie reducing the principal outstanding) by one iota. hear, hear. a lot of the time (with occasional exceptions) the difference between the bearish and the bullish seems that the bears can do arithmetic. amazing but true. Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted November 9, 2005 Author Share Posted November 9, 2005 Too many details people....... The point is, you pay for your housing, so whether you pay for it as interest or as rent doesn't really matter. But if you pay for it as rent, you have no chance of benefitting from HPI Quote Link to comment Share on other sites More sharing options...
geranium Posted November 9, 2005 Share Posted November 9, 2005 Too many details people....... The point is, you pay for your housing, so whether you pay for it as interest or as rent doesn't really matter. But if you pay for it as rent, you have no chance of benefitting from HPI The devil's normally in the detail. Even Sarah Beeny factors in taxes (plural), fees, voids, repairs, service charges and risk. And if you pay for housing as interest, you have no chance of benefiting from HPC. We're both placing a bet. Let's face it, we don't yet know who's right. Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted November 9, 2005 Author Share Posted November 9, 2005 The devil's normally in the detail. Even Sarah Beeny factors in taxes (plural), fees, voids, repairs, service charges and risk. And if you pay for housing as interest, you have no chance of benefiting from HPC. We're both placing a bet. Let's face it, we don't yet know who's right. Yes I'm aware of that bet. But I believe the last 100 years have shown pretty clearly who's right...... Quote Link to comment Share on other sites More sharing options...
AgeingBabyBoomer Posted November 9, 2005 Share Posted November 9, 2005 'But if you pay for it as rent, you have no chance of benefitting from HPI' Got to disagree there TTRTR - HPI has made my rent about half the IO mortgageable value of the place I live in. Simply put it is cheaper to ren tfomr my landlord than it is to rent money form the bank. The difference goes into saving, and wating as my LTV plummets. Given the right falls, I may only need to borrow five figures as opposed to the six figure potential mortgage I was considering only a year or so ago. ABB Quote Link to comment Share on other sites More sharing options...
geranium Posted November 10, 2005 Share Posted November 10, 2005 Yes I'm aware of that bet. But I believe the last 100 years have shown pretty clearly who's right...... And within those 100 years there have been shorter-term cycles .... my time frame is rather less than 100 years. Quote Link to comment Share on other sites More sharing options...
Yonmon Posted November 10, 2005 Share Posted November 10, 2005 Once again I feel the need to point out the benefits of leverage. If you have £20,000 in the bank, 3% will get you £600 If you have £20,000 as a 10% deposit on a £200,000 property, 3% will get you £6,000. In fact a 30% return on your cash investment. The same point applies to leveraged investment generally. Why bother with a leveraged investment in property when there are better leveraged investments out there? Quote Link to comment Share on other sites More sharing options...
red Posted November 10, 2005 Share Posted November 10, 2005 Yes, so they pay off their landlord's mortgage and save themselves 900 pounds??? Who's the winner there (assuming the landlord is pretty clued up and professional)??? In a falling market, the tenant, of course. The 'clued up and professional' landlords will have bailed out long ago! Quote Link to comment Share on other sites More sharing options...
Key Worker Posted November 10, 2005 Share Posted November 10, 2005 I think the article you refer to is long on rhetoric and short on analysis. The only thing which does point in the direction of HPI appears to be mortgage approvals. I am personally fairly convinced that apparent rises reported currently is largely due to a rebalancing in the types of property sold. As for people who say TTRTR 'shouldn't bother', I think it would be much less interesing to read only posts which reinforce what people want to hear about a HPC. TTRTR also makes very valid points about leverage which some people don't seem to appreciate in thier rush to make themselves feel better about thier own STR position. It seems to me that if there is ANY HPI at all it is nearly always financially beneficial duinrg that period of time to be an owner, not a renter, all other things being equal, and not forgetting that the house-buying process is expensive in terms of transaction costs. Keep it up TTRTR! (But I do hope you're wrong!) Quote Link to comment Share on other sites More sharing options...
Levy process Posted November 10, 2005 Share Posted November 10, 2005 Too many details people....... The point is, you pay for your housing, so whether you pay for it as interest or as rent doesn't really matter. But if you pay for it as rent, you have no chance of benefitting from HPI ... but you stand a chance of benefitting from any HPD that may occur. Quote Link to comment Share on other sites More sharing options...
boom_and_bust Posted November 10, 2005 Share Posted November 10, 2005 (edited) Once again I feel the need to point out the benefits of leverage. If you have £20,000 in the bank, 3% will get you £600 If you have £20,000 as a 10% deposit on a £200,000 property, 3% will get you £6,000. In fact a 30% return on your cash investment. Hi, And visa versa. That could be a loss as well if prices fall. There are several property markets around the world in decline as we speak, it has happened plenty of the times in the past in the UK. You may destroy your credit history and theoretically, under British law, debt can still be charged as a crime if negligence or recklessnes can be proved. Theoretically you can still go to jail or at least be held responsible for that debt for the rest of your life. In reality, you would really have to screw up to do that (like our BTL magnet friend in the earlier thread). So it's a gamble now. Make your choice according to who you are I guess, your stomach for risk, debt, etc., Regardless if you believe that we are at the mid point of some kind of HPC or not, you have to approach the current market as a gamble at this time, too much speculation and analysis exists for it to be a clearcut decision as it was when prices related more closley to the economy and incomes. Make your own mind up how big that gamble is to you personally, whether housing is just a home to you or whether your perspective is as a property developer or BTL landlord. And remember, when prices correct to their long term average (as they always have in the past), you will then be facing a normal market where maybe you will not make specutacular gains but housing will again become a reasonable investment as well as a home. Buy now and the risk side is that you do not have a home you particularly wish to live in longterm and extra extra, extra debt. Boomer Edited November 10, 2005 by boom_and_bust Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted November 10, 2005 Author Share Posted November 10, 2005 The same point applies to leveraged investment generally. Why bother with a leveraged investment in property when there are better leveraged investments out there? Please, let us know what they are will you? Quote Link to comment Share on other sites More sharing options...
foxytrader Posted November 10, 2005 Share Posted November 10, 2005 TTRTR, you are dead right about the rental cost!!! Most people forget that in their calculations on here. Statements like "I have"X" amount in the bank making me "y" a year. They don't lke it when you tell them "and you are using your interest to pay off your landlord's mortgage"!!!!!! And before you all jump in slagging me off and even accusing me possibly of being TTRTR or Property Guru under another name. I'm not. I think prices will fall but I have to say, some people's desire to bring/wish financial apocalypse on the UK financial system because it is "Their right" to own a home is rather unhealthy I think, maybe you should all get out more........................... Not paying off the landlord's mortgage. If he has BTL he really doesn't want to pay it off. The property crash prognosis is not simply a death-wish on the part of certain people but a recognition that any asset where grossly overvalued from tulips to tech stocks will eventually crash. And no it isn't different this time. US and Australian prices are starting the ball rolling and it's on the way. Interest rates in the States are lower than here but rising. Hear the thunder.... Quote Link to comment Share on other sites More sharing options...
ʎqɐqɹǝʞɐɥs Posted November 10, 2005 Share Posted November 10, 2005 (edited) The Official House Price Rally? Its about time we had this challenge. I have been supping up my Vauxhall Nova for the last year. I have had it spray painted pink, lowered the suspension (I know its a bugger on the lady chavettes back if we end up porking in it), blacked out the windows (well I could only afford the windscreen but it looks kewl head on as I run you over), hand painted a couple of go faster stripes across the boot, installed the obligatory Zebra (fake) fur seart covers, modified the exhaust pipe into fat 4 chrome smoking pipes, added a feeble 2 foot spoiler off the boot (if you drive head on it looks like my boot is open but dont worry its just me spoiler). I was goig to add a couple of bucket bins in the boot to pump out 2unlimiteds "No Limits" but my money ran out so in place I have knicked a couple of wheelie bins from Salford and stuck a couple of cheap radios in the bottom of them. I need to get a pic of it soon. Youll love it. edit: Muttley can you co-pilot my car for a change? I dont want Dick 'Right Freds Dead' Dastardly scuppering my chances again. Edited November 10, 2005 by shakerbaby Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.