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Greg Philpott

Trading Up/sideways Vs Str

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Second stepper here: have a 2 bed terrace with mortgage mostly paid off, in an OK suburb, but thinking of moving, either more centrally to a flat, or a sideways move to a better suburb.

Either way, we're looking at having to borrow another 150-200K to make the move. Now, renting the central London flat will cost about 1700 per month, whereas the additional borrowing will cost about 1400 per month at current interest rates (which may of course rise at some point). The figures are similar if we rent vs buy a nice house in the better suburb.

STR'ing only seems to make sense at the moment if a crash is a certainty - if London prices keep rising while inflation erodes the STR fund, then in 5 years' time we'll be in a worse place. At the same time, being nearly mortgage free feels good, and the prospect of borrowing a massive amount is daunting.

This toxic combination of HPI and low interest rates is a curse both for FTBs and for those wanting to move, even if they have nominally 'benefited' from the boom - I certainly don't feel any richer.

All HPI has done is provide greater leverage for those happy to take on more debt.

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What about your job? Str can give you an income if you loosd your job, as employement isnt at its best, and renting gives you mobility, so if the SHTF, you loose your job (and there is no crash) you can easily move to other rented and or stay afloat whilst you look

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Think of a number, double it, raise it by the power of your shoe size and stick to that as a budget.

Apparently the debt isn't real so spend as much as you like and don't worry about it.

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What about your job? Str can give you an income if you loosd your job, as employement isnt at its best, and renting gives you mobility.

True, although lack of employment is maybe less of an immediate issue in the field I'm in - I'd be more concerned about not being able to work as a result of accident or illness (do these insurance policies ever pay out?).

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Apparently the debt isn't real so spend as much as you like and don't worry about it.

That's the problem, it does feel like that at the moment, given BoE and govt policies. Certainly, the people borrowing these sums feel reassured by these policies that the debt isn't anything to worry about, and sometimes it's hard to resist that.

Can you see a return of mass repossessions, or is it more likely that debt will be commuted or written off? I wouldn't bet on the 'fair' outcome happening, given what's gone on the last 10 years or so.

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We are in a very similar position. 3 bed terrace in zone 3 almost mortgage free. It's feeling a bit small now though with a young baby so we are buying a large 4 bed (soon to be 5 after an extension) in zone 4 which we leave us with a mortgage of around 300k.

The gap to the next step only seems to be getting bigger so figured it is best to make the jump and then forget about house prices as we don't intend to move again for a long time.

Whilst job losses and interest rate rises are always a possibility I have worked for the same company for 22 years and the mortgage is only 1.5 times joint income so whilst it's more than I would like, it's manageable.

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do these insurance policies ever pay out?.

A collegue had critical illness cover, he then had kidney failure, he is on thr mend now (10 years on) but the insurance paid off his mortgage at the time.

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That's the problem, it does feel like that at the moment, given BoE and govt policies. Certainly, the people borrowing these sums feel reassured by these policies that the debt isn't anything to worry about, and sometimes it's hard to resist that.

Can you see a return of mass repossessions, or is it more likely that debt will be commuted or written off? I wouldn't bet on the 'fair' outcome happening, given what's gone on the last 10 years or so.

I feel I may have to agree with you... :(

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