DownwardSlopingPlateau Posted March 11 Share Posted March 11 1 hour ago, house-down said: Wow - I have a 630K mortgage left on a house in London and I dont feel that bad - Its also 12 years into a repayment mortgage when I bought in 2012 Payments are 3K a month which seems ok to me - Im single no kids with net income of 5.5K a month so its manageable I got a 75)K mortgage in 2012 as an IT contractor earning 750 a day - Ive gone perm now and feel much poorer but its still manageable If you'd put down a £100k deposit, those same monies invested in a simple mature markets equity fund would be worth over £1M today. Split over your ISA allowance and SIPP, it would also be tax free when you pack in work. As a single guy myself, I chose not to waste that opportunity. Each to their own, I guess. Quote Link to comment Share on other sites More sharing options...
mynamehere Posted March 11 Share Posted March 11 Every asset class holds risk. Even cash, as we've seen with rampant inflation. The most basic thing to do is diversify. For me personally that means 1/4 in stocks, 1/4 in property equity, 1/4 in fixed savings, 1/4 in debt. I didn't have any debt during the period of inflation which is something I want to change, so though I have the cash to purchase outright, I'll be taking on a mortgage, and putting the cash into savings and equity as above. Not because I think I am magical at predict the respective returns of these asset classes, but because I don't want to have all my eggs in one basket again Quote Link to comment Share on other sites More sharing options...
house-down Posted March 11 Share Posted March 11 1 hour ago, DownwardSlopingPlateau said: If you'd put down a £100k deposit, those same monies invested in a simple mature markets equity fund would be worth over £1M today. Split over your ISA allowance and SIPP, it would also be tax free when you pack in work. As a single guy myself, I chose not to waste that opportunity. Each to their own, I guess. FTSe 100 gone nowhere in ten years S&P has I admit and pound weakening will help but I do not believe ten times Do you admit that stocks are more volatiles (as measure by variance and standard deviation) than property in London? Quote Link to comment Share on other sites More sharing options...
DownwardSlopingPlateau Posted March 11 Share Posted March 11 (edited) 4 hours ago, house-down said: FTSe 100 gone nowhere in ten years S&P has I admit and pound weakening will help but I do not believe ten times Then do the math. Look at the returns from a developed markets global equity tracker over the last 12 years since you started your mortgage and based on your own figure of £3k/m and £100k initial - with the compounding, it comes to over £1M. As a single guy and IT contractor - just like you - I've rented cheaply and accumulated more than double that figure over the last 14 years. My belief was always to make that "£750/day" that you quoted work for me, rather than be locked away in a £630k mortgage for the last decade or more. Like I said, though, each to their own. 😉 Edited March 11 by DownwardSlopingPlateau In before the Spelling Police. :) Quote Link to comment Share on other sites More sharing options...
Nick Cash Posted March 11 Share Posted March 11 8 hours ago, house-down said: Wow - I have a 630K mortgage left on a house in London and I dont feel that bad - Its also 12 years into a repayment mortgage when I bought in 2012 Payments are 3K a month which seems ok to me - Im single no kids with net income of 5.5K a month so its manageable I got a 75)K mortgage in 2012 as an IT contractor earning 750 a day - Ive gone perm now and feel much poorer but its still manageable If that was me I’d be rather less optimistic. The fact that you say it’s “manageable” suggests to me it’s becoming an albatross. Good luck - hope you’re under 40 with lots of energy! Quote Link to comment Share on other sites More sharing options...
Bonkers2016 Posted March 11 Share Posted March 11 6 hours ago, mynamehere said: Every asset class holds risk. Even cash, as we've seen with rampant inflation. The most basic thing to do is diversify. For me personally that means 1/4 in stocks, 1/4 in property equity, 1/4 in fixed savings, 1/4 in debt. I didn't have any debt during the period of inflation which is something I want to change, so though I have the cash to purchase outright, I'll be taking on a mortgage, and putting the cash into savings and equity as above. Not because I think I am magical at predict the respective returns of these asset classes, but because I don't want to have all my eggs in one basket again @mynamehere What is inferred with the 1/4 in debt? as in taking about 20k of credit card debt? What is this is you don't mind sharing the details? Quote Link to comment Share on other sites More sharing options...
sell2rent Posted March 11 Share Posted March 11 (edited) 1 hour ago, Bonkers2016 said: @mynamehere What is inferred with the 1/4 in debt? as in taking about 20k of credit card debt? What is this is you don't mind sharing the details? I played the opposite game of using savings to offset mortgages. It gamified two mortgages and got them cleared on average in 5 years. This set me up for being able to leave my job and start a business from a hobby and not give up equity to investors at a time I was rock bottom. This turned out to be the single best financial decision of my life. Others do very well using debt, I just don’t sleep at night. Edited March 11 by sell2rent Quote Link to comment Share on other sites More sharing options...
Brendan110_0 Posted March 11 Share Posted March 11 On 09/03/2024 at 19:06, Pmax2020 said: I appreciate this is a difficult one to answer due to personal circumstances varying greatly, but how much would you borrow for a home? I’m not long 40, with 2 kids, and a wife that works part-time, but in a well paid job. Our current mortgage and combined income is roughly the same, approx 90k. I stare at ‘dream’ family homes that would increase my mortgage 2 or 3 fold, but I just cannot bring myself to put offers in. We have a nice house already, but I want a bigger garden and more space for the family. More importantly - a better school catchment! The thought of trebling my mortgage in my 40s, when I’ve spent 15 years getting it back below 100k, is truly depressing! Is anyone else in a similar position? Or has anyone bought something at a higher value and regretted it? Wouldn't bother with the school catchment area, AI is going to be an absolute leveller. Better off retiring early and living some life. Quote Link to comment Share on other sites More sharing options...
mynamehere Posted March 11 Share Posted March 11 Can't see AI being a leveller, it will likely put even more money into the hands of the rich, and raise value of scare stuff like land. Which tends to be owned by the rich... As for the debt question, it varies off course, but from my perspective at least in recent years, it also seems like mortgage rates are generally lower than the returns I'm getting on sheltered cash, and I can see inflation being quite volatile, so locking in significant mortgage debt at 4% seems like a sensible thing to do. also my mortgage has flexible overpayment, so you can react quite quickly to changes, perhaps it's more liquid than the savings in a way. reading this back I'm not 100% sure this all stacks up but it seems like putting all your cash into a paid off house isn't necessarily the most risk free option in these volatile times, but could be wrong about that Quote Link to comment Share on other sites More sharing options...
winkie Posted March 11 Share Posted March 11 When people take on the largest debt of a lifetime to purchase a home, most do not have enough money to buy houses in cash like one particular poster keeps telling everyone they have.....the issue of where interest rates will be going next is always, and will always be a consideration........average residential mortgage iro 4% to 5% is imo going to be the going rate for a while unless something drastic happens......can't see more QE for the foreseeable future, unless something drastic happens. Quote Link to comment Share on other sites More sharing options...
Stewy Posted March 12 Share Posted March 12 8 hours ago, winkie said: When people take on the largest debt of a lifetime to purchase a home, most do not have enough money to buy houses in cash like one particular poster keeps telling everyone they have.....the issue of where interest rates will be going next is always, and will always be a consideration........average residential mortgage iro 4% to 5% is imo going to be the going rate for a while unless something drastic happens......can't see more QE for the foreseeable future, unless something drastic happens. But surely cash is the best way to buy? If you buy with debt you end up paying multiple times the original cost. I paid a decent percentage less than the cost as some of it was compounded interest... ✓✓ Quote Link to comment Share on other sites More sharing options...
house-down Posted March 12 Share Posted March 12 It is scary to think that a 1MM flat costs you 52K a year in lost interest a year even if you buy in cash Also worth remembering that even in 2012 people were calling the top of the house market and we know whats happened since (+50% or thereabouts) Im saying that a house to live in is never a bad idea to buy and trying to time it is a suckers game Me : I borrowed as much as I could and did ok - If the market had been flat or fallen a bit I would have been ok as well Quote Link to comment Share on other sites More sharing options...
winkie Posted March 12 Share Posted March 12 3 hours ago, Stewy said: But surely cash is the best way to buy? If you buy with debt you end up paying multiple times the original cost. I paid a decent percentage less than the cost as some of it was compounded interest... ✓✓ Once paid for a home with credit that will take years, only then the next home can be bought in cash....or can save for years to buy one..... Quote Link to comment Share on other sites More sharing options...
70PC Posted March 12 Share Posted March 12 24 minutes ago, house-down said: It is scary to think that a 1MM flat costs you 52K a year in lost interest a year even if you buy in cash Also worth remembering that even in 2012 people were calling the top of the house market and we know whats happened since (+50% or thereabouts) Im saying that a house to live in is never a bad idea to buy and trying to time it is a suckers game Me : I borrowed as much as I could and did ok - If the market had been flat or fallen a bit I would have been ok as well "Im saying that a house to live in is never a bad idea to buy" I agree. People don't don't buy normal cars in anticipation of selling them for more later. "trying to time it is a suckers game" I don't agree. Overpaying has implications where people anticipate moving within a couple of years or use money they will need for other things. The growing number of people in trouble is evidence they have been overpaying. Price to earnings is a fundamental in property value. People were calling a top in 2012 but interest rates were reduced to a 300 year low followed by a string of government initiatives to prop up prices. The options for proping up an overpriced market look to be over. "I borrowed as much as I could and did ok - If the market had been flat or fallen a bit I would have been ok as well" That is rationalising your own decisions. There are times when borrowing as much as you can works. At other times it doesn't work. Quote Link to comment Share on other sites More sharing options...
sell2rent Posted March 12 Share Posted March 12 Timing may work if a market has lag effects and is inefficient? It worked well for me STR 2006-2011 after my new build doubled from 1998-2006. It seems to be so far from 2022-. Quote Link to comment Share on other sites More sharing options...
Stewy Posted March 12 Share Posted March 12 10 hours ago, 70PC said: The options for propping up an overpriced market look to be over. That won't age well. The price is never too high to buy. ✓ Quote Link to comment Share on other sites More sharing options...
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