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Bingley Bloke

Buying Overpriced Property Isn't Hard Enough Yet, I Fear

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Despite my bearish sentiments about property, I feel we may be in for a bit of a wait yet before prices really tumble. Here's why...

On my wage I can borrow £59,500 which, when combined with my savings, amounts to about £70,000. This won't get me anything, but £120,000 including a loan od £110,000 (6.47 x my salary) would actually get me somewhere half-decent where I live, and I could afford it too. Here's how...

I borrow £110,000 on a ten-year fixed rate deal of 4.99% currently offered by the Halifax. This would give me a monthly repayment, on interest only, of £457.42. I'm an expert when it comes to living cheap so saving £250/month would be possible, though tight, and if I did this for ten years I would end up with approximately £35,000 saved up. When the fixed interest deal came to an end I could use these savings to pay off £35,000 of the debt and continue with a mortgage of £75,000. I don't know what interest rates will be by then but even at 7.25% the repayments on a £75,000 mortgage would be slightly less than the £457.42 I'd been paying for the last ten years. Then I'd start saving again and do the same after another ten years, leaving me with a mortgage of just £40,000 which would then be small enough to be completed as a repayment mortgage rather than interest only as my wage should be significantly higher.

Of course, soaring energy costs are likely to make things a bit more complicated than that, but I feel it's still too easy to buy property right now. Even I can do it!!

Edited by Bingley Bloke

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Thats why credit tightening by banks will be key in making the house of cards collapse.

There are a number of reasons this bubble has gotten out of control... a key one of them bing stupid people.

If stupid people can borrow enough to buy, they have adequately demonstrated (over the last few years) that they will do so.

The only things that will stop them from doing so, IMHO, are sentiment and lending criteria.

If sentiment changes significantly, which it is but slowly, then they will not see buying as a good idea and won't.

If lending criteria get tightened then they will not be able to buy anyway unless they can really afford it.

I think we will start to see tighter lending criteria due to the massive increases in bad debt on banks/BSs books. Also higher IRs will put a stop to the cheap credit mortgages of the last few years.

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Maybe so, but don't forget first time buyer numbers are at their lowest ever, so not everyone is willing or silly enough to borrow massive amounts, even if they can.

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Of course, soaring energy costs are likely to make things a bit more complicated than that, but I feel it's still too easy to buy property right now. Even I can do it!!

yes...me too.

i could cash in everything i ever saved. sell my car. get a second job. sell tat on car boots during the weekend. take a huge mortgage and also a loan for the deposit. hold off from a family or going out and never spend on the high street. id eat beans on toast with the cheapest bread i can find. then id sit at home with no tv and nasty used furniture and have sleepless nights of massive debt worry for the next 30 years.

for that id get a house that a 1970s factory worker could have afforded - now thats progress....

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yes...me too.

i could cash in everything i ever saved. sell my car. get a second job. sell tat on car boots during the weekend. take a huge mortgage and also a loan for the deposit. hold off from a family or going out and never spend on the high street. id eat beans on toast with the cheapest bread i can find. then id sit at home with no tv and nasty used furniture and have sleepless nights of massive debt worry for the next 30 years.

for that id get a house that a 1970s factory worker could have afforded - now thats progress....

That would be funny if it wasn't reality :lol:

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yes...me too.

i could cash in everything i ever saved. sell my car. get a second job. sell tat on car boots during the weekend. take a huge mortgage and also a loan for the deposit. hold off from a family or going out and never spend on the high street. id eat beans on toast with the cheapest bread i can find. then id sit at home with no tv and nasty used furniture and have sleepless nights of massive debt worry for the next 30 years.

for that id get a house that a 1970s factory worker could have afforded - now thats progress....

Don't be daft RFD.

You previously claimed you earn £40k PA and you live in the Manchester area. You also said you have a £40k deposit saved up.

You could buy a £200k property and have plenty of money left over each month for a car, good food, a TV and the odd family holiday.

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  • 301 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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