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xavierpj

Another Soul Gets Sucked In To The Madness.....

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... but like I said, I'm not going to argue with you over this. Everybody I have spoken to, apart from you, thinks I'm making the right decision. Property is a long term investment, so even if the market does drop, I can wait it out. Negative equity is only a problem if you come to realise the value of your property, i.e. sell it.

Just so that you know that I've given some thought to the long term consequences, here's some figures I've calculated based on a £150k mortgage on a £160k property. I'm assuming that the variable rate is 5.75%, when doubling this I have taken it to 12% for ease of calculation.

1. If interest rates don't change, I could take at least a 12% drop in the value of my property by the time I finish my PhD (7 years) and still be in positive equity. So if I wanted to sell up right then, I could still do that and have money in my pocket. If interest rates doubled, I could take an 8% hit in the same period.

2. If I waited a little longer, say for 10 years, allowing me to make some use of my recently gained PhD, I could take a 19% drop and still be in positive equity. If the interest rates doubled, I could take an 11% drop in the same period. I understand from the graphs on the OECD paper that 10 years could be the bottom of a trough in house value.

3. If I waited till I'm 40, which is in 15 years time, by which time I would probably be looking at leaving the country, I could take a 29% drop in the property price. If the interest rates doubled, I could take a 19% drop. Extrapolating the OECD paper, it's likely that if the market does fall, it would have begun to rise again by this time.

If I wanted to leave the country whilst the housing market is in recession, I could always switch to an interest only buy-to-let mortgage and sit out the recession. If I decided to upgrade in this country, I would probably do the same if we were in a recession so that I could get a better property and wait until the market rises back to a point where it is feasible to sell my original house.

The other arguement could be that I should wait for prices to drop before buying which isn't sensible IMO as they may not drop and I would not be able to afford if they got much higher. Considering that there is a severe housing shortage in London, a nationwide drop would probably not hit the lower end of the London market as badly as these are the houses which people want and can afford.

Like I said, I don't really want to argue this as my mind is made up and it will take a hell of a lot more than statistics, whether they're from the news or the OECD, to change my mind. I just wanted you to know that this has been seriously thought through. If the market crashes, then the likelihood of me being in negative equity and it being a problem for me is unlikely; we really would have to be back at interest rates of 17%+ like the late 80's for that to happen.

as always

xxxxx

P.S. So please can we talk about something nice like the weather next time ;o)

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Except that he's right in what he says

Edited amortization Table on £150k loan on £160k house @ 5.25%

Year Loan Balance

2006 147,701.78

2013 123,373.25

2016 109,559.16

2021 80,534.15

Edited by mysterybadger

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Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

Edited by ?...!

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Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

Because he KNOWS tha 160k will buy the house he wants whereas you only HOPE that 120k will. With most mortgages fixed for a number of years and people offloading expensive credit, where will the pressure come from to cause prices to come down as you suggest?

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Because he KNOWS tha 160k will buy the house he wants whereas you only HOPE that 120k will. With most mortgages fixed for a number of years and people offloading expensive credit, where will the pressure come from to cause prices to come down as you suggest?

Er?... I said:

Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

I haven't suggested anything all I have said is:

Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

I'm not hoping for anything.

Am I?

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Er?... I said:

Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

I haven't suggested anything all I have said is:

Bears on this forum have a beautifully simple arguement.

Why pay 160K today if you can pay 120K in the future?

The difference is the price of impatience.

I'm not hoping for anything.

Am I?

Thats one big IF.

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Thats one big IF.

It can't be that big, you missed it the first time you read it.

I had to point it out by making it bold and italic

How likely or not you think this is, depends solely on what you believe.

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Thats great...... A happy house buyer. Hope it all works out for you mate.....

But if the markets drop and you lose your job, you might not feel the benefits of your small expensive house.....

Including interest and capital repayment, by 2016 how much will this investment have cost you ? That sounds like a lot of real money..... Especially for the man on the street.

You sound like you have it sussed though, why dont you buy two houses and rent one out ?

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No point arguing with NoDumbFvckSunMoron, he makes TTRTR look intellectually gifted.

Er whch makes you look what exactly?

Do you ever post anything other than abuse and pathetic griping?

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Guest Winners and Losers

Look, at the end of the day it IS quite incredible the amount of absolute tat that is selling for crazy prices. Why? Because people think that in 12 mths time it will be worth twice as much. These are the people who are going to be whinging and moaning for the next 10years.

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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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