Jump to content
House Price Crash Forum
Sign in to follow this  
CrashConnoisseur

Math Of House Buying.

Recommended Posts

'Math of House Buying':

http://www.intmath.com/Money-Math/3_Math-of-House-Buying.php

Flash Interactive

You can calculate any repayment here. Change any of principal, interest or period and then click "Calculate". You can also see a graph of the equity (the amount you own) that has been built up in the property over time.

[...snip...]

With mortgages, the amount you are paying early in the loan period is mostly interest, and very little is coming off the principal. Towards the end of the loan, the interest amount is less and the principal starts to disappear more quickly.

[Graph:] Amount ($) still owing after p months.

The mistake a lot of people make is to sell the house quickly. The average mortgage is only 7 years. They own very little of the house by then because they have mostly been paying interest to the bank. If house prices have gone up a lot, they are ahead. But if house prices level off, or decline, then you lose a lot of money.

[...snip...]

Footnote

It may not always be best to buy a house compared to renting. In Japan, house prices have still not recovered to where they were 16 years ago. Sure, interest rates are low there, but negative equity has been a huge problem for years. (This is when the amount that you owe on a house is more than what the house is worth.

[Graph:] House prices, Japan. Index = 100 in 1975.

This means that house prices more than doubled at the peak in 1991 and have dropped back to 1975 levels since. In 2005/2006 there has been a modest increase.

Interestingly, house prices in US, Australia, UK, and most industrialised economies have shot up in recent years due to low interest rates. One wonders what the future holds for house prices in these countries...

If rents are low in your area, it may be better to rent a place and invest (not spend) the difference.

Nice Web standards compliant page too.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.