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First Time Buyer Beware Document


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your right - people have enough problem understanding that property prices might go down never mind understanding the difference between interest and capital repayment... 

Sure that's the difficulty of countering sound bytes like this, the issue isn't that simple. What does dead money really mean anyway?

Looks like this is a leave the document as per original then although I'm a bit confused that the heading says renting is not dead money and then the paragraph says that a mortgage is :( Hmmm it's too late to think about that one.

I am not an expert on human phsychology (sp?) but I think it is always best to get one message over cearly than many messages over misunderstood... 

Agreed.

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What does dead money really mean anyway?

As I understand it, dead money refers to money which has gone out of your possession which needn't have done. So for example if you buy a house the money you pay on a mortgage is going to you (as long as house prices don't fall to zero while you own it). Think of it like this: owning a house is like pouring money into your own piggy bank, and renting is like pouring it into your landlord's piggy bank. In reality it's a LOT more complicated than that, but I think that's the gist of it.

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Good stuff.

Couple of queries:

"house prices are overvalued by about 30%, according to the Bank of England"

Did the BoE really say that, if so can you post and maybe include the reference?

This renting is dead money issue is a tricky one. However I don't think it's right that a mortgage is dead money as if it's a repayment mortgage some of the payment will go towards paying off the equity.  It's more the mortgage interest that isn't buying you anything. Trouble is explaining this all would get a little too bogged down so I see why you've gone for what you have. I'm thinking that a weaker point like that will be too easy to counter by someone wanting to discredit the document, that's the problem with countering soundbytes :( Renting is smart money ;) Maybe shove interest after mortgage, "Well mortgage interest is just dead money..."?

The bank of england quote came from The Monkey. I can't find the reference myself either which has got me worried now....

The Mortgage is dead money statement does apply. The majority of a first time buyers repayment mortgage is interest. A tiny little bit of it goes to paying off the capital. When houses are falling you are most likely not paying off the capital quick enough to cover the cost of the fall. Hence the whole payment each month is losing you money. Especially so now as you can rent for a lot less and the reaminder you save up for a deposit.

Agreed that trying to put all that across would have been a nightmare. Kept it simple and hopefully it should trigger enough interest for someone to do a little bit of their own checking (maybe even visit this site).

It's mostly about getting an opposing view out there to the people that need it most. Without an opposing view they can't make an informed decision.

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We need an HTML version on the internet as not everyone has or likes to use adobe reader. The HTML version needs plenty of META tags and registering with the main search engines. Once it there then if we all click on the links from say Google then the article will drift towards the top of the results.

I does make a good read

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FIRST_TIME_BUYER_BEWARE.pdf

Please find attached the final draft, unless anyone can see some obvious mistakes.

This document should be sent to any first time buyers you know. Either print it and give it too them or just email it too them.

Excellent work, like any document you can always change things/add things etc, but regardless it gets the point over

You only have to stop a FEWyounger FTB's ruining their lives for the next 10 years and its been worthwhile

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I like the document but would like to see something about negative equity in there. Even the mention of the word would be very useful.

I only learnt myself this week that you can't sell your property if you are in negative equity. You would have to pay the difference to the bank if you want to sell and I wouldn't expect many FTBs would be able to do this. Therefore they could be stuck in their house until the price recovers and that could be more than 10 years if ever!.Also you can't switch mortgages and therefore will have to go onto the banks SVR once your fixed rate expires and this is generally much higher.

Anyone that has bought on 95% or 100% LTV mortgages in the last year is probably now in NE, they can't move and shortly they will be paying SVRs and that's going to really hurt, especially if IRs increase.

I feel that this is very important. It is NE that really ruins peoples lives.

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As I understand it, dead money refers to money which has gone out of your possession which needn't have done. So for example if you buy a house the money you pay on a mortgage is going to you (as long as house prices don't fall to zero while you own it). Think of it like this: owning a house is like pouring money into your own piggy bank, and renting is like pouring it into your landlord's piggy bank. In reality it's a LOT more complicated than that, but I think that's the gist of it. 

As far as I can see dead money is a term from poker

http://en.wikipedia.org/wiki/Dead_money_%28poker%29

The Mortgage is dead money statement does apply. The majority of a first time buyers repayment mortgage is interest. A tiny little bit of it goes to paying off the capital. When houses are falling you are most likely not paying off the capital quick enough to cover the cost of the fall.  Hence the whole payment each month is losing you money. Especially so now as you can rent for a lot less and the reaminder you save up for a deposit.

Agreed that trying to put all that across would have been a nightmare.  Kept it simple and hopefully it should trigger enough interest for someone to do a little bit of their own checking (maybe even visit this site). 

Ah I understand what you mean now, cheers.

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Finally the Monkey has found it here

"Britain's homeowners were warned by a senior member of the Bank of England's interest-rate committee yesterday to brace themselves for the "significant probability" that house prices will fall by up to 30%."

"Based on the long-term relationship between house prices and average earnings, of about 3.5 times, he said house prices would have to fall around 30% to re-establish the average of the last 20 years."

http://www.tiscali.co.uk/money/guardian/ne...ldfallby30.html

And here are some supporting links:

http://news.bbc.co.uk/1/hi/business/3936889.stm

http://news.bbc.co.uk/1/hi/business/3806961.stm

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We need an HTML version on the internet as not everyone has or likes to use adobe reader. The HTML version needs plenty of META tags and registering with the main search engines. Once it there then if we all click on the links from say Google then the article will drift towards the top of the results.

I does make a good read

The Monkey couldn't agree more.

How about people PM the Webmaster and ask him?

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Cityfool

There's a website which may be familiar to some people, but it's one a friend recommends for ensuring the websites he designs and constructs get in the top results on search engines.

Here's a link:

Website promotion

Good luck!  :)

There is a better one called webposition gold/platinum to which i have unlimited access let me know the details and it can be arranged, be careful when promoting websites etc.. you can easily shoot yourself in the foot.

Give me the key search phrases you want and i can find the most common search phrases used by anybody searching for it and a lot more right down to the most effective domain name.

Go to yahoo.co.uk

Type in diamonds for sale - no 5 out of 1.250 000 is my domain for sale and i'm working on the no 1 slot

not bad eh

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Ok heres a challenge who can be the first person to get one into the pockets in the windows displayed at an estate agents and take a picture of it, without them noticing..It will take some teamwork to do, but would be amazing if someone could pull it off    :lol:

I think it could be done, they are not that quick at noticing things.

Just before the Xmas weekend, we found a strip of large 'Buy One get One Free' stickers (each about 4inches in diameter) outside a supermarket. We decided to save them for the EAs windows, so we waited until the Xmas weekend when they were closed for a couple of days, and stuck them on every EAs window.

Some caught on straight away on the first day they re-opened, but others didn't even notice them for a week, Foxes took 8 days until they noticed (I think they only noticed when the window cleaner came round).

Thinking about printing some nethouseprice labels to stick on the windows, so that people who stop to look in the window get to know about nethouseprice. :rolleyes:

Mrs Rainbow

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Is there anything in there about building and planning applications?

These are free to examine. You simply have to go to your local council and you can see if any building applications have been made and what they were.

You're doing the surveying work and it doesn't cost yuo a penny.

VERY useful if you want to check out basement/loft conversions.

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  • 1 month later...
Guest The Masked Turnip
FIRST_TIME_BUYER_BEWARE.pdf

Please find attached the final draft, unless anyone can see some obvious mistakes.

This document should be sent to any first time buyers you know. Either print it and give it too them or just email it too them.

Any feedback for changes please post in this topic.

I'm going to send it via email to a whole bunch of people I know are thinking about buying but am not going to tell them its mine. The whole objective here is to give the document the air of a third party voice.

It might not be a bad idea to send through to some of the usual channels. The importance is if you know someone whose renting they should definately get it, in case they get any crazy ideas.

Landlords reading the forum, you could send it to your tenants to encourage them to stay put  :P  (see it's win win)

If someone wants to make a start on the estate agent one then please feel free..I'm a bit busy with my business at the moment to get started on that as well.

Well done on the work. Maybe we could have an 'email your friend this document' link where we can put in multiple addresses.

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Perhaps there should also be an e-mail, letter, etc. campaign to the various TV channels saying that all the property programmes are excedingly boring and that it is about time they moved onto a new topic. Just a thought as they start to respond to a very small number of letters of complaint. Targeting newspaper editors (e.g. giving them ideas for news items, etc.) and letters to newspapers might also help. In my opinion the propaganda of the vested interests needs to be attacked on as many fronts as possible.

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This thread proves one thing. STR is not for everyone. For people who are relaxed enough to sit back, maybe keeping an eye on the market, but prepared to wait it out as long as it takes in rented accommodation, well that is one thing.

If you are of a less relaxed personality type, there is the danger that it will turn into an obsession. Once you get to the stage where you are personally spending (or wasting) your time trying to persuade other people to enter the housing market in the hope that this will somehow help your cause, then I think you have gone beyond desperation point. You need to refocus your life, and if owning your house means that much to you – buy one.

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Good stuff:-

1. Can you post a word version as well.

2. It is ok if i edit so it says 'House Buyers Beware' as First time buyers are only a minority now and we should also target:-

a. BTLers

b. Second home buyers

c. Those returning from renting.

d. Immigrants

e. Divorcees (1 home becomes 2)

3. We should drop piles on trains, boats, airports and in motorway service stations, places where people pass through a lot.

Though I am sure there will be twouble at some point over this.

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