Owning your own home

Obviously in order for money to be invested into something it has to be generated from somewhere. The government prior to that of Mad Margaret probably didn't see the need for large scale investment in social housing because they didn't conceive the plan to sell it off and not re-invest it back into the system - we have that deranged bitch to thank for that.

Nowadays if someone wants to build a new development they have to provide a percentage of affordable housing. That pair of vomit-inducing twats the Candy brothers have built a small selection of flats in Battersea in order to account for their percentage at No 1 Hyde Park. Outrageous behaviour - but if you spend £80 million on a flat, the last thing you want is Frank Gallagher pissing in your car park or Rab C. Nesbitt loitering outside the door.

The councils were allowed to plough the money back into the system once they had cleared their debt. In practice most didn't. They just went back to the old ways of neglecting their housing.

I'm not sure how the Candy bros got away with that. The percentage of social housing is supposed to be in the same development. But it's bullshit anyway. What you get is a couple of shared ownership properties at stupid prices with a tiny 10 or 15% share available. The system really needs some regulation.

I believe they got away with it because the bloke who bank-rolled their operation went apeshit at the prospect of people sitting on battered sofas outside his multi-million pound development.

The bigger the spend, the higher up the corruption will flow.

^^ is this a Tory calling for more regulation?!

(at BQ obv, not B&D)

I don't understand the point you're making. That I can rent at £625 a month and save a similar amount - then in 30 years buy a house outright? How can I rent and save that much at the same time? And what about the 30 years wasted rent? That's some very flawed thinking there.

My simple point is that people who off-handedly write "wasted rent" or "throwing money away on rent" often aren't really aware of what they are really doing when they own a house.

Ignore the principal repayment issue for a second.

NORMALLY the rental costs are pretty close to the interest cost for the same house.

This is the key to understanding my point. Interest rates are very low now so it may well be cheaper to buy TODAY than rent - but you have to be prepared for the rise in rates.

So for example, a £100k house might cost £5k to rent a year, which is the equivalent of a 5% (interest only) mortgage (no deposit).

So you paying £5k per annum to the bank or to your landlord is exactly the same thing.
It isn't throwing money away - it's a cost of living.

Finally on the principal repayments - IT IS JUST SAVING MONEY.
You have enough over your interest payment or over your rent to save.
Good for you.
Whether you choose to pay off the mortgage or put it in an ISA or a pension or whatever is just a simple investment choice.

You could rent and save and then have a nest egg with which to buy a house.

Principal repayments aren't some magic beans investment!

Also I wasn't having a go about renting I just think that your rent would be a lot higher if your proposals went through and that's an odd thing to want!

I'm not worried about paying interest - it's a necessary evil.

EXACTLY - just like paying rent!

So for example, a £100k house might cost £5k to rent a year, which is the equivalent of a 5% (interest only) mortgage (no deposit).

So you paying £5k per annum to the bank or to your landlord is exactly the same thing.
It isn't throwing money away - it's a cost of living.

If you have an interest only mortgage, then yes, it's not really much better than renting, you can only hope the value goes up.

But unless you are an investor, an interest only mortgage is a ridiculous idea. Anyone buying for themselves should absolutely be on a repayment mortgage, and if you can't afford to, don't get into it.

So at that point your investment rather changes, and every time you make a mortgage payment you are building up equity. Of course that equity can shrink, but the more you pay off, the less likely you are to be greatly affected by that. Thanks to paying a mortgage rather than renting since I was 19, I now have a roughly 2:1 equity:loan ratio on my property.

Plus, and this is a big issue right now, our deposit is sitting there shrinking faster than it grows. Inflation is outstripping the interest rates we can get. That has to be factored in to our sums right now. Not doing anything with that money means it shrinks by 2-3pc a year.

Just because you are on a repayment mortgage - it doesn't change the fact that YOU ARE PAYING INTEREST.

I used interest-only in the example because people get confused with repayments.

But unless you are an investor, an interest only mortgage is a ridiculous idea. Anyone buying for themselves should absolutely be on a repayment mortgage, and if you can't afford to, don't get into it.

Are you an IFA?
What exactly is an "investor"?
What is wrong with saving somewhere OTHER THAN IN YOUR HOUSE.
That's all that happens when you invest in an ISA or pension or whatever.
It is a simple investment choice.

What happens if you get to the end of 25 years and you own your house but have no pension? How are you going to buy food?

Sure I can't guarantee that a pension investment will return more than whatever interest rate you pay on your mortgage but any IFA will tell you that DIVERSIFICATION is a good idea on both a risk AND reward basis.

There is no magic.
What's wrong with owning your house and paying the interest for living there and NOT being able to pay down the principal.
IT IS EXACTLY THE SAME AS RENTING. And no one is giving renters a hard time because they can't afford to save over their rent!!

Sure you won't own the house at the end of 25 years - JUST LIKE RENTING.

Just because you are on a repayment mortgage - it doesn't change the fact that YOU ARE PAYING INTEREST.

I used interest-only in the example because people get confused with repayments.

Are you an IFA?
What exactly is an "investor"?
What is wrong with saving somewhere OTHER THAN IN YOUR HOUSE.
That's all that happens when you invest in an ISA or pension or whatever.
It is a simple investment choice.

What happens if you get to the end of 25 years and you own your house but have no pension? How are you going to buy food?

Sure I can't guarantee that a pension investment will return more than whatever interest rate you pay on your mortgage but any IFA will tell you that DIVERSIFICATION is a good idea on both a risk AND reward basis.

There is no magic.
What's wrong with owning your house and paying the interest for living there and NOT being able to pay down the principal.
IT IS EXACTLY THE SAME AS RENTING. And no one is giving renters a hard time because they can't afford to save over their rent!!

Sure you won't own the house at the end of 25 years - JUST LIKE RENTING.

I think I speak for most on the forum when I say: "Come again?".

no

maybe

Just because you are on a repayment mortgage - it doesn't change the fact that YOU ARE PAYING INTEREST.

I used interest-only in the example because people get confused with repayments.

Are you an IFA?
What exactly is an "investor"?
What is wrong with saving somewhere OTHER THAN IN YOUR HOUSE.
That's all that happens when you invest in an ISA or pension or whatever.
It is a simple investment choice.

What happens if you get to the end of 25 years and you own your house but have no pension? How are you going to buy food?

Sure I can't guarantee that a pension investment will return more than whatever interest rate you pay on your mortgage but any IFA will tell you that DIVERSIFICATION is a good idea on both a risk AND reward basis.

There is no magic.
What's wrong with owning your house and paying the interest for living there and NOT being able to pay down the principal.
IT IS EXACTLY THE SAME AS RENTING. And no one is giving renters a hard time because they can't afford to save over their rent!!

Sure you won't own the house at the end of 25 years - JUST LIKE RENTING.

I'm struggling to see what the point is you are making.

Interest only mortgages are not exactly the same as renting, yes the repayments are the same, but your final return (if you ever sell) is dependant on market prices, and may well be negative. That's why it's a stupid idea unless you are an investor,

By investor I mean someone who buys property with the aim of making money from it rather than living in it. I thought that was fairly obvious.

I don't intend to ever sell my flat, or if I do I would replace it with another property, so I couldn't give two shits about house prices.

I don't intend to ever sell my flat, or if I do I would replace it with another property, so I couldn't give two shits about house prices.

That's the opinion that me and GF take. Sure, if they go up, great - but it'll only matter if we sell, and not a jot until then. Sure, if they go down, bad - but only when we sell. Plus, after a few years of paying a mortgage they'd have to come down a long way to plunge you into negative equity. But, basically, it's renting a flat with payments that diminish over 25 years and then stop. That's better than renting at inflation-adjusted prices ad infinitum. Clearly.

^^ is this a Tory calling for more regulation?!

(at BQ obv, not B&D)

Yes. Well I used to dispute the "tory" label but as my defence is I voted lib dem, and that now appears to be an even worse crime, maybe I should gratefully accept the lesser offence :-)

I am generally not in favour of big government, lots of legislation, and think the free market is a generally good thing economically, but where we are talking about large amounts of public money being spent, where service provision rather than profit should be the watchword, beit transport, housing, schools, bin collection, health, whatever, then I am in favour of tight legal frameworks binding the providers of those services. Why? Because corruption is endemic in these areas. Councils and civil servants are often naive at best, and sometimes incompetent or corrupt at worst. Even honest developers, drugs companies etc will take maximum advantage of that, and there's enough who aren't honest either.

I apologise to all of the forum for omitting the obvious fact that when you own the home you are taking a massive punt on the price of your house.
That is a significant difference to renting of course.

All I am trying to explain is that INTEREST = RENT in that both are a necessary evil that is effectively a cost of living.
If you think house prices are going down then paying RENT rather than owning an paying INTEREST is a very good way to avoid the RISK OF HOUSE PRICE COLLAPSE.
You aren't throwing money away by renting you are PAYING THE PRICE OF HAVING SOMEWHERE TO LIVE.

I don't intend to ever sell my flat, or if I do I would replace it with another property, so I couldn't give two shits about house prices.

Trust me, when you come to want to move - you are going to give MANY shits about house prices.
Negative equity and no other savings = no move.
Equity in the house destroyed by falling prices and more stringent deposit requirements from the banks = no move.

Trust me, when you come to want to move - you are going to give MANY shits about house prices.
Negative equity and no other savings = no move.
Equity in the house destroyed by falling prices and more stringent deposit requirements from the banks = no move.

no 1st time buyers to feed the chain= no move.

ponzi scheme

I've been saving like a MUTHAPHUCKA for the past year or so, I go to Afghan in the New Year and by the time I come back (fingers crossed) I should have about £50k in the bank. Plan is to put that money down on a nice little place in the countryside, maybe up here or down in Hugh Fearnley-Whittensall country and just live the goodlife. Might even start my bakery/brewery that I've dreamed of. I know £50k isn;t a huge amount of money but it's something. Psyched on maybe finally being able to buy a place. I could never have done it in London :(

Not sure I understand the interest only issue here.

Lets use my parents place as an example:

Dr Dammit purchases house in 1982 for £22,000
House is paid off in ~20 or so years.
Title to the house now belongs to Dr Dammit.

Now, if he had an interest only mortgage then at the end of the period he would have to return the £22,000, which he could do by selling the property, and as long as the property is worth more than £22,000 he's ok?

Yes, but how much did the house weigh?

#nevergetsold

£50k?! Well done. That's a great head start. Better than me and my better half have done. You in the army?

Yeah I am. Just been working hard, training super hard, and saving as much as possible. I want a thatched cottage with a garden. Maybe some piglets. Defo chickens.

Good for you. Sounds lovely.

My bro has two houses. He's younger and less educated than me. Fucking army pricks.. :)

Yeah I am. Just been working hard, training super hard, and saving as much as possible. I want a thatched cottage with a garden. Maybe some piglets. Defo chickens.

Great for you chap, have you been accepted then? What are you doing in the Army? I've thought about it in the past a lot my self.