Author Topic: can anybody please help me out?  (Read 8480 times)

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Offline Simon

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Re: can anybody please help me out?
« Reply #25 on: November 02, 2017, 07:43:08 am »
Well today we find out if the base rate goes up, hope it does, savings worth more, mortgage locked anyway for nearly 5 years and i expect that once interested goes up house prices will have to come down as no one will be able to afford the mortgage and there will be a market crisis again. If interests are up and values come down it means once you secure the property as soon as you start to overpay you see huge benefits from that and the dip in prices will make life easier all round.
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Offline tggzzz

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Re: can anybody please help me out?
« Reply #26 on: November 02, 2017, 08:54:03 am »
Brexit is going to bu**er us all, but the one positive might be falling house prices. Or will that just mean that overseas buyers regard it as a cheaper investment?

Time will tell.
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #27 on: November 02, 2017, 11:27:08 am »
Brexit is going to bu**er us all, but the one positive might be falling house prices. Or will that just mean that overseas buyers regard it as a cheaper investment?

Time will tell.
Falling house prices isn't a good thing. It means the wealth of a country as a whole shrinks, and negative equity isn't really great for people either. A lot of value is locked up in privately owned real estate. It's typically the lion's share of the total wealth in and value of a developed country.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #28 on: November 02, 2017, 12:52:04 pm »
Brexit is going to bu**er us all, but the one positive might be falling house prices. Or will that just mean that overseas buyers regard it as a cheaper investment?

Time will tell.
Falling house prices isn't a good thing. It means the wealth of a country as a whole shrinks, and negative equity isn't really great for people either. A lot of value is locked up in privately owned real estate. It's typically the lion's share of the total wealth in and value of a developed country.

It's unfortunate house prices ever got so high at all. Yes people have to buy a house (or rent one at even higher prices)  but we will hit a point where no one can afford a house because wages don't keep up, if inflation really was inflation it would be OK but costs of everything go up and it's official statistics that we are effectively paid less than in the past before you take into account the cost of buying a house. That is why i am lucky i bought at a low point as it won't affect me. Sadly people need to live somewhere and will find themselves buggered but this is why we should not have these bubbles in the first place. We either raise wages or lower house prices and we know which one employers would prefer.....

The danger in the UK is that owning a home is becoming harder, buying one to rent to others very hard and soon only a certain sector of society will be able to afford to buy and rent out houses, we will basically take ourselves back in history to the victorian era if not before where huge land owners control housing and land. Banks "print" and control the supply of money by making loans. While it is illegal to print notes it is not illegal to type numbers into a computer. Some people have run out of things to invest in at which point things like mortgages get packaged up and sold as investments and when they run out of those they have to find more people to lend to and then one not very fine day the whole system collapses because the poor lenders can't keep up anymore having been peerpresured into borrowing to have a lifestyle they can't afford. If money is so cheap to "borrow" (buy) then it can also fuel things the wrong way.
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Online sokoloff

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Re: can anybody please help me out?
« Reply #29 on: November 02, 2017, 12:55:11 pm »
Falling house prices isn't a good thing. It means the wealth of a country as a whole shrinks, and negative equity isn't really great for people either. A lot of value is locked up in privately owned real estate. It's typically the lion's share of the total wealth in and value of a developed country.
It's unfortunate house prices ever got so high at all. Yes people have to buy a house (or rent one at even higher prices)  but we will hit a point where no one can afford a house because wages don't keep up
Isn't that like saying, "Nobody goes there anymore; it's too crowded"?

House prices are not set by a house pricing committee; they're set by willing buyers and willing sellers. If house prices were to (temporarily) get to the point where there were no willing buyers, they'd fall back to the price where a willing buyer emerged.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #30 on: November 02, 2017, 01:00:02 pm »
yes but people have to buy houses, here in the UK demand is high or so I am told, house builders are in no hurry to build and many small builders have been wiped out. So the only the big ones are left. These buy land up and then may build houses years later as they don't want to sell when prices are low. Like i said there is a possibility of large entities being able to manipulate the market. No a committee does not set prices but it's not all individual buyers and sellers. For example I got my house chap because at the time selling a house was hard and i was one o the few around that had the deposit and credit score and permanent job to buy. People are also priced out of desirable areas.
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Offline tggzzz

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Re: can anybody please help me out?
« Reply #31 on: November 02, 2017, 02:50:39 pm »
Brexit is going to bu**er us all, but the one positive might be falling house prices. Or will that just mean that overseas buyers regard it as a cheaper investment?

Time will tell.
Falling house prices isn't a good thing. It means the wealth of a country as a whole shrinks, and negative equity isn't really great for people either. A lot of value is locked up in privately owned real estate. It's typically the lion's share of the total wealth in and value of a developed country.

Negative equity is indeed a serious problem for the individuals. In an earlier property crash the nearby new-build estate of Bradley Stoke became known as Sadly Broke.

But that isn't the same as the "wealth" of a country.

Property prices are "paper money" that is unavailable until you downsize towards the end of your life. Too high property prices mean that the cash cannot be invested in something that will pay dividends down the line. Remember one of the consequences of "tulip mania": the Dutch were less able to compete with the UK in expanding trade with the far east - and that allowed the British to gain many parts of their empire.
There are lies, damned lies, statistics - and ADC/DAC specs.
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Offline Simon

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Re: can anybody please help me out?
« Reply #32 on: November 02, 2017, 06:47:17 pm »
Indeed, with booms busts and general market manipulation. That is why i am more interested in renting my house out when I'm ready to move on than sell it.
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #33 on: November 02, 2017, 10:04:57 pm »
Negative equity is indeed a serious problem for the individuals. In an earlier property crash the nearby new-build estate of Bradley Stoke became known as Sadly Broke.

But that isn't the same as the "wealth" of a country.

Property prices are "paper money" that is unavailable until you downsize towards the end of your life. Too high property prices mean that the cash cannot be invested in something that will pay dividends down the line. Remember one of the consequences of "tulip mania": the Dutch were less able to compete with the UK in expanding trade with the far east - and that allowed the British to gain many parts of their empire.
It's not quite the same, but has the same effect. Countries simply cannot afford to reduce house prices in relevant ways. If debt isn't covered by some form of collateral, things start going awry. Unless you reduce the value over longer periods than a typical mortgage will run, of course, but that's unlikely to consistently happen. It's easy money for a government. If the collateral deficiency becomes too large, a country's credit rating will go down, with interest going up and causing a negative spiral. Even if the money isn't even actually spent, a nation will go bankrupt if house prices are affected too much. Conversely, having more housing and higher house prices is a great way of increasing value without actually needing to do a lot of actual work.

That it's money you cannot spend until you cash out isn't entirely true either. Looking at the trend over the past 100 years or more, house prices in most developed nations have only gone up, with one exception spanning only a few years. As soon as your house has surplus value, it's possible to convert the difference into cash without actually selling your home. You just have to make sure the value of your house doesn't drop, as your leeway will be gone.

Finally, rather than ever growing housing prices stifling growth, they actually seem to foster it. Most house owners in developed nations earn more by rising property values than they could ever earn with any kind of job, financial wizards in the City excluded. The longer you wait buying in, the further you will fall behind. Obviously, that's not something that can continue forever, but for now it's pretty much impossible to ignore.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #34 on: November 02, 2017, 11:06:57 pm »
not really, if prices increase and you cant afford them how does that benefit you? my house has increased in value by 50%, how does it help me. I can sell it and buy a comparable house in just as bad an area of town for the same money...... no change, what was a 57500 mortgage will now be a 100'000 pound mortgage on my same wages, how have i gained? sure i could sell and get enough to pay off my family debt and have a 30000 deposit again, but if I have to take once again a mortgage of 4x my currant wages now at 100'000 how am i better off, to move to a like for like house I'm in nearly twice the debt and certainly no less debt to buy another bottom grade house. if i had year on year pay rises i could just move t a nicer area...,
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #35 on: November 03, 2017, 12:22:19 am »
not really, if prices increase and you cant afford them how does that benefit you? my house has increased in value by 50%, how does it help me. I can sell it and buy a comparable house in just as bad an area of town for the same money...... no change, what was a 57500 mortgage will now be a 100'000 pound mortgage on my same wages, how have i gained? sure i could sell and get enough to pay off my family debt and have a 30000 deposit again, but if I have to take once again a mortgage of 4x my currant wages now at 100'000 how am i better off, to move to a like for like house I'm in nearly twice the debt and certainly no less debt to buy another bottom grade house. if i had year on year pay rises i could just move t a nicer area...,
I'm not sure what you mean, but I think I answered this question in my previous post. If you do sell, you end up with 50% more money than you started out with. Not exactly, as the bank will take its cut, but you've gained money. You started with X and ended up with X + Y. Compared to someone who rents or is just entering the market, for instance, you've gained wealth. If you start renting now, you'd still be ahead.

However, that's not quite the most common scenario, as it's a somewhat simplistic all or nothing. You can use surplus value in many other ways. Banks love doing business with people who already have money or value and as we know, value generates value.
 

Offline Hypernova

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Re: can anybody please help me out?
« Reply #36 on: November 03, 2017, 02:40:40 am »
not really, if prices increase and you cant afford them how does that benefit you? my house has increased in value by 50%, how does it help me. I can sell it and buy a comparable house in just as bad an area of town for the same money...... no change, what was a 57500 mortgage will now be a 100'000 pound mortgage on my same wages, how have i gained? sure i could sell and get enough to pay off my family debt and have a 30000 deposit again, but if I have to take once again a mortgage of 4x my currant wages now at 100'000 how am i better off, to move to a like for like house I'm in nearly twice the debt and certainly no less debt to buy another bottom grade house. if i had year on year pay rises i could just move t a nicer area...,
I'm not sure what you mean, but I think I answered this question in my previous post. If you do sell, you end up with 50% more money than you started out with. Not exactly, as the bank will take its cut, but you've gained money. You started with X and ended up with X + Y. Compared to someone who rents or is just entering the market, for instance, you've gained wealth. If you start renting now, you'd still be ahead.

However, that's not quite the most common scenario, as it's a somewhat simplistic all or nothing. You can use surplus value in many other ways. Banks love doing business with people who already have money or value and as we know, value generates value.

And now as a renter you lose the security of still having a house if some financial disaster happens like losing your job or the landlord decides to kick you out to use the house for something else. You need to consider the constraint that people would want to stay as house owners once they become one.
 

Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #37 on: November 03, 2017, 09:00:23 am »
And now as a renter you lose the security of still having a house if some financial disaster happens like losing your job or the landlord decides to kick you out to use the house for something else. You need to consider the constraint that people would want to stay as house owners once they become one.
If you don't fully own your house, you will lose your home if you lose your job whether you've bought it or are renting it. Non-payment will not please the banking overlords. It depends on the local laws a lot whether a landlord can easily kick someone out. In some places it's stupidly simple, in others neigh on impossible. What's more secure heavily depends on the specific local circumstances.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #38 on: November 03, 2017, 09:04:43 am »

I'm not sure what you mean, but I think I answered this question in my previous post. If you do sell, you end up with 50% more money than you started out with. Not exactly, as the bank will take its cut, but you've gained money. You started with X and ended up with X + Y. Compared to someone who rents or is just entering the market, for instance, you've gained wealth. If you start renting now, you'd still be ahead.

Not really, I gave you the figures for my own situation as an example. I was lucky and able to buy when prices hit rock bottom, now that prices are up again yes i will get more for my house. But my house is not an investment pot, it is my home, if i sell it i need to buy another one and that will now cost me proportionally more so I'd end up in the same amount of debt relative to my annual income as when I bout the current house considering my wages have actually risen by 70%! So my mortgage will be 70% higher, some gain? not really. I currently owe £44'200 for the house alone and a further £10'000 on further advances to tie me over at times and buy a car, so I am currently 54'200 in debt, if I were to move to a home of similar standard which no one in their right mind would i would have to put myself at least £70'000 in debt. Lets remember when the the price crash came I could only afford a 57'500 mortgage, still not enough, family stumped up £30'000 to make up the shortfall. I could have gone to another lender and got £71'875 but that would have just been harder to pay off. Today having paid off only £13'000 and having had to take on £10'000 of debt I've actually only paid off £3000 in 7 years!!!!!

If prices had stayed as low as when I first bought I could sell up and move on to another house that is nicer because that nicer house would now again be just within my budget and I'd struggle but it would be worth it to move to a nicer area. People can only buy what their wages can afford, if prices go up it hurts. The only people it helps is those selling up and not buying or wanting to buy a much less value home.
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #39 on: November 03, 2017, 09:08:31 am »
Not really, I gave you the figures for my own situation as an example. I was lucky and able to buy when prices hit rock bottom, now that prices are up again yes i will get more for my house. But my house is not an investment pot, it is my home, if i sell it i need to buy another one and that will now cost me proportionally more so I'd end up in the same amount of debt relative to my annual income as when I bout the current house considering my wages have actually risen by 70%! So my mortgage will be 70% higher, some gain? not really. I currently owe £44'200 for the house alone and a further £10'000 on further advances to tie me over at times and buy a car, so I am currently 54'200 in debt, if I were to move to a home of similar standard which no one in their right mind would i would have to put myself at least £70'000 in debt. Lets remember when the the price crash came I could only afford a 57'500 mortgage, still not enough, family stumped up £30'000 to make up the shortfall. I could have gone to another lender and got £71'875 but that would have just been harder to pay off. Today having paid off only £13'000 and having had to take on £10'000 of debt I've actually only paid off £3000 in 7 years!!!!!

If prices had stayed as low as when I first bought I could sell up and move on to another house that is nicer because that nicer house would now again be just within my budget and I'd struggle but it would be worth it to move to a nicer area. People can only buy what their wages can afford, if prices go up it hurts. The only people it helps is those selling up and not buying or wanting to buy a much less value home.
Again, there are various ways of utilizing the surplus value of a home, so it's not just a bonus if you sell and don't buy again :) Not everyone will want to do that, but it's certainly a nice option to have. Of course, people who didn't buy in the first place will be left behind too, as the price of entry gets higher and higher.
« Last Edit: November 03, 2017, 09:10:29 am by Mr. Scram »
 

Offline tggzzz

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Re: can anybody please help me out?
« Reply #40 on: November 03, 2017, 09:14:30 am »
Again, there are various ways of utilizing the surplus value of a home, so it's not just a bonus if you sell and don't buy again :) Not everyone will want to do that, but it's certainly a nice option to have. Of course, people who didn't buy in the first place will be left behind too, as the price of entry gets higher and higher.

There are indeed several different forms of "equity release".

If you read the financial press aimed at consumers, many come with big warning labels because they are regarded as very poor value. Classic examples are those aimed at the retired who want to increase their retirement income without moving house. "Equity release doesn’t come cheap. A lifetime mortgage can cost more than three times what you borrow after 20 years, while some home reversion schemes demand more than 70% of your home’s value for just a 20% advance."
https://www.which.co.uk/money/pensions-and-retirement/youre-retired-working-on-benefits-equity-release/guides/equity-release/what-is-equity-release
« Last Edit: November 03, 2017, 09:17:12 am by tggzzz »
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Offline Simon

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Re: can anybody please help me out?
« Reply #41 on: November 03, 2017, 09:15:03 am »
I can't see how you can use the surplus value of a home unless you either sell it for the profit difference or use it as collateral to borrow money to invest but this is a risky business as you don't know what will happen to rates on both sides of that arrangement. Indeed some of that extra 10K I have borrowed is invested but the actual amount it will make me is minimal (currently 7% before tax while i pay 2% in mortgage interest that will go up later) and perhaps i just prefer to be mortgage free. As I said before being mortgage free means I can indeed maximize the value of my home, Currently I own a mere £33'000 worth of it most of which is my families money, the rest 54'200 is owned by the bank. now if i owned it outright I could be making £600 a month from it which would go a long way to paying off a mortgage on a second home....
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Offline tggzzz

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Re: can anybody please help me out?
« Reply #42 on: November 03, 2017, 09:18:50 am »
Ha! See my edit; you replied faster than I could insert it :)
There are lies, damned lies, statistics - and ADC/DAC specs.
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Offline Simon

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Re: can anybody please help me out?
« Reply #43 on: November 03, 2017, 09:22:29 am »
Basically nothing comes free and anyone telling you otherwise is lying. Yes you can hit lucky like my dad didn't when he sold his house a week before the value of houses went up 4x! overnight without warning but this is luck only and not something you can "bank" on.
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Offline Simon

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Re: can anybody please help me out?
« Reply #44 on: November 03, 2017, 09:26:16 am »

https://www.which.co.uk/money/pensions-and-retirement/youre-retired-working-on-benefits-equity-release/guides/equity-release/what-is-equity-release

you link basically says buyer beware and bad idea, basically you are selling part of your house in advance safe in the knowledge you will die anyway, what a happy prospect.....
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #45 on: November 03, 2017, 09:27:50 am »
There are indeed several different forms of "equity release".

If you read the financial press aimed at consumers, many come with big warning labels because they are regarded as very poor value. Classic examples are those aimed at the retired who want to increase their retirement income without moving house. "Equity release doesn’t come cheap. A lifetime mortgage can cost more than three times what you borrow after 20 years, while some home reversion schemes demand more than 70% of your home’s value for just a 20% advance."
https://www.which.co.uk/money/pensions-and-retirement/youre-retired-working-on-benefits-equity-release/guides/equity-release/what-is-equity-release
I guess it depends on how you do it exactly. However, generally it's low risk for any banking institution to deal with people who actually already own a house or part of it. Since it's a lower risk than lending money to someone who still needs to pay for the house, you can generally negotiate much better terms.

 

Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #46 on: November 03, 2017, 09:30:39 am »
you link basically says buyer beware and bad idea, basically you are selling part of your house in advance safe in the knowledge you will die anyway, what a happy prospect.....
What some people do is investing the money back into the house by extending it. That way you can use some of the value, which also increasing it. This also minimizes the risk, as the investment won't suddenly lose its value. If it does, chances are the rest of the house will too, so you would have had a problem anyway.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #47 on: November 03, 2017, 09:33:56 am »
Well this all works when you own the thing, yes of course a house that you actually own going up in value is good as you have options, but most people are mortgage holders so all an increase in value translates into is more debt to move.
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Offline Mr. Scram

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Re: can anybody please help me out?
« Reply #48 on: November 03, 2017, 09:43:27 am »
Well this all works when you own the thing, yes of course a house that you actually own going up in value is good as you have options, but most people are mortgage holders so all an increase in value translates into is more debt to move.
How so? The value increase is all yours, while the debt doesn't scale accordingly.

I can understand the sentiment that it's not necessarily money you can use this moment right now, but it's certainly better to be in your position than to not have a house and to see the price of entry get ever higher. Plus, you save up by paying off your mortgage. If you rent, it's all down the drain. It's obviously a bit more complicated than that, but still.
 

Offline Simon

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Re: can anybody please help me out?
« Reply #49 on: November 03, 2017, 09:45:43 am »
Well as I said i have used the increase in value to borrow money cheaply. in fact I used part of one advance at a lower rate to pay off some of the main mortgage. Indeed I'd rather maximize the value by making it all mine then I'm no strings attached.
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