Bigger Faster Better More?

[Paul H]

You can make a million very easily. Just invest 500 million into something safe....

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MEA?

[rallybug]

A house is one of the safest investments.

You missed out on the last two property crashes then?

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A property crash only becomes a problem if you have to sell (through job loss etc) - if you don't have to sell and can afford repayments, a property crash won't affect you. What was the property price of, say, a town house in Douglas at the time of the big crash in the 80s? Compared to now, bearing in mind someone who bought in 1980 would be clearing their mortgage this year.

 

As for the original question, I'd much rather have a house that I owned outright - especially if it was designed and built to my requirements (large garage, basement, energy efficient with solar panels etc, stuff like that).

[Fatty Fatty Toad Boy]

A house is one of the safest investments.

You missed out on the last two property crashes then?

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Are you referring to Island prices? According Nationwide's historical figures for the UK there was only one "crash" - between 1990 and 1993.

 

At the peak at the end of 1989, an average house was worth £62,782, at the end 1993 it was £51,050 but by 1998 it was back to £62,903. Not nice (unless you sold up and rent for 4 years), but it was only temporary.

 

As a long term investment your house is hard to beat. If you bought an average UK house in 1954 for £1,891 it would now be worth £154,107; over 80 times the buying price; roughly 9% per year. So if the interest rate on the mortgage is less than this (and it usually is) then you're better off with a mortgage.

[Slim]

A property crash only becomes a problem if you have to sell (through job loss etc) - if you don't have to sell and can afford repayments, a property crash won't affect you. 

 

Of course it affects you. If you'd have bought at post crash prices, your repayments would be lower.

 

As for the original question, I'd much rather have a house that I owned outright - especially if it was designed and built to my requirements (large garage, basement, energy efficient with solar panels etc, stuff like that).

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Thats the thing innit, how low do you base your requirements in order to not need a mortgage?

[Slim]

As a long term investment your house is hard to beat.  If you bought an average UK house in 1954 for £1,891 it would now be worth £154,107; over 80 times the buying price; roughly 9% per year.

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Don't forget inflation. It's currently at 6%, so property has to perform above that to earn you money. It currently isn't, is it?

[GD4ELI]

A house is one of the safest investments.

You missed out on the last two property crashes then?

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Are you referring to Island prices? According Nationwide's historical figures for the UK there was only one "crash" - between 1990 and 1993.

 

At the peak at the end of 1989, an average house was worth £62,782, at the end 1993 it was £51,050 but by 1998 it was back to £62,903. Not nice (unless you sold up and rent for 4 years), but it was only temporary.

 

As a long term investment your house is hard to beat. If you bought an average UK house in 1954 for £1,891 it would now be worth £154,107; over 80 times the buying price; roughly 9% per year. So if the interest rate on the mortgage is less than this (and it usually is) then you're better off with a mortgage.

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And you remember the unemployment? And the fact that in the early 80's inflation was zooming along? Trust me it was not pleasant for many people.

 

Jobs aren't for life, they are until the Financial Sector leaves.

[Bill Posters]

You can make a million very easily. Just invest 500 million into something safe....

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MEA?

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That gets my vote for best response of the day so far

[crumlin]

Comments like that fella, I guess you don't have a missus? If you can afford a big house, a cleaning person isn't going to break the bank.

We paid £132K for our house (5 years ago), we could have afforded upto £160K but didnt want to take this risk, I'm not sorry, we've never struggled financially and when I got pregnant there was no question of me being sent back out to work. I am very happy with our house, our neighbours and I think Mr Bee is happy with the cost of the morgage (I do not even know how much it costs).

Its a toughie, if I were buying a house now, I would go 10-20K under my maximum - just for the sake of a hike in interest rates.

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Actually you're right - I am an aging bachelor but a tidy one

 

I agree with your financial ideas - play safe. The recession in the early 80's was unpleasant, the island has a lot to lose if the Financial Services market collapses.

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Did any of you listen to the MR interview with the Politician from Jersey yesterday, very worrying, and its also in the paper that the UK Government has the right to tax people on the IOM under British Citizen rules.

[Tonto]

We bought up to and at the cutting edge of our lending limit in London at the end of the loadsadosh 80s and it wasn't funny when the bottom fell out of the market. We came back to the Island with very firm ideas about the value of bricks and mortar! And credit card debt. We bought small and neat and paid every spare cent into the mortgage.

 

The house we have now had been on the market for nearly 18 months because noone wanted an old house with land in the middle of a housing estate. It wasn't cheap - for us - and we threw every single penny we had into it - even sold the shares we had bought over the years. But it wasn't easy and we clawed our way through mountains of debt to get here.

 

Our mortgage is manageable and although we dont have 2 or 3 foreign holidays a year like some lucky folk, we have a house that we can safely pay for even if there is another slump. I'm not saying that with a single degree of smugness, but with the experience of someone who has been caught pants down previously!

[joeyconcrete]

I bought my house 2 years ago, probably during the start of the price peak. I got a very long mortgage because i was young at the time (21). Next month the 2 year fixed rate is up, since then the interest rates have risen a lot and the prices have stabalised. Realistically my house is the same value as I bought it two years ago, which is 10k below the current market price. (The others arent selling)

 

If I had a choice, I'd own a nice manageable home rather than stretch for a larger one.

 

Its one of those things, before owning a house I was paying close to 800 rent, and now my mortgage is lower than my rent was and has been for two years.

 

Sometimes I wish i never bothered, given the financial commitments with the mortgage, maintenance and various associated costs, you're lifestyle does change - but i guess its worth it (unless the ass falls out the market)

[Carter]

A mortage is one of the cheapest loans that you can get (especially so with MIRAS).  A house is one of the safest investments.

 

Have you ever met a poor property developer?

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FCMR?....The Neddies??

[Tempus Fugit]

There is an element of 'swings and roundabouts' here, with interest rates and mortgages.

We started our mortgage when the rate was 18% (in the days when banks didn't do mortgages), luckily that is well down now and we are paying a whole lot less than properties are renting for, but the low rate has hammered savings in banks, insurance policies and pensions for the future. I am happy with what we chose.

 

The world seems hell bent on the cheapest prices for everything, never mind the quality, or the sustainability of materials or companies, don't bother to fix anything, just chuck it in the landfill and get the Chinese to make another, and don't bother about the 'local' jobs. This doesn't seem to matter with some folk though with glitzy wheels sitting in the drive (or outside the council house !) costing more than the house and will be worth about 50% within a year or two.

 

I am also mistrustful of estate agents since I had a valuation on a property, I got one figure, thought I had better get another to compare and it was so far out I got two more. The range of variation was about +/-30% of the selling price !.

I am convinced the low valuation I had was not realistic as within 2 days I had a silly telephone offer without the property even being on the market. I will never trust that company again. The highest was a smarmy suited youth with rose tinted spex.

[Addie]

If you were in a position to buy an adequate house outright or put the money into a larger house but have a mortgage, which would you do?

 

It would depend on the potential of the property and if we could achieve it without crippling costs.

 

Our option when considering what sort of house to purchase was always its potential.

 

If you are capable of adding value to your home (doing the work yourself if you have the skill) this can be a very satisfying route.

 

The benefit is that you can buy the materials etc when you can afford them, so your project bunny-hops along on an 'as and when' financial basis.

 

The other side of the coin is that you may be stuck with that avocado bathroom suite for longer than you planned due to downturns in the economy or work.

 

We've always bought for less than we sold but managed to move up the housing ladder just the same. We could have reached higher and taken more risks but were happy as we were.

 

We look at our first home and the value today is nowhere near the value of our last ones. But people who stay in a home like that forever might be very contented and have less stress than we've had.

 

If you have bags of money, you can get the lads in to transform your home. Wonderful. We've never been able to employ teams of builders to make-over any home. We've traded skills with others and learned how to do lots of things ourselves. Stressful and satisfying.

 

It is possible, if you reach a bit, work hard and aren't greedy, to lose your mortgage so much earlier and that's great.

 

Bit of a mess of a post I know (sorry, sleepless night) but some points might be relevant.

[Slim]

That's good advice Addie, thanks for taking the time to pen it. I don't mind roughing it, I'm currently in a cottage that's not double glazed and has no central heating. I've potentially made some dosh out of a couple of lucky buys, and I'm trying to decide if I buy something sensible with no or very little mortgage or something a bit bigger than that with a bigger mortgage.

 

The lazy begger in my is inclined to go for the first option and then stop stressing about meeting the payments, but it's something I might regret.

 

I was amazed at my friends attitude though, to him the only option was to borrow right up to your limit. Everything else was foolishness.

[GD4ELI]

That's good advice Addie, thanks for taking the time to pen it. I don't mind roughing it, I'm currently in a cottage that's not double glazed and has no central heating. I've potentially made some dosh out of a couple of lucky buys, and I'm trying to decide if I buy something sensible with no or very little mortgage or something a bit bigger than that with a bigger mortgage.

 

The lazy begger in my is inclined to go for the first option and then stop stressing about meeting the payments, but it's something I might regret.

 

I was amazed at my friends attitude though, to him the only option was to borrow right up to your limit. Everything else was foolishness.

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Stress kills - you don't need it. Let the intellectually challenged display their status symbols and posh houses. Enjoy life, it's much more important.

 

Better to find yourself a rich farmer's daughter