dan le moignan

Had my house a year now, put down 16k and re payments are £1200 a month for 25 years , remeber thinking at first, what the hell am i doing having £1200 coming out of my account a month for 25 years! i was living at home paying £30 a week
Now though its pritty easy, even managed to save and buy an escort cosworth

It's Czech Mate

All of my replys make sense unlike yours?

I refer you to this and your sarky comment about inflation...where you clearly dont understand how it affects relative spending power


and your blinding idea of raising rent during recession to cover your negative equity and rising payments ( as interest increases )



Only a mong would buy a house on interest only on the verge of a housing market crash......insatant negative equity...UNLESS you were VERY cash rich and it was a very long term investment.

It's Czech Mate

Also please explain why this is different to a capital repayment mortgage.............when the price of the house changes the amount you owe stays the same also

JohnnyB

lets take it from this point of view.

I have bought a house and I am using a repayment method.

I need to earn more to repay it, but to earn more I get taxed more correct?

so on a interest only one I need to earn less eg less tax, but if I need to use my capital then I have money ready which is not taxable.

look at the long term not the short term

ps there will not be a crash, not this time

It's Czech Mate

I'm using crash as a relative term.....relative to the huge growth of recent years a stabilisation of prices, which is realistically what is happening can be viewed as a 'crash'

Great answer above...providing you dont go straight to negative equity...which is a possibility at the moment if you go 95-100% loan/equity on interest only, then you have no capital to play with, which is my whole point.

I agree with you that long term interest only is good as an investment if you read my previous answers.

ps. If you release equity on your purchase that you have made from the price increase you'll be very lucky not to pay capital gains tax

ps. To help you out here I have a Masters Degree in Economics and Accounting, am working as an accountant and am looking/working towards working in the property finance market

It's Czech Mate

And still my original question goes unanswered

dvid

All very well interest only but when you retire you still have a house to pay for, and unless you move and downsize that aint gonna happen, come 60 I will have paid off my mortgage, assume I dont move up again.... Although I am over paying to ensure its paid off long before then

It's Czech Mate

Overpayments is where its at....provided they come off the capital not the interest!

AMAZING how much you can save

JohnnyB

you don't just buy one house you have lots of houses and every 2 years just like a crop you havest them.

you may want to but some of the havest into a new purchase or buy outright one of the houses in your portfoilio.

thus so at some point you will have a good few houses you own which are paying for them selfs

can I suggest buying the book from the above link

dojj

iTrader: (3)

you pay capitals gains tax on anything other than the house you live in when you come to sell

so buy buying a second house you have already fucked yourself up for the future, even if you sell the cheap house

<edited to add>

you would have to see the house price go up and over the point where your money originally invested was returned AFTER your gains had been discounted
and in this climate, it will be ages before that happens

xr2i-carl

Wheres that? some round Limehouse way hav just gone up and asking 380k

It's Czech Mate

If you put half down and use half to pay mortgage for a few years thats good for your lifestyle...BUT you cant save at the amount it costs to borrow so that £30k sitting there would be losing value every day....

Its up to you what you do, i wouldnt be too eager to buy a second buy to let property in the current climate, but to be honest nowhere is great to invest in at the mo unless you want to take a risk.....

I am in the same predicament, I have paid for my wedding later on next year and have £50 sitting there ready for property.....I have one house already and want to end up living somewhere bigger with a second property too...I think I can do it lol

dojj

iTrader: (3)

long term and repayment would mean you'd own both outright at the end of the term and your kid wouldn't have to get a mortgage if you give it to him
he could then sell it on or use the house to buy something elsewhere, away from his dad

Thrush

iTrader: (1)

I own one house. I have no intention of renting it out. I want to live in it.

Why in the hell would I do interest only?!?!?!

I have a 35yr mortgage, so if I went interest only, then over 35yrs I'd have paid the bank something daft like £200k (probably more if rates rise progressively over the years) but when the mortgage period has finished, I STILL owe them the £160k my house cost, I don't own it, but I am out of pocket by £200k?

Yeah, makes perfect sense

Interest Only only makes sense if you buy to let. Or you have an endowment policy, but thats now seen as an "old" thing to do (my mothers house they bought for £44k, worth near £400k now, but of course she only has to pay back the £44k borrowed, but cos they bought it back in the late 70's/turn of the 80's, she has an endowment policy rather than a repayment mortgage)

To me, interest only is like renting. You pay roughly the same what it would cost to rent, maybe save a few quid each month, but at the end of it all, you still don't own the house, just have spent a shit load of money to live there and have nothing to show for it.... Just like renting

JohnnyB

you house is worth more in 35 years mate

much much more

Thrush

iTrader: (1)

So what? That means it costs me more to buy it?

So what if it worth more - if I sell it, I don't see a penny from it! I don't own it!

JohnnyB

get your head round this

people don't get it


what car could you buy for 20k 35 years ago? aston ?

what car could you buy with 20k now ford focus ?

so you owe 160 would it be the same 160 k in 35 years ?

JohnnyB

To me, interest only is like renting. You pay roughly the same what it would cost to rent, maybe save a few quid each month, but at the end of it all, you still don't own the house, just have spent a shit load of money to live there and have nothing to show for it.... Just like renting Clin d'oeil


wrong

you owe money, but it will be fook all in 35 years

if you are skint just take a small loan out and then it will be yours

Thrush

iTrader: (1)

Yes it would! I owe the BANK money! It has nothing to do with what a house is worth!

My mums house cost £44k in 1979/80. It's worth £400k now. Doesn't mean she owes the bank £400k tho does it? She borrowed £44k, so she owes them £44k (plus the interest or course, which you'd pay anyway if you were doing interest only)

I don't see why you keep quoting what house WILL be worth?

As I said, that works in principal for houses that you buy to let. You buy at £200k, interest only mortgage is say, £500 a month. You rent it out for £750 a month. In 20years it's worth £300k, so you sell it and you are £100k up, plus the "profit" from the rent...

But what does that have to do with buying a house you want to own and live in?

End of the day you will always owe the bank what you borrowed no matter if house prices rise or fall... If prices crash, and my £160k house is only worth £30k, I still owe £160k!

Thrush

iTrader: (1)

What?

JohnnyB

thrush it will never crash over 30 years



its impossible, so that 44k was a massive amount of money in 1980 now you can get a personal loan for 44k at the end of the day you mum has payed more in income tax to afford to pay back that 44k

JohnnyB

35k now is not 35k in35 years


get you fookin head round it FFS

S1rst

Thanks all. Certainly some things to think about.

So how much would your payments go down by roughly if you put say 10% down?

JohnnyB

i am not giving you guys more info, as you seem to short sighted to see it

but one little thought


44k in 20 years would be the be the spending limit on a normal credit card


work it out

It's Czech Mate

You're talking abou tinvestments mate which is great, I think these guys are just looking at affording a mortgage full stop! Different way of thinking about it

S1rst

Just found this mortgage calcultor if anyone wants to try it and see how accurate it is.............

http://www.bbc.co.uk/homes/property/...lculator.shtml

S3an

absolutely no chance off this. im selling my house at the mo and was gonna buy a new house without selling my own property. new house less £30k deposit about £150k, and interest only on that amount(150k) was about £800. as said in previous replies that rent will be no where near the interest only payment.

Thrush

iTrader: (1)

jhonny - yes thats true, but SO WHAT!!!!! If you spend 35yrs paying interest only mortgage, at the end of 35yrs you still don't own the house! THIS is what I am getting at. So what if it's worth more or less than it was before YOU STILL DON'T OWN IT.... I want to own my house, so that when I sell it I pocket the profit. But the only two ways to own it is either do a repayment mortgage, or pay interest only for the life of the mortgage, then at the end sell it for more than I paid for it, and pay back the money I borrowed in one lump sum......

Either way, I would still have paid the same ammount of interest, and I would have still paid the total initial sum borrowed, so whats the difference?

Thrush

iTrader: (1)

The numbers are just numbers, not set in stone figures.....

Spares or repairs

I have a good deal, started mine 2 months ago through skipton.Its a repayment mortgage over 35 years for now. Hoping to reduce to 25 when 3 years is up. Its capped at 5.99 currently around 3.5 but wont go bellow 2.99. Paid £9000 in fees and deposit leaving me a mortgage of 85000 on a 3 bed semi with detached garage. Needs a bit of work hence me and pa gutting it. Worth it in end tho.

maxest

iTrader: (1)

I bought one in Jan, house was 100k, put 15k down so 85k mortgage. Mortgage is just under £460 a month, at 4.9% got it fixed for another yr

JohnnyB

Thrush what you don't get is if you repay every month you need to earn enough to pay it, so you pay more tax.

just look at the figures more deeper mate eg what you earn what you repay and work out the tax


if you pay off you after 25 years it works out cheaper just do the maths

this is how i am feeling


Please get the book on the above link

dojj

iTrader: (3)

i think the problem you can't get your head around matt is the fact that the bank won't own your house
you will still own your house with an intrest only mortgage

but you will still owe the money to the bank
so you need to find that money from somewhere, which is why you need to flog the house to finance the repayments

i don't think jhonny realises this either as he thinks prices will rise as they have in the past 30 years

they won't because inflation has shrunk

my dad bought our current house for £12k in 1978 and got a mortgage that was £68/month for 15 years
at that time it was a large amount of money to be paying and he had to scrimp and save, but as time went on, he was earning more moeny per year so that when he was reaching the end of his mortgage time he was earning £300 a week so that sum of money for the mortgage was paltry

compare that to today's money, where you pay 30 times that amount for a house and you pay that much more for the mortgage
can you imagine joe average earning £9k a week in 25 years time?

exactly and this is the problem that no one realises when the prices boomed
those who had property and invested right at the start can now reap the rewards, but doing it now is only going to give oyu a head ache because you'll always be looking for the mooney to cover the mortgage and you won't really see a huge amount of rise in prices as you did ove the past 10 years
and you've got the added problem of being fucked for tax when you sell up

if you have 4 houses all worth £250k say but you boguht them years ago for £25k each and then sell them, you've made £900k
out of that, you've got to give the government 40% of that money, which is £360k but you are left with £540k which is fine

but buy now for that same £250k per house and then sell in years and years time for £350k and you've made £400k but you've got to put £160k to the tax man which leaves you with £240k, which won't even buy you a house at the current rate

buying at the top end of the market and thinking prices will carry on tising is not clever which is why this past month has seen the most amount of buy to let properties being sold off by landlords in years and years

if lots of people are jumping ship then i think they know what they are doing

it'sthe same as share sharks thiking the northern rock was going to be a big earner in a few weeks, shares went from over a tenner a share to now currently about 87p a share