Nice House vs nice Car? Which takes priority?
Discussion
X5TUU said:
Totally agree on the above, I could never have done anything in the south like what I've done up norf, or outside or Sunderland / Newcastle to be honest, very unique opportunity area. I'll be the first to admit I couldnt afford to buy at all if I lived in the south of the country as the multipliers just won't work for me.
Girlfriends house is in this precise area
djc206 said:
My original post was far too vague, blame typing it out on an iphone and getting constant posting errors.
I was also typing with my south centric head on. What I should have written was buying a house around here I personally have virtually no chance of making any money on a home, home not house/property (I don't on a car either!). With the 250k band at the first time buyer position there's no money to be made there, with the 500k band at the decent size family home position there's no money to be made there either. As you and others have correctly pointed out the way to make money is buy to let, basically take advantage of other peoples ability to pay rent or have it paid for them but not get or have the desire to get a mortgage. Something I have every intention of doing myself once my girlfriend and I have sorted out our own home. My original point was how deluded so many people are over how much they are going to make on their homes. Chances are anyone buying now in the South and other high cost areas will not make any money in real terms.
The example given above is a £500k house with £400k mortgage over 25 years. Stamp duty is £15k, interest is going to be about £400k. So your house costs you £915k not accounting for inflation. Throw that into the mix and you need to see about £1.25 million give or take £100k in 25 years time. Will that happen? Not likely given that the market down here has outstripped wages for so long that a stagnation if not correction is long overdue. Something that rising interest rates will surely cause as mortgages of that size become unobtainable to all but the highest earners. Of course there are ways of reducing the price you need to see such as overpaying now while interest rates are low.
By contrast my parents sold their house for 5 times what they paid for it after 15 years, no work on the house required. That's not going to happen again in my lifetime.
Good for you for doing so well. My girlfriend owns a house up north, lovely place worth about the same as a 1 bed flat down here, ridiculous. My intention is to buy to let up there once we've sorted our own place out down here.
Think of it as a savings account.I was also typing with my south centric head on. What I should have written was buying a house around here I personally have virtually no chance of making any money on a home, home not house/property (I don't on a car either!). With the 250k band at the first time buyer position there's no money to be made there, with the 500k band at the decent size family home position there's no money to be made there either. As you and others have correctly pointed out the way to make money is buy to let, basically take advantage of other peoples ability to pay rent or have it paid for them but not get or have the desire to get a mortgage. Something I have every intention of doing myself once my girlfriend and I have sorted out our own home. My original point was how deluded so many people are over how much they are going to make on their homes. Chances are anyone buying now in the South and other high cost areas will not make any money in real terms.
The example given above is a £500k house with £400k mortgage over 25 years. Stamp duty is £15k, interest is going to be about £400k. So your house costs you £915k not accounting for inflation. Throw that into the mix and you need to see about £1.25 million give or take £100k in 25 years time. Will that happen? Not likely given that the market down here has outstripped wages for so long that a stagnation if not correction is long overdue. Something that rising interest rates will surely cause as mortgages of that size become unobtainable to all but the highest earners. Of course there are ways of reducing the price you need to see such as overpaying now while interest rates are low.
By contrast my parents sold their house for 5 times what they paid for it after 15 years, no work on the house required. That's not going to happen again in my lifetime.
Good for you for doing so well. My girlfriend owns a house up north, lovely place worth about the same as a 1 bed flat down here, ridiculous. My intention is to buy to let up there once we've sorted our own place out down here.
Age 20 (to make maths easy): Purchase house for £350,000 (total expenditure: £365,000 SDLT, solicitor etc). £15,000 for fees, £50,000 deposit, mortgage £300,000 = £1,339 at current rates (25yr mortgage). Bit of a struggle initially, however after a few years, you're earning more cash etc so you start over paying.
At 35 years old (less number of years due to overpayments), you've paid £125,000 in interest so total expenditure £490,000 (ish). Chuck a bit of maintenance, insurance etc - £50,000 and you're at, let's call it £550,000.
Let's be pessimistic - house has doubled in value so it is circa £700,000.
However, at this point, I see you having 3 options:
1. Live rent free forever
2. Take out a new mortgage to free up some cash to buy nice cars/holidays etc
3. Take out a new mortgage and buy another house to rent. Rinse and repeat.
Now, everyone needs a place to live, and there aren't that many people who live for free. With that in mind, surely the above is a far more attractive proposition than
The other 2 great things with property are first that it tends to be index linked (give or take) and second that it might go up in value or it might go down in value. It's very unlikely to be worth nothing. There aren't many investments such as that.
The Moose said:
Think of it as a savings account.
Age 20 (to make maths easy): Purchase house for £350,000 (total expenditure: £365,000 SDLT, solicitor etc). £15,000 for fees, £50,000 deposit, mortgage £300,000 = £1,339 at current rates (25yr mortgage). Bit of a struggle initially, however after a few years, you're earning more cash etc so you start over paying.
I know you said to make maths easy, but how many people at age 20 have £65k cash and a £60k salary to get a £300k mortgage?Age 20 (to make maths easy): Purchase house for £350,000 (total expenditure: £365,000 SDLT, solicitor etc). £15,000 for fees, £50,000 deposit, mortgage £300,000 = £1,339 at current rates (25yr mortgage). Bit of a struggle initially, however after a few years, you're earning more cash etc so you start over paying.
I think it just a question of needs and depends on circumstances.
When it is just you, it is normally a case of cheapest house/flat possible and spend the rest on a car.
When you start to have a family etc, you will need more bedrooms etc which will inevitably mean you will spend alot more (which for most people will mean they are pushing themselves to the limit anyway) which means the 'nice car' has to go on hold.
Unless you are on a mega salary, or have a big inheritance, this is nearly always the case.
When it is just you, it is normally a case of cheapest house/flat possible and spend the rest on a car.
When you start to have a family etc, you will need more bedrooms etc which will inevitably mean you will spend alot more (which for most people will mean they are pushing themselves to the limit anyway) which means the 'nice car' has to go on hold.
Unless you are on a mega salary, or have a big inheritance, this is nearly always the case.
paul383 said:
Herman Toothrot said:
May I ask how? At 20 most would still be in 3rd year of university, 21/22 only just in their 1st year of work and I've not noticed any £60k graduate schemes.
Oil and gas/banks/family business/own businessdaemon said:
I would have to say you are in a very (un?)fortunate position of being in the vicinity of what must be an extremely small percentage of the post grad population. 99.9999% dont come out and walk into £60K jobs.
I never said they were all grads although the ones that went to IB's were. Grad base plus bonus easily see's 60k in 1st year.swerni said:
b
ks.
What position would one hold in banking or oil and gas at 20?
Ok its bks. What position would one hold in banking or oil and gas at 20?
ks then. If you say so.You will find that's not what I said:
paul383 said:
Not sure. But I know quite a lot of people with 60k salary at 20 and significantly more at 21/22.
60k at 20 is Oil and Gas. (actually more)paul383 said:
swerni said:
bks.
What position would one hold in banking or oil and gas at 20?
Ok its bks. What position would one hold in banking or oil and gas at 20?
ks then. If you say so.You will find that's not what I said:
paul383 said:
Not sure. But I know quite a lot of people with 60k salary at 20 and significantly more at 21/22.
60k at 20 is Oil and Gas. (actually more)Hardly a representative sample is it?
paul383 said:
daemon said:
So you've "refined" (no pun intended) your original statement of knowing quite a lot of people with 60K salary at 20 to "one"?
Hardly a representative sample is it?
No - there are many. I personally know "quite a lot". Hope this helps.Hardly a representative sample is it?
Turns out when called on it, its now down to one.
ANY stats you would look at based on real life data will show you by far that anyone on £60K at 20 is very much an extremely rare exception.
We had a two up two down mid terrace house that was pretty small but it was our first home that we owned. At the time we had a Supra then got the Tuscan. As soon as we decided we wanted kids and get a bigger house the Tuscan went.
Two Years later we now have the nicer house and were able to get another nice car
It was a long two years I must say, but feels better doing it this way.
Two Years later we now have the nicer house and were able to get another nice car
It was a long two years I must say, but feels better doing it this way.
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