Discussion
DonkeyApple said:
But, if you're buying up assets without leverage and have a book of them already that are showing good capital gain while all are underpinned by benefits revenue then I don't really see much of a risk there. As opposed to what I have mostly been invested in, where I think there is more risk given how that market has boomed and there is no potential for support for rents so pure market forces would prevail.
But you've given the impression that the assets you are currently buying you're paying cash for and in that regard we probably have an identical view that the current market is not smart for leverage. In property I wouldn't want anything in the U.K. on less than 50% margin and I certainly wouldn't want anything where I couldn't happily finance a 12 month void, sitting tenant or trashing.
I've never had an issue sitting on cash as it's just another asset class and it tends to be a good one to be in when other assets are falling in demand and then value.
Also, having cash when property values are falling and banks are knocking for a margin call means you can keep them off your back which is why I'm of the view that paying down a mortgage beyond a certain level is less beneficial at the moment than putting the cash to one side and deciding at a later date whether to pay down the debt. And why I don't think it's the right time to be increasing debt levels. Nothing wrong with continuin to invest in property but I don't think it's the time to be doing so with leverage.
Absolutely. The op's plan in this thread - effectively borrowing 100% of the purchase price - was just bonkers. Mind you, there are people who are still using well thought out plans which include expanding strong portfolios with borrowings. But that's because they have lengthily held portfolios of now unburdened property, so it's of no real risk at all to refinance say 20-25% of it to add further (anyway self-servicing) stock, which once added further lowers their global LTV below even those modest 20-25% levels. And the game goes ever on. But you've given the impression that the assets you are currently buying you're paying cash for and in that regard we probably have an identical view that the current market is not smart for leverage. In property I wouldn't want anything in the U.K. on less than 50% margin and I certainly wouldn't want anything where I couldn't happily finance a 12 month void, sitting tenant or trashing.
I've never had an issue sitting on cash as it's just another asset class and it tends to be a good one to be in when other assets are falling in demand and then value.
Also, having cash when property values are falling and banks are knocking for a margin call means you can keep them off your back which is why I'm of the view that paying down a mortgage beyond a certain level is less beneficial at the moment than putting the cash to one side and deciding at a later date whether to pay down the debt. And why I don't think it's the right time to be increasing debt levels. Nothing wrong with continuin to invest in property but I don't think it's the time to be doing so with leverage.
IMO anyone now entering the btl market would be best advised to buy a humble and lower end startup, preferably BMV, and with 100% cash, and place the btl skilfully with effective and professional management. After even 12 months the reality (especially the arithmetic) of matters will have become apparent. Because if it's been bought BMV it can be sold pretty rapidly BMV again. Or, if the arithmetic says expand the venture then re-mortgage it. Whatever.
Taking a punt on something nice (i.e. expensive) using borrowed funds, including from the family home, with the idea of some certainty of either capital gain or even letting profit is, currently, going to require a chunky slice of luck to work out well.
I thought nowadays lenders had developed systems to prevent such follies? Any sub prime lenders I've encountered lately certainly wouldn't supply the op's scheme with their money assuming the plan was put openly to them.
Edited by drainbrain on Saturday 22 July 00:15
Yup. The market isn't at all right for using one's family home as collateral to leverage up further on property. It may come again but just at the moment the wind has started to blow from the direction. Even our Govt has stepped in and forced speculators to de-leverage or close out with their SDT and taxation changes. And the increasing of Tier 1 requirements and much more importantly the enforcement of much stricter lending criteria actually based on the 'wealth' of the borrower. That last one doesn't seem to have hit home with many but it is a huge change and a huge warning. They know not only what is coming but they have announced very clearly their intention to not step in between market forces. Highly leveraged property owners were bailed out in 2009 as a side effect of zero rates to keep the money markets flowing but everything that has been put into action over the last few years is all about not bailing anyone out but letting the natural burn do its work. To clear out the weak and foolish to make a fresh path for the next generation.
Gen X could only afford property in the 90s because the over leveraged and the speculators of the 80s who had driven the market sky high on the back of insane and lax levels of borrowing (ring a bell?) were left to burn and for their assets to be reallocated to those following on behind. But only those with actual cash could do so. But Gen X did have cash because they were actually savers rather than spenders. But the key is that the current U.K. policy makers are all people who lived through the 87-92 property market and understand the essential social importance of allowing market forces to clear out the weak.
So, we have State enforced deleveraging of the speculative residential property market, rising US rates, UK policy turning hawkish, the EU about to get a German head of the ECB and in London where the property boom has all been driven from we have high end developments failing ( Shard, Battersea) a sign that reality is effecting speculators' decisions and this year we have had the enormous collapse of the >£3m end of the market where some asking prices have fallen as much as 50% to get the deal away. And the only reason the Home Counties is holding up is because there is an enormous migration suddenly occurring of central London workers selling up in London and moving back out as they cannot afford to make the next property step up in London. Anywhere that is within an hour of London by train has seen a huge influx of economic migration from London over the last two years that has seen the mid level market in places like Oxford climb strongly but that migration can only last a short while longer before reverting to more normal levels.
Either way, something is afoot and I don't think being leveraged beyond 50% in any investment is currently prudent. And if this wind change does build into a storm then those who have cash will come through most easily and more importantly be in the position to buy assets on the other side. Given that I am 44 I see that event as the event that will define the quality of my old age if it comes to happen.
Gen X could only afford property in the 90s because the over leveraged and the speculators of the 80s who had driven the market sky high on the back of insane and lax levels of borrowing (ring a bell?) were left to burn and for their assets to be reallocated to those following on behind. But only those with actual cash could do so. But Gen X did have cash because they were actually savers rather than spenders. But the key is that the current U.K. policy makers are all people who lived through the 87-92 property market and understand the essential social importance of allowing market forces to clear out the weak.
So, we have State enforced deleveraging of the speculative residential property market, rising US rates, UK policy turning hawkish, the EU about to get a German head of the ECB and in London where the property boom has all been driven from we have high end developments failing ( Shard, Battersea) a sign that reality is effecting speculators' decisions and this year we have had the enormous collapse of the >£3m end of the market where some asking prices have fallen as much as 50% to get the deal away. And the only reason the Home Counties is holding up is because there is an enormous migration suddenly occurring of central London workers selling up in London and moving back out as they cannot afford to make the next property step up in London. Anywhere that is within an hour of London by train has seen a huge influx of economic migration from London over the last two years that has seen the mid level market in places like Oxford climb strongly but that migration can only last a short while longer before reverting to more normal levels.
Either way, something is afoot and I don't think being leveraged beyond 50% in any investment is currently prudent. And if this wind change does build into a storm then those who have cash will come through most easily and more importantly be in the position to buy assets on the other side. Given that I am 44 I see that event as the event that will define the quality of my old age if it comes to happen.
DonkeyApple said:
Yup. The market isn't at all right for using one's family home as collateral to leverage up further on property. It may come again but just at the moment the wind has started to blow from the direction. . . . . . . . .
A very good explanation, which shows the importance of studying what has gone before.
I am older than you so have witnessed quite a few economic downturns. The most bizarre one probably was about 1973. The Labour Chancellor of the Exchequer set off to Heathrow on an overseas trip, but turned back because the UK needed a financial bailout from the IMF. Businesses could only work properly for three days each week, because the electricity was switched off.
The 2007 one was massive, but as you say, it was not as unpleasant as expected because of the cushioning by the zero interest rates.
At 44, if you can repeat my example you can look forward to your retirement in 9 years time.
The only debt was for main residence. Looking back I missed opportunities with that philosophy, but it would have involved risks with timing. I am happy to carry risks relating to direct equity holdings, but the timing risk is eliminated by very long-term strategy, and sticking mostly to defensive type businesses that can still make progress during recessions.
Finally on the subject of domestic property. The first time buyer price / income years ago ran at an average somewhere around 3 or 4. Now it is far higher. I know that one significant change has been to two income households. That obviously would allow a higher multiple, but it does seem odd at present, when a higher tax rate doctor living in Surrey, with a £100,000 deposit, cannot even afford a three bedroom semi. As you suggest, an 'event' will probably change this, but the doctor might be wise to continue renting, to avoid being clobbered by a gearing / leverage and a house price fall. We can talk about the possibilities, but economic downturns often occur suddenly and for unexpected reasons.
I agree.
Is worth adding that even if there was a 30% fall in the South East that would leave traditional family homes still too expensive for the traditional single professional income. Which means we either have a fall far bigger than ever before or the population must adjust its mindset forward and recognise that they will be buying smaller than their parents and grandparents.
I tend to favour the latter which supports the view that the Boomer generation will transpire to be the peak wealth generation for a long time to come and that we will probably see a huge growth in suburban large homes being subdivided to cater for the new economic needs going forward.
Is worth adding that even if there was a 30% fall in the South East that would leave traditional family homes still too expensive for the traditional single professional income. Which means we either have a fall far bigger than ever before or the population must adjust its mindset forward and recognise that they will be buying smaller than their parents and grandparents.
I tend to favour the latter which supports the view that the Boomer generation will transpire to be the peak wealth generation for a long time to come and that we will probably see a huge growth in suburban large homes being subdivided to cater for the new economic needs going forward.
I agree, but I don't think it will be late suburban homes being subdivided (unless its inheriting kids sharing).
Tiny flats are the future, people will give up the notion of living in a flat when young and then moving onto homes with gardens when they have kids.
I saw a new build flat complex near the o2 a few weeks ago, had a children playground in the centre. This will trickle out to the suburbs.
Tiny flats are the future, people will give up the notion of living in a flat when young and then moving onto homes with gardens when they have kids.
I saw a new build flat complex near the o2 a few weeks ago, had a children playground in the centre. This will trickle out to the suburbs.
When you look at metro land out around zone 5 you can see these developments already.
From zone 1 out to zone 3 a very large percentage of what were once large family homes have long since been subdivided into flats with shared driveways and gardens. The conversions have been going on since the 60s I guess.
My thinking is that this practice will ultimately extend out to zone 4 and 5 where only developers have the firepower to buy the £1m+ big homes and they convert them to 4 £500k flats and job them on to the retail buyer.
I've often wondered if you'd start to see pensioners converting their big family homes into bungalows for them with a nice rented flat or two above them that gives them a big income without having to leave their home. It's what many people did in places like Putney and other zone 2 areas years ago. Even today you still find the odd zone 2 house converted to flats where the old lady on the ground floor was the original owner of the whole house.
Subdividing suburban family homes into apartments has to be something that comes back into fashion if prices hold where they are or thereabouts.
Or a seismic shift in moving jobs out to the regions which I long held as being a very prudent way of distributing wealth and population much more evenly in the UK rather than shoving all workers in the South East and bribing everyone else with welfare payments not to rise up.
From zone 1 out to zone 3 a very large percentage of what were once large family homes have long since been subdivided into flats with shared driveways and gardens. The conversions have been going on since the 60s I guess.
My thinking is that this practice will ultimately extend out to zone 4 and 5 where only developers have the firepower to buy the £1m+ big homes and they convert them to 4 £500k flats and job them on to the retail buyer.
I've often wondered if you'd start to see pensioners converting their big family homes into bungalows for them with a nice rented flat or two above them that gives them a big income without having to leave their home. It's what many people did in places like Putney and other zone 2 areas years ago. Even today you still find the odd zone 2 house converted to flats where the old lady on the ground floor was the original owner of the whole house.
Subdividing suburban family homes into apartments has to be something that comes back into fashion if prices hold where they are or thereabouts.
Or a seismic shift in moving jobs out to the regions which I long held as being a very prudent way of distributing wealth and population much more evenly in the UK rather than shoving all workers in the South East and bribing everyone else with welfare payments not to rise up.
One financial point concerning the Boomer generation.
Buying a home was important to many in the 1960s and 1970s and although in relation to earnings at the time it was not easy, I suppose today though, there are far more consumer 'essential' demands upon income (e.g. £70 monthly for a Sky package, £40 monthly for the latest smartphone, etc.).
Those house buyers did receive a tremendous boost to their wealth, from an unexpected source - inflation.
For a long time inflation ran well above 10%. In 1975 it reached 26.9% and in 1980 it reached 21.9%.
Everyone who had a mortgage and who were also fortunate to remain in employment, effectively had their mortgage gradually paid off by inflation. Their debt was in pre-inflated Pounds, but their income was rapidly being increased by inflation.
Mortgage interest rates were of course also high, over 10%, but I am talking about the capital.
That situation has been completely different during the past 10 years, with low inflation and modest pay increases.
Home buyers with a mortgage happened to be beneficiaries, but such high levels of inflation created misery for so many people. Prices in the shops were increasing almost every week.
Many Boomers are financially comfortable now, but that period of high inflation played an important part.
ps. MULTIPLE OCCUPANCY
I have just read your discussion about more apartments for families.
In my first flat, and there will often be adjacent flats above, below and on each side, we had one set of noisy neighbours.
A living nightmare.
Lesson learnt, so after that, it was detached house only.
Apartments for families might work financially, but I would not wish our experience on anyone.
Edited by Jon39 on Saturday 22 July 16:27
DonkeyApple said:
When you look at metro land out around zone 5 you can see these developments already.
From zone 1 out to zone 3 a very large percentage of what were once large family homes have long since been subdivided into flats with shared driveways and gardens. The conversions have been going on since the 60s I guess.
My thinking is that this practice will ultimately extend out to zone 4 and 5 where only developers have the firepower to buy the £1m+ big homes and they convert them to 4 £500k flats and job them on to the retail buyer.
I've often wondered if you'd start to see pensioners converting their big family homes into bungalows for them with a nice rented flat or two above them that gives them a big income without having to leave their home. It's what many people did in places like Putney and other zone 2 areas years ago. Even today you still find the odd zone 2 house converted to flats where the old lady on the ground floor was the original owner of the whole house.
Subdividing suburban family homes into apartments has to be something that comes back into fashion if prices hold where they are or thereabouts.
Or a seismic shift in moving jobs out to the regions which I long held as being a very prudent way of distributing wealth and population much more evenly in the UK rather than shoving all workers in the South East and bribing everyone else with welfare payments not to rise up.
It was prolific and yes there are lots of houses split into 2, but has been stopped for a while from what I have seen of denied planning permissions locally- any attempt to spit a house into flats nowadays is automatically denied as it is official Greater London policy that there is a shortage of family homes.From zone 1 out to zone 3 a very large percentage of what were once large family homes have long since been subdivided into flats with shared driveways and gardens. The conversions have been going on since the 60s I guess.
My thinking is that this practice will ultimately extend out to zone 4 and 5 where only developers have the firepower to buy the £1m+ big homes and they convert them to 4 £500k flats and job them on to the retail buyer.
I've often wondered if you'd start to see pensioners converting their big family homes into bungalows for them with a nice rented flat or two above them that gives them a big income without having to leave their home. It's what many people did in places like Putney and other zone 2 areas years ago. Even today you still find the odd zone 2 house converted to flats where the old lady on the ground floor was the original owner of the whole house.
Subdividing suburban family homes into apartments has to be something that comes back into fashion if prices hold where they are or thereabouts.
Or a seismic shift in moving jobs out to the regions which I long held as being a very prudent way of distributing wealth and population much more evenly in the UK rather than shoving all workers in the South East and bribing everyone else with welfare payments not to rise up.
Cheap new build flats make more sense financially, and large developers will use their influence to keep it that way. There was a recent change in law by the Tories where 'unused' commercial buildings can be very easily turned into shoe box sized bedsits against council objections.
You may be right, but I feel it won't happen- lots of green field sites and parks Councils are quite happy to sell off/develop in partnership with developers with zero contributions from council budgets.
hyphen said:
It was prolific and yes there are lots of houses split into 2, but has been stopped for a while from what I have seen of denied planning permissions locally- any attempt to spit a house into flats nowadays is automatically denied as it is official Greater London policy that there is a shortage of family homes.
Cheap new build flats make more sense financially, and large developers will use their influence to keep it that way. There was a recent change in law by the Tories where 'unused' commercial buildings can be very easily turned into shoe box sized bedsits against council objections.
You may be right, but I feel it won't happen- lots of green field sites and parks Councils are quite happy to sell off/develop in partnership with developers with zero contributions from council budgets.
You are probably right. There is probably more desire from construction firms able to lobby to build whole developments than allow small builders to convert houses. The latter doesn't line any pockets or deliver any sound-bites. Cheap new build flats make more sense financially, and large developers will use their influence to keep it that way. There was a recent change in law by the Tories where 'unused' commercial buildings can be very easily turned into shoe box sized bedsits against council objections.
You may be right, but I feel it won't happen- lots of green field sites and parks Councils are quite happy to sell off/develop in partnership with developers with zero contributions from council budgets.
Jon39 said:
One financial point concerning the Boomer generation.
Buying a home was important to many in the 1960s and 1970s and although in relation to earnings at the time it was not easy, I suppose today though, there are far more consumer 'essential' demands upon income (e.g. £70 monthly for a Sky package, £40 monthly for the latest smartphone, etc.).
Those house buyers did receive a tremendous boost to their wealth, from an unexpected source - inflation.
For a long time inflation ran well above 10%. In 1975 it reached 26.9% and in 1980 it reached 21.9%.
Everyone who had a mortgage and who were also fortunate to remain in employment, effectively had their mortgage gradually paid off by inflation. Their debt was in pre-inflated Pounds, but their income was rapidly being increased by inflation.
Mortgage interest rates were of course also high, over 10%, but I am talking about the capital.
That situation has been completely different during the past 10 years, with low inflation and modest pay increases.
Home buyers with a mortgage happened to be beneficiaries, but such high levels of inflation created misery for so many people. Prices in the shops were increasing almost every week.
Many Boomers are financially comfortable now, but that period of high inflation played an important part.
ps. MULTIPLE OCCUPANCY
I have just read your discussion about more apartments for families.
In my first flat, and there will often be adjacent flats above, below and on each side, we had one set of noisy neighbours.
A living nightmare.
Lesson learnt, so after that, it was detached house only.
Apartments for families might work financially, but I would not wish our experience on anyone.
A large array of tax incentives and pension contributions have also assisted. But while the Boomers are the wealthiest group to the point that for the first time ever pensioner incomes are greater than workers' incomes it is amazing how many are broke and having to borrow against their homes. The whole 'living beyond means' issue hasn't spared any generation in reality. Buying a home was important to many in the 1960s and 1970s and although in relation to earnings at the time it was not easy, I suppose today though, there are far more consumer 'essential' demands upon income (e.g. £70 monthly for a Sky package, £40 monthly for the latest smartphone, etc.).
Those house buyers did receive a tremendous boost to their wealth, from an unexpected source - inflation.
For a long time inflation ran well above 10%. In 1975 it reached 26.9% and in 1980 it reached 21.9%.
Everyone who had a mortgage and who were also fortunate to remain in employment, effectively had their mortgage gradually paid off by inflation. Their debt was in pre-inflated Pounds, but their income was rapidly being increased by inflation.
Mortgage interest rates were of course also high, over 10%, but I am talking about the capital.
That situation has been completely different during the past 10 years, with low inflation and modest pay increases.
Home buyers with a mortgage happened to be beneficiaries, but such high levels of inflation created misery for so many people. Prices in the shops were increasing almost every week.
Many Boomers are financially comfortable now, but that period of high inflation played an important part.
ps. MULTIPLE OCCUPANCY
I have just read your discussion about more apartments for families.
In my first flat, and there will often be adjacent flats above, below and on each side, we had one set of noisy neighbours.
A living nightmare.
Lesson learnt, so after that, it was detached house only.
Apartments for families might work financially, but I would not wish our experience on anyone.
Edited by Jon39 on Saturday 22 July 16:27
Boomer wealth raises an interest aspect though, if rate rises are designed to curb inflation then how will it work if each rate rise is a wage increase for the largest and wealthiest demographic? That could be interesting?
Re apartment living, yes there's more risk of noise but it really boils down to beggars not being able to be choosers.
DonkeyApple said:
Or a seismic shift in moving jobs out to the regions which I long held as being a very prudent way of distributing wealth and population much more evenly in the UK rather than shoving all workers in the South East and bribing everyone else with welfare payments not to rise up.
I'd love this to happen ... just for everyone else's industry and not my own. The obvious and public headache that the BBC had trying to shift some staff to meeja-city Salford would, I imagine, put many off trying the same thing. DonkeyApple said:
... it is amazing how many are broke and having to borrow against their homes. The whole 'living beyond means' issue hasn't spared any generation in reality.
Yes, but are the majority really broke, or perhaps some just see a new opportunity for spending?
As well as property 'equity release', pension savings are apparently now easy to withdraw and spend as well.
Subsequent generations should not have to pick up the cost, when there might have been foolish financial behaviour.
For a generation brought up before any availability of easy credit (Access I think was the very first UK credit card), you might think they would stick to their original principles.
I suppose there could be a whole thesis, and a multitude of reasons for this situation;
You have a very good knowledge of financial matters and economic history.
That might be one clue as a reason for 'living beyond means'. As the old joke goes, 50% of the population, cannot explain what 50% is. A widespread lack of any financial understanding.
Perhaps some other reasons might be;
Influenced by compulsive and persuasive modern marketing techniques.
Insatiable desire to always have a new car on the driveway. I can hardly believe, but it is said that 80% of new cars are now obtained with PCP schemes, with regular replacement every 3 years (coincidentally the maximum depreciation period).
Very low interest rates, making debt look like free money.
Below inflation rates for cash savings accounts, probably encourages retired people to spend. They used to like getting their 6% interest payment every year, blissfully ignorant that inflation was probably 5% anyway.
DonkeyApple said:
Boomer wealth raises an interesting aspect though, if rate rises are designed to curb inflation then how will it work if each rate rise is a wage increase for the largest and wealthiest demographic? That could be interesting?
You I think, must be referring to the annual state pension increases, linked to inflation.For the Treasury it would be a significant outflow increase, but for a pensioner with only that income (about £5,000 pa), any increase doesn't make much difference. I suppose there might be welfare in addition to the £5,000, but I am very fortunate not to know. A worryingly low income to try to live on.
drainbrain said:
DonkeyApple said:
But, if you're buying up assets without leverage and have a book of them already that are showing good capital gain while all are underpinned by benefits revenue then I don't really see much of a risk there. As opposed to what I have mostly been invested in, where I think there is more risk given how that market has boomed and there is no potential for support for rents so pure market forces would prevail.
But you've given the impression that the assets you are currently buying you're paying cash for and in that regard we probably have an identical view that the current market is not smart for leverage. In property I wouldn't want anything in the U.K. on less than 50% margin and I certainly wouldn't want anything where I couldn't happily finance a 12 month void, sitting tenant or trashing.
I've never had an issue sitting on cash as it's just another asset class and it tends to be a good one to be in when other assets are falling in demand and then value.
Also, having cash when property values are falling and banks are knocking for a margin call means you can keep them off your back which is why I'm of the view that paying down a mortgage beyond a certain level is less beneficial at the moment than putting the cash to one side and deciding at a later date whether to pay down the debt. And why I don't think it's the right time to be increasing debt levels. Nothing wrong with continuin to invest in property but I don't think it's the time to be doing so with leverage.
Absolutely. The op's plan in this thread - effectively borrowing 100% of the purchase price - was just bonkers. Mind you, there are people who are still using well thought out plans which include expanding strong portfolios with borrowings. But that's because they have lengthily held portfolios of now unburdened property, so it's of no real risk at all to refinance say 20-25% of it to add further (anyway self-servicing) stock, which once added further lowers their global LTV below even those modest 20-25% levels. And the game goes ever on. But you've given the impression that the assets you are currently buying you're paying cash for and in that regard we probably have an identical view that the current market is not smart for leverage. In property I wouldn't want anything in the U.K. on less than 50% margin and I certainly wouldn't want anything where I couldn't happily finance a 12 month void, sitting tenant or trashing.
I've never had an issue sitting on cash as it's just another asset class and it tends to be a good one to be in when other assets are falling in demand and then value.
Also, having cash when property values are falling and banks are knocking for a margin call means you can keep them off your back which is why I'm of the view that paying down a mortgage beyond a certain level is less beneficial at the moment than putting the cash to one side and deciding at a later date whether to pay down the debt. And why I don't think it's the right time to be increasing debt levels. Nothing wrong with continuin to invest in property but I don't think it's the time to be doing so with leverage.
IMO anyone now entering the btl market would be best advised to buy a humble and lower end startup, preferably BMV, and with 100% cash, and place the btl skilfully with effective and professional management. After even 12 months the reality (especially the arithmetic) of matters will have become apparent. Because if it's been bought BMV it can be sold pretty rapidly BMV again. Or, if the arithmetic says expand the venture then re-mortgage it. Whatever.
Taking a punt on something nice (i.e. expensive) using borrowed funds, including from the family home, with the idea of some certainty of either capital gain or even letting profit is, currently, going to require a chunky slice of luck to work out well.
I thought nowadays lenders had developed systems to prevent such follies? Any sub prime lenders I've encountered lately certainly wouldn't supply the op's scheme with their money assuming the plan was put openly to them.
Edited by drainbrain on Saturday 22 July 00:15
Still, thanks for the insight, BTL no longer being considered.
rossw46 said:
Sorry, borrowing £100K on a £170K purchase price doth not 100% make...can you even borrow 100%?
Still, thanks for the insight, BTL no longer being considered.
O I do beg your pardon. I thought the plan was to release £70k in equity from a refinance of your own house and use that to deposit on a btl you borrowed a further £100k to buy for a total of £170k. i.e. the lot borrowed via refinance and btl loan. Still, thanks for the insight, BTL no longer being considered.
Must have read it wrong.
Anyway the plan's in the bin.
So good luck with Plan B!
drainbrain said:
O I do beg your pardon. I thought the plan was to release £70k in equity from a refinance of your own house and use that to deposit on a btl you borrowed a further £100k to buy for a total of £170k. i.e. the lot borrowed via refinance and btl loan.
Must have read it wrong.
Anyway the plan's in the bin.
So good luck with Plan B!
You didn't read it wrong Must have read it wrong.
Anyway the plan's in the bin.
So good luck with Plan B!
. I don't think OP understood. My apologies, I obviously have misunderstood, my knowledge of finance is obviously not near what it should be to meddle in finance, I'm an Electrical Engineer by trade, so I'm going to stick with what I know, making sure your lights stay on, and go with the mortgage over-payment option.
Edited by rossw46 on Saturday 22 July 21:18
Jon39 said:
You I think, must be referring to the annual state pension increases, linked to inflation.
For the Treasury it would be a significant outflow increase, but for a pensioner with only that income (about £5,000 pa), any increase doesn't make much difference. I suppose there might be welfare in addition to the £5,000, but I am very fortunate not to know. A worryingly low income to try to live on.
Ah, no, I was referring to the fact that they are the group that holds cash so as the yield on cash increases those that have cash earn more. For the Treasury it would be a significant outflow increase, but for a pensioner with only that income (about £5,000 pa), any increase doesn't make much difference. I suppose there might be welfare in addition to the £5,000, but I am very fortunate not to know. A worryingly low income to try to live on.
rossw46 said:
My apologies, I obviously have misunderstood, my knowledge of finance is obviously not near what it should be to meddle in finance, I'm an Electrical Engineer by trade, so I'm going to stick with what I know, making sure your lights stay on, and go with the mortgage over-payment option.
It's just that in your opening post you say that you're going to borrow £70k against your house and then borrow another £100k on a different mortgage secured against the target property, the value of which was to be £170k. So, that second property is 100% leveraged. Edited by rossw46 on Saturday 22 July 21:18
drainbrain said:
Jockman said:
So not so pointless. And not so self-centred. 
Well I've had a woolly-minded 'life insight' that the point of being materially blessed is to enable the welfare of the deprived. This might be wrong thinking, in which case fuelling it would be pointless and just another expression of selfishness.
But I see what you mean. There's a certain point in 'altruism' and to the degree it benefits others, it's 'unselfish'.
That's our charity, by the way. According to it's boss it's doing really well too......
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