You can't go wrong with property investments

[Alf W]

Assume Capital borrowed was £20k. Capital re-paid £15k. Capital left owing £5k.

House value £81k minus o/s capital = £76k

Ability to re-pay £5k now zero so £5k bundled up with a load of other toxic debt, wrapped in scented paper and flogged to some unsupecting punter for £4k and then run like hell. I have done the Investment Banker thing.

[DimPrawn]

Assume Capital borrowed was £20k. Capital re-paid £15k. Capital left owing £5k.

House value £81k minus o/s capital = £76k

Ability to re-pay £5k now zero so £5k bundled up with a load of other toxic debt, wrapped in scented paper and flogged to some unsupecting punter for £4k and then run like hell. I have done the Investment Banker thing.

What about the £41K in interest they paid that could have been invested in a booming stock market and the £16K in maintaining the house for 20yrs?

You seem to have conveniently missed that bit in the buyers outgoings?

However, using their figures I calculate a gain of £5K not a loss of £15K.

[Francko]

The point of the whole thread is that it is better to invest in booming markets rather than in the depressed ones. If someone still had doubts about that...

Maybe somebody can try to explain this to Atw?

[Cyberman]

Those figures are rubbish. 16,000 pounds in maintenance ? I've spent nothing like that in 21 years that I have been in my house.

The renter will carry on paying rent all of his life, which will increase while his pension reduces due to inflation, whereas the Buyer will probably live 20-30 years rent free once the mortgage has been paid off. Yet, they IGNORE this very salient point!!

.. and yes, the Buyer will have an extremely valuable asset, regardless of what the doomongers say. He will be able to release equity, whilst the renter has vitually nothing.

[TimberWolf]

Don't mortgage interest rates run roughly parallel to inflation? If so, you could simplify the situation by ignoring interest payments, since house prices rise with inflation and nullify the interest payments. Rents presumably rise in parallel with inflation too, so remain the same in real terms, while historically house prices rise in real terms by a few percent a year. I think you need to run this through numerically year by year to be sure, taking everything into account. If you can rent cheap enough, renting may work out cheaper (especially when house prices are dropping off a cliff), but it's going to be dependent on a lot of variables and assumptions.

[BrilloPad]

Remember the shares are pre dot-com crash. They went through the roof (geddit!)

http://news.bbc.co.uk/1/hi/business/7726389.stm

ahh yes . i c.

rather like those fund managers who advertised in November 1997 about their 10 year returns......

[Platypus]

<snip smug comments>

And of course interest rates, which are too high anyway ....

[alreadypacked]

Tell this to Fanny Mae who have repossessed over 67000 homes they can't get rid of.

[DimPrawn]

Tell this to Fanny Mae who have repossessed over 67000 homes they can't get rid of.

That's one big Fanny.

[Cyberman]

Don't mortgage interest rates run roughly parallel to inflation? If so, you could simplify the situation by ignoring interest payments, since house prices rise with inflation and nullify the interest payments. Rents presumably rise in parallel with inflation too, so remain the same in real terms, while historically house prices rise in real terms by a few percent a year. I think you need to run this through numerically year by year to be sure, taking everything into account. If you can rent cheap enough, renting may work out cheaper (especially when house prices are dropping off a cliff), but it's going to be dependent on a lot of variables and assumptions.

My mortgage is 250 quid a month but if we hit a zero tracker rate, I will be paying nothing, but if somebody was renting my 4-bed it would cost them at least 1,000 pounds a month. Plus, I have over 200K in equity.

Oh I wish I was renting !!!