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tallim

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  1. I remember saying 5 years ago that if I could ever get a 5 year fixed rate at 3.5% or less then I wouldn't care what the price of the house was. Looks like my metal is about to be tested, my view is a bit different now low interest rates are the norm and I have less of a need to borrow, but still. That is historically stonking value for a 5 year fix if you're borrowing enough for the 1500 product fee to make no real difference.
  2. Rent the asset or rent the money. Capital payments are just savings with compound interest. The differences are only introduced when the asset price changes, or the cost of renting the asset or the money are different. In your example using a 5% rate for everything and slightly rounding some figures; 25 year repayment mortgage @1000 per month is purchase price of 171,000. To save 171,000 in 25 years with compound interest you need to save 291 per month. So if you can rent the 171,000 asset for (1000-291) = 709 per month (5% of the asset price) then everything is equal. Now make it real world and everything gets really complex with differing rates and different costs other than just the interest / rent, but basic principle is the same, still looks a bit odd if you imagine it over 25 years, but scale back to 12 months and it's simpler. (Though oddly enough, my current rental almost exactly balanced; renting, mortgage interest and savings interest were all within a shade of 2.9%, I'm facing the downside of that decision right now though as landlord has decided to sell up )
  3. A bit worrying for those pushing for an increase in housing supply, who is going to build these extra houses if a cash rich company that controls more than 60,000 building plots has so little appetite to build volume, or foresees such a poor rate of return that they give cash back to shareholders?
  4. Well now Tata owns Jaguar Land Rover maybe we could see a Range Rover Nano. Cheap car with the right badge, like an Aston Martin Cygnet (well, not the cheap bit): http://www.independent.co.uk/life-style/motoring/road-tests/aston-martin-cygnet-2373055.html I think we'll have an interesting spring, I have a feeling that there is quite a backlog of supply that people are holding off marketing until the spring bounce period. I've certainly seen new supply dry up in my area and from a couple of conversations with friends and colleagues it appears to be received wisdom that you don't market until March so your house is fresh for the spring bounce buyers.
  5. Spotted coming up for auction soon, 6 2-bed flats in a decent area, easy commute to Manchester on the tram. Wood Court, 205 Brooklands Road, Sale Flat 4 65k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111040-1324402217 Flat 5 70k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111039-1324473188 Flat 9 75k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111038-1324402252 Flat 10 65k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111037-1324402282 Flat 13 70k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111036-1324402330 Flat 17 70k guide http://www.countrywidepropertyauctions.co.uk/content/Property_Search/Details/2-bedroom-property-for-sale-in-205-Brooklands-Road-M33-rpache-CHL111035-1324402352 All bought on 26/08/2003 for 92k as new about 12-18 months after the development completed. I'd expect them to go for around 20% over guide, so maybe 80 to 90k. One in same apartments failing to sell on open market for 130k. http://www.rightmove.co.uk/property-for-sale/property-30614384.html 22 July 2010 Initial entry found 10 September 2010 Price changed: from '£145,000' to '£141,950' 28 January 2011 Price changed: from '£141,950' to '£137,500' 01 July 2011 Price changed: from '£137,500' to '£129,500' Last open market sale at 120k http://www.mouseprice.com/house-prices/land-registry/205-brooklands-road-sale?Mode=SP They'll rent all day long with few voids at 600pcm to young couples or sharers, no mention of how much service charges are though, slight potential to become social housing. First sale of this type I've seen in this area of Greater Manchester.
  6. I thought you were of the opinion that prolonged inflation would eventually lead to pay catching up and closing the gap quite significantly?
  7. It's what puts me off being a landlord though, I think I would't trust people enough. I wouldn't want what I perceive as the hassle. Plus, in my experience, letting agents are next to useless when anything goes wrong in a tenancy for both the tenant and the landlord, suddenly it's the landlord's job to chase non-paying tenants, or sort out serious disputes. I am a bit risk averse though, most landlords probably never have to deal with these situations.
  8. Yes they do have higher interest rates on BTL loans (if the tenant has a big enough deposit to actually access a mortgage), so you either dabble at the low end where gross rental yields are greater than 7% or you understate the opportunity cost of the capital that's tied up, which is not really both sides benefitting, so maybe you have a point, it's just the tenant that benefits in the latter case.
  9. Do they want to be a landlord, would they be comfortable with the risks and responsibilities that entails? Happy to replace a boiler at the drop of a hat, happy to kick out a non-paying tenant, happy to leave the tenant alone to enjoy quiet occupation, happy to have that nagging feeling that the letting agent is somehow conning you and that the tenant is hiding damage?
  10. This is very emotive language that doesn't really describe the situation at all, but has been used an awful lot in the last decade. If a landlord can fund an asset for less than the tenant, don't both sides benefit? If the landlord wants to take on risks that the tenant doesn't, don't both sides benefit? If a landlord can provide access to an asset that the tenant can't because they have no security to offer to obtain a mortgage, don't both sides benefit? It's often portrayed as a very one-sided relationship, but that's not always the case. Haven't landlords sheltered many of our younger generations from the capital losses we've seen everywhere but London in the last few years? Why does this phrase never get used for commercial buildings?
  11. How can you tell? I'm winding down for some winter sun next week in that city of housing boom and bust, Dubai. The worst thing is that rising prices would likely be celebrated by the lady in this example; every 1% would give £855 equity on the £85.5k flat while only adding £150 to the 10% deposit cash requirement on my assumed £150k house. Hooray for wider steps on the housing ladder!
  12. It is a bit of nonsense article isn't it, confusing cash flow with cost. The article was close to being decent, but they've regurgitated press releases without understanding them and making a coherent story. I certainly wouldn't consider a 10% deposit to be a cost, it's a cash requirement, but not a cost. I think most accounting standards would agree with that too. That is what has changed in the market; no cash, no house. On this particular example: The £12.5k of debt was got rid of by putting most of it into the Northern Rock together mortgage, borrowing £8k more than the total purchase price. Monthly interest on £100.5k at 6.9% is £578, I think 'Together' mortgages had to be repayment though, so that's £704 [1], I'd expect a 27 year old nurse to be around pay band 4 or 5, so maybe £21k annual salary this year [2], which is take home of ~£1350 per month [3]. Certainly tight, especially in previous years, but today at 4.8% and 4 years into the mortgage with the outstanding balance at £93.5k (assuming no overpayments) and a remaining term of 21 years it's dropping to £590. Assuming she would like to move to a £150k place she's going to need £15k cash as a deposit, plus maybe £3k for agent, legal and product fees, making a total of £18k. Assuming her current net housing worth is -£8k (mortgage of £93.5k on a place that would sell for £85.5k), she needs to build £26k from today, or a mortgage balance of £67.5k. Assuming static selling prices and mortgage rates then monthly overpayments to reach that balance in this example would be: 3 years normal repayment mortgage capital built = £8.5k, overpayment per month to get to mortgage balance of £67.5k = ~£455 5 years normal repayment mortgage capital built = £14.5k, overpayment per month to get to mortgage balance of £67.5k = ~£170 Certainly feasible in 5 years, likely to be feasible in 3 if you knuckle down, get basic pay rises and do some overtime. Absolutely feasible if you get a partner to help pay for things! Absolutely unfeasible if you lose your job! [1] http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator [2] http://www.rcn.org.uk/support/pay_and_conditions/pay_rates_20112012 [3] http://www.thesalarycalculator.co.uk/salary.php
  13. It's a bit of an odd one, game theory I think, what's good for the indivudal is not good for the group. It makes perfect sense for individuals to pay down debt, build up a war chest, keep a low profile, etc... But, like you say, if everyone did that we'd get into a downward spiral, so many jobs rely on a certain level of consistent discretionary spending. That's not a bad thing, it's a sign of a well developed nation that so much of our activity is entirely discretionary, but it does make it very sensitive to shocks and all the more annoying that so much demand was brought forward by letting people leverage up so far. I think I disagree that the media are stupid for telling us things are bad, they're thankfully not a particularly co-ordinated group. I think I'd feel distinctly uneasy about a media outlet having a 'let's keep positive and things will improve' agenda, makes me think of Soviet news reports about rising tractor production. You would advise friends or family that the future looked very uncertain and not to rely on job security, rising wages, rising asset prices, etc... You just need other faceless groups of people to be the ones that continue their high level of discretionary spending. i.e. Sky News gives it's viewers what they think is a realistic outlook, but hopes that non-Sky News viewers continue to spend and keep Sky News viewers in jobs.
  14. That town has an interesting claim to fame: BMX Pro Town http://sports.espn.go.com/action/bmx/news/story?id=5852272 Wikipedia link has an interesting table showing the biggest employers: http://en.wikipedia.org/wiki/Greenville,_North_Carolina # Employer Product Employment 1 Pitt County Memorial Hospital Health Care 6,297 2 East Carolina University Education 4,936 3 Pitt County Public Schools Education 2,940 4 DSM Chemicals 1,100 5 NACCO Materials Handing Group Lift Trucks 1,100 6 County of Pitt Government Administration 922 7 Pitt Community College Education 783 8 City of Greenville Government Administration 704 9 Physicians East Medical Care 500 10 Greenville Utilities Commission Public Utilities 425 11 ASMO Greenville of North Carolina Small Electric Motors 410 12 Wal-Mart Department Store 400 13 Convergys Customer Service Center 400 14 Attends Healthcare Products Adult Incontinence Products 300 15 Karastan-Mohawk Carpet Yarn 270 16 Grady-White Fiberglass Boats 250 I think it highlights the importance of SMEs, there must be a tail to that list hundreds of companies long in a city of 180,000.
  15. My other home is Kenya, while dining outside is one of life's greatest pleasures, it is sometimes more than offset by having to put up with drought, crop failure and expensive / poor access to drinking water. Doubly bad when a large proportion of the power generation capacity is hydro and you get rolling blackouts to accompany it!
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