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Average prices/earnings

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Kickstart
The Oracle



Joined: 04 Feb 2002
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PostPosted: 22:00 - 01 Jun 2006    Post subject: Reply with quote
colin1 wrote:
yeah but that will be covered by how much either goes up in value


Only when you sell one, at which point (not being a main house) you will get hammered with tax, added to which you have the running costs of the house.

Oh, and if you are renting it then it is income to be taxed.

All the best

Keith
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Dan 4RR
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Joined: 02 Dec 2004
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PostPosted: 13:29 - 02 Jun 2006    Post subject: Reply with quote
When my gran bought her first and only house in the 1920's it cost her £200 Shocked When she eventually passed away last Febuary (RIP Gran) it was sold for £165,000. Laughing
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xlizx
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Joined: 17 Jun 2005
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PostPosted: 20:19 - 02 Jun 2006    Post subject: Reply with quote
My folks got their place for about £47.5 K in 1995, it had been repossessed and was an utter shithole, no carpet, nails stickig up off the floor etc. Now its worth about £250,000 because they've tarted it up, and my area's become desireable.
Me and the bloke will have to rent, no chance of ever being able to afford a place down here.
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colin1
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Joined: 17 Feb 2005
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PostPosted: 20:20 - 02 Jun 2006    Post subject: Reply with quote
Kickstart wrote:
colin1 wrote:
yeah but that will be covered by how much either goes up in value


Only when you sell one, at which point (not being a main house) you will get hammered with tax, added to which you have the running costs of the house.

Oh, and if you are renting it then it is income to be taxed.

All the best

Keith


houses dont cost that much to run, and you still make a profit even after tax, running costs, interest etc and as i already mentioned, you can release the equity in a house at any time by taking out a cheap loan or remortgaging. You dont have to wait until you sell it.

i think we are going round in circles. You will now say that the interest on a loan/remortgage is a lot. I will say its not compared to how much the house appreciates in value. You will say that you dont get that until you sell the house etc
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colin1
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PostPosted: 20:21 - 02 Jun 2006    Post subject: Reply with quote
xlizx wrote:
My folks got their place for about £47.5 K in 1995, it had been repossessed and was an utter shithole, no carpet, nails stickig up off the floor etc. Now its worth about £250,000 because they've tarted it up, and my area's become desireable.
Me and the bloke will have to rent, no chance of ever being able to afford a place down here.


if you wanted to get your foot on the property ladder, you could always move somewhere where houses are cheap.
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Kickstart
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Joined: 04 Feb 2002
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PostPosted: 20:48 - 02 Jun 2006    Post subject: Reply with quote
colin1 wrote:
houses dont cost that much to run, and you still make a profit even after tax, running costs, interest etc.


They do cost a fair amount. Certainly not free (especially council tax and the like).

colin1 wrote:
and as i already mentioned, you can release the equity in a house at any time by taking out a cheap loan or remortgaging. You dont have to wait until you sell it.


You do not release the equity. You merely risk the equity for a very marginally lower interest rate.

colin1 wrote:
i think we are going round in circles. You will now say that the interest on a loan/remortgage is a lot. I will say its not compared to how much the house appreciates in value. You will say that you dont get that until you sell the house etc


It isn't a lot at the moment, but house prices can (and do) go down (I finally sold a house a few years ago which had taken well over a decade to get back up to its original purchase price, overall a loss of about 2/3 the value of the house, about how much it would cost to rent). House prices are high at the moment, not sure if they will go higher (or may even crash, probably not likely).

The main way a house is an investment for the owner is that once the mortgage is paid off then your "rent" is far cheaper every month. You cannot get money from the house without selling it (which means buying again, or renting if your main house).

All the best

Keith
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Sadie
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Joined: 14 Jul 2004
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PostPosted: 10:32 - 03 Jun 2006    Post subject: Reply with quote
Silver wrote:
Blair earns £163k a year which by industry standards is bugger all.


My bosses get more than that for their annual bonuses! Never mind their salaries!
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colin1
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Joined: 17 Feb 2005
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PostPosted: 12:36 - 03 Jun 2006    Post subject: Reply with quote
Kickstart wrote:
You cannot get money from the house without selling it (which means buying again, or renting if your main house).


ok i'll put it another way

if you know the value of your net assetts including your house, you can feel comfy getting a loan knowing your assetts are worth more than you liabilities (debts).
To me this is just the same as making a withdrawal from a savings account but other people dont see it that way.
My net worth is the balance of my account.
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colin1
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PostPosted: 12:39 - 03 Jun 2006    Post subject: Reply with quote
Sadie wrote:
Silver wrote:
Blair earns £163k a year which by industry standards is bugger all.


My bosses get more than that for their annual bonuses! Never mind their salaries!


that £163k is just his salary
im sure he has other sources of income
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Kickstart
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Joined: 04 Feb 2002
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PostPosted: 14:05 - 03 Jun 2006    Post subject: Reply with quote
colin1 wrote:
if you know the value of your net assetts including your house, you can feel comfy getting a loan knowing your assetts are worth more than you liabilities (debts).


Maybe, but if you are using it to buy another house then you had better hope that is already true.

Personally the saving in interest rate is so small I would not be keen on taking the extra risk (and the only reason there is a saving is because the loan company know that they can seize your house to pay off your debt).

colin1 wrote:
To me this is just the same as making a withdrawal from a savings account but other people dont see it that way.
My net worth is the balance of my account.


Trouble is that it is a savings account that can easily loose your home if you get it wrong, and which ultimatly only pays out when you die.

colin1 wrote:
that £163k is just his salary
im sure he has other sources of income


He would need to, having a mortgage for several million pounds.

All the best

Keith
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Yoshi
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Joined: 05 Jul 2005
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PostPosted: 21:40 - 07 Jun 2006    Post subject: Reply with quote
Haven't read all the thread but we bought a terraced house for £20K circa 1996 (and this wasn't extraordinary, it was the average price for the area at the time). The same tenant has been living in it for around 10 years, and her rent pays for the mortgage each month, plus a couple of quid extra.

We now own the house outright, the mortgage has been paid off, and it is worth £120-150K. Plus we are getting the cash from the tenant to keep now, and we don't do any maintenance or anything, leave it up to her.

Hence, you can't argue that property isn't an investment. Done properly with good understanding and analysis of the market it can be very profitable.
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colin1
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PostPosted: 16:30 - 08 Jun 2006    Post subject: Reply with quote
Kickstart wrote:

Personally the saving in interest rate is so small I would not be keen on taking the extra risk (and the only reason there is a saving is because the loan company know that they can seize your house to pay off your debt).


not all loans are secured loans where your house is at risk. there are also unsecured loans

Yoshi wrote:
Haven't read all the thread but we bought a terraced house for £20K circa 1996 (and this wasn't extraordinary, it was the average price for the area at the time). The same tenant has been living in it for around 10 years, and her rent pays for the mortgage each month, plus a couple of quid extra.

We now own the house outright, the mortgage has been paid off, and it is worth £120-150K. Plus we are getting the cash from the tenant to keep now, and we don't do any maintenance or anything, leave it up to her.

Hence, you can't argue that property isn't an investment. Done properly with good understanding and analysis of the market it can be very profitable.


cool, just the encouragment i need Smile although im not sure all tenants wd do the maintnance, sounds like u have a good un
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Kickstart
The Oracle



Joined: 04 Feb 2002
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PostPosted: 18:56 - 08 Jun 2006    Post subject: Reply with quote
colin1 wrote:
not all loans are secured loans where your house is at risk. there are also unsecured loans


No, but a remortgage of your house is certainly secured on the property, putting it at risk.

All the best

Keith
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kawakid
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Joined: 15 Mar 2005
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PostPosted: 00:51 - 21 Jun 2006    Post subject: Reply with quote
I feel sorry for everyone in this situation, it must be very hard.

I wouldn't be able to afford my house now on its value and the 2.5 times my salary. When I bought the house about 10 years ago, it was about 50K.
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Kickstart
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PostPosted: 01:22 - 21 Jun 2006    Post subject: Reply with quote
mondeokid wrote:
I wouldn't be able to afford my house now on its value and the 2.5 times my salary. When I bought the house about 10 years ago, it was about 50K.


Pretty much the same here. However interest rates are very low now (when I bought my first house they went up to almost 3 times what they are now after a few months, currently a bit over 5% while they reached 15% for a short time). Mortgages certainly seem to be given away for far higher amounts for peoples incomes these days.

If interest rates go up much there will be some people in serious trouble.

All the best

Keith
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chrisw
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Joined: 24 Apr 2006
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PostPosted: 13:21 - 21 Jun 2006    Post subject: Reply with quote
Kickstart wrote:

Pretty much the same here. However interest rates are very low now (when I bought my first house they went up to almost 3 times what they are now after a few months, currently a bit over 5% while they reached 15% for a short time). Mortgages certainly seem to be given away for far higher amounts for peoples incomes these days.


I've as yet not bought a house (currently renting) but I was under the impression that a mortgage of 5x your salary was about as high as should be allowed to take into account future interest rate rises. But apparently there have been mortgages of 9 - 10x the person’s salary being handed out.

I may be wrong with those numbers, but its just seems like financial suicide to take on that kind of debt!
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Kickstart
The Oracle



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PostPosted: 19:11 - 21 Jun 2006    Post subject: Reply with quote
Hi

Tend to agree. Not sure how much interest rates are likely rise.

Quick Google for self certified mortgages and found [url=https://www.mortgages.tv/useful-tools/mortgage-calculator.php]this[/ulr] (first one I found, probably far worse). Basically they seem to give 8 times income (and as that is self certified people will probably fiddle the figures to get even more). Say someone is on £30k then they can have £237k. That is about £1k a month in interest. Hell of a large percentage of their post tax income.

All the best

Keith
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