See this is what pee's me off with the current 'tax the backside out of those that own a decent home' mantra - - many of those folks worked decades, paid interest rates that were crazy high, often worked more than one job, took in lodgers etc just to make ends meet... they maintained their property all their lives and their asset grew in value, meaning they could at least be comfortable in their final years and hopefully give their kids the start they never had... then the state comes along and wants to steal it out of envy? We've sort of loaded ours in reverse for now, in as much that we put money away for our daughter that we gave to her when she was 18 - she has continued to build on that, and her boyfriends parents must have done similar as he too has a good chunk of savings - between them, they have a deposit (or damn near it) to be able to buy something, even relatively far south and circa a third of the value of a property up north. All we were able to do was be good tenants for our landlords, look after this property as if it were our own and hope they look favourably on us (which they do) - as I said to a friend the other night when discussing our situation, we shouldn't have much trouble finding a landlord in a new location as most landlords would give their right nut to have tenants like us.
People read how good it is that property prices are going up and think it's good but they never seem to realise that they have to pay the lender more and they can’t spend it without selling And from a different side I have a friend who for years has been buying houses on a interest only mortgage when the term is up she sells and pays the loan and keeps whatever it's gone up
At one stage the mortgage rate went up to close on 20% but we were lucky to have got a fixed rate before it soared. Some of our friends had to sell their houses.
My neighbours are on an interest only mortgage - and nearing retirement age... so they are almost certainly going to have to sell and then buy whatever they can elsewhere with whatever equity they have. Thankfully, they've been in the house a long time, so the value will have gone up anything between £200k-£300k
When I got my mortgage I asked for a capped rate - so that my payments wouldn't go up, but I could take advantage of any falls. Interest rates were about 10% at the time. Capped mortgages were rare but the mortgage broker associated with my estate agent found me one. A few months later we had the sterling crisis and the threatened big jump in interest rates. And then we left the ERM and interest rates started to fall, and never again went as high as 10%. I think I was paying about 7% at the end. My capped mortgage was an endowment one but after a few years I switched to a repayment and started overpaying, ending up mortgage free after only 13 years. I also benefited from a "carpetbagging" payment because the building society I had the original mortgage with was taken over by a bank. There was story on the BBC the other day headlined something like "I worked all my life and paid my taxes but the bank is taking my house". He took out an interest only mortgage, couldn't keep up the repayments and had no way of repaying the capital. What did paying his taxes have to do with this?
I remember those good old days. I also remember setting off to drive to Colchester an hour away (on business). That morning base rate had been 10%, by the time I reached I Colchester it was 15% and by the time I left for home it was down to 12%, we'd left the ERM and George Soros had made a billion pounds profit on the currency markets.
When I was buying my first house our sales director advised me to get the largest interest only mortgage I could afford. Then he said when interest rates go up you pay the extra each month, then when they come down you continue to pay the increased amount each month (reducing the mortgage). His arguement was that you had economised to make the higher payments and managed so you could afford to continue paying that amount; also you're salary would have gone up or would be going up since you took the mortgage out. With pre 2000 house prices and not in London this worked quite well for me.
A lot of people who bought in the 1990s when prices were low benefited from big gains but then squandered it all by remortgaging and spending the released capital on holidays and cars. It was quite common for people to say "my house bought it for me". I remember walking through my housing estate and counting all the brand new caravans/motor homes parked on the driveways!
Spent the 90s in a smallish house with a manageable mortgage as all our spare money went on paying the kids school fees. It was a financial relief when they went to university, even while helping with the fees and living expenses. And once they flew the nest, we were able to buy our current nice house and garden when I moved jobs, plus take some decent holidays. We have still maintained our frugal habits though (mine developed in a childhood below the poverty line, although we didn’t realise it at the time!)
Used to be that living in London and the South East ( whether by choice or necessity ) always meant more expensive housing. As time has gone on, more and more areas have become just as expensive re housing. Some can be attributed to holiday/2nd homes but not all. All very well the present govt. setting a target of building so many new houses but developers are crafty and don't follow the %age of "affordable" properties and will hold land until prices rise.. There is also the lack of making use of Brownfield sites/ empty office blocks/factories etc. We bought our first house in 1971 - a Victorian 2 bed terrace a few miles out of Stockport in Cheshire. Currently in our 20th house ( England, Wales, France and Spain ) the majority of them requiring some sort of renovation. I can remember interest on our mortgage going up to about 18% in the late 1980's.
@Fat Controller are your prepared to move? Houses up north are far cheaper than down south. As for new build targets @Philippa it would be cheaper to make sure all the available empty housing was occupied - 6% of all housing stock just in England - Number of vacant and second homes, England and Wales - Office for National Statistics There are grants available for do-er uppers to make them habitable and it would save a fortune on green belt building, installation of services and cleaning up brown field sites.
After the war the government brought out the New Towns Act (think it was 1946) and built a lot of totally new towns that were there to take up the lack of housing and to help large conurbations that were overcrowded and with a lot of very run down housing to rehouse the residents. They worked out very well and were not run by local councils (until many years later) but by non profit Development Corporations who had their own building workforces. They had full infrastructure (took some years) and industrial estates and shopping centres. Prospective employers were encouraged to come there by having very reasonable rents with long term fixed contracts and no increase in rental. They were also allocated new houses to offer to their prospective workers, at very reasonable rents, but a large percentage of the workers had to come from designated areas (overcrowded or slum areas). The system worked very well but took a lot of government investment. They should do the same nowadays but governments now don't do anything but sub-contract.
There are plans to create new towns. Whether they will ever come to anything ... One of the big hurdles is the supply and cost of labour and materials in the construction industry. Anyway, 12 locations have been identified as discussed in the report here. New Towns Taskforce: Report to government
Not just prepared to, we are actively planning to do so. We are currently somewhat anchored as our daughter is about to start university (exam results pending), but thereafter it is my intention to head back in the general direction of home. Rents are around 45% what they are here, so that would allow us to actually save a deposit and then buy something - as I can work mostly from home, I can keep my current job and seniority which between the two of us should mean we can mortgage at circa 2x salary and still be hundreds a month less than here. Even allowing for a couple of journeys south a month for work, we should still be better off. In the short term, we are squaring ourselves up (paying off debt, basically) and I've also started a share option/savings plan at work that is currently on track to deliver approximately a third of what we'd need for a deposit on a mortgage back home, that matures in about 2½ years. No other choice really - we certainly can't do it around here.
