Be Excellent To Each Other

What's wrong with the houses you're in? Are you adding features to them purely to increase their value, so that you can 'move up'?

The house we have is great, nice garden plenty of space. The guy we bought if from was a builder, he did great work for people all over the street.

However in his own house he almost delighted in doing shit, half finished work everywhere. Nothing too major just loads of small things. For example I was able to lift the kitchen sink up by the tap by a good inch as he has fixed with electrical wire as a pose to the correct fitting. He did this as he couldn't be arsed to take out the integrated dishwasher to do the job right.

Bathrooms are a bit dated and the kitchen looks ok on first glance but look closer and the shit work shines through.

Also the house is a dorma bungalow, with 2 bedrooms upstairs and 2 down. There is much more space downstairs that up.

So the plan is to take the roof off and make the same space upstairs as we have downstairs. We really would like the bedrooms on the same floor as kid number 2 is planned with maybe a third!
Once we have done this we would not be planning to move unless we win the lottery !

No!

Maybe the correct fitting was turned on by builders modelling electrical wire. We don't have the context to judge.

A guy who works for me was telling me he went to see a friend at the weekend in Wimbledon, his house is about 5 minutes walk from the station.

The house is a 3 bedroom end of terrace with a loft conversion, it has a drive that is large enough for a small car such as Ford Focus as well as a garage that you could maybe get a smart car in. Its ok inside but things like the kitchen are dated

His friend paid £180,000 for it 15 years ago and its just been valued at a million pounds!

How people can get on the property ladder in areas of London now is beyond me, unless of course you get a £500,000 a year job straight out of university.

Just had a look on Rightmove at Wimbledon houses, and there's 4 bed 3 storey houses of a similar size and layout to mine for £1M, and some quite a bit smaller for not far off.

Ouch!

A quarter of that would get you a comparable house on my road in the Midlands.

£625k to £1.55m looking a that. 4-10x my road.

Sw19 is a bit posh, though.

Not sure you benefit from that, my sister in law loves living in Maidenhead which is expensive now and will get worse once Cross Rail is finished

There are some really nice houses by the river and in other areas costing millions, but to be honest you are going to get a nice house anywhere if your spending £5 million or more.

So for the average joe houses cost maybe 10-30% more that one 10 miles away

What you get for that is average shopping, a river running through the town and lots of millionaires house to look and dream!

House prices are weird though. Most people buy a house with a mortgage, and most people will move out at some point before they finish paying it off.
The defining factors are the deposit needed, the mortgage repayments, and the equity change during the time you are in the house.

The actual house cost obviously defines all those factors, but it's not something I factor into the equation in and of itself, if that makes sense.

Yeah, I think MrsA said "We want to pay this much a month, in case one of us doesn't work for a bit" and then we looked around to see what that would get. I think we could have borrowed lots more if we wanted to, but in the end, didn't as we've seen some of our friends juggle the mortgage with a kid and the shortfalll in income.

tl;dr MaliA cheaps out, again.

Yep, affordability is what matters.

I have spent an excessive amount of time programming a script that projected my mortgage into the future, and adapted based on interest rate changes or increased overpayments. And it plotted a graph.

It was (and is, when I put it back online) a really useful way of visualising how paying off an extra £50 a month now will actually save you £1000s of pounds and months of your mortgage over the course of 30 years.

I've got a target for my savings account which I'm not far off (enough to live on for a year), then once I've got to that threshold I'm bumping up my mortgage payments to try and shorten the term by a decent amount.

Very sensible - a decent amount of readily available cash for emergencies or whatnot, and then plough the rest into the mortgage. Unless you can find a savings account which beats your mortgage rate, it's always always better to put the excess cash into the latter.

Always is a strong word. Once it is in, it can be difficult to get out again, and if house prices drop, completely impossible.

Backing it up with a load of savings mitigates that issue for sure, but it isn't always the no-brainer to pay off the that mortgage that it seems like, especially if you value flexibility.
To give a specific example, it's more tax efficient for me to not pay down the mortgage on the house up north, as I would have to pay tax on the earnings.

Possibly, but are you thinking long enough on the calculation?

Obviously mortgage interest counts against any 'profit' made from renting it out, which for me often made it loss-making. Paying off more certainly reduces the balance, and interest charged, thereby making it more likely you'll make a profit which is taxable. Remember also that Housing income loses are carried forward, so a negative year followed by a positive year may still attract no net tax.

However every quid you don't pay off isn't just saving you 20% of potentially taxable earnings, it's losing you 4% of that £1 over the remaining length of your mortgage. There will be a tipping point, but as a general rule over the long term, overpaying is 'always' better.

As I say, keep some aside for cashflow, but if the market does go into negative equity, overpaying is again surely the best bet? If you're waiting for the market to rise, you might as well overpay in the meantime, and if your alternative is to sell fairly soon at a loss, overpaying will at least save you the interest that would have accrued on the larger balance in the meantime.

Yeah, but my house ownership isn't a long term thing, i'm aiming to get out as soon as possible.

Plus I've got another mortgage on the flat that I live in, so in the choice where any extra cash would go (if I had any ) then that really is a no brainer. Pay down the one you live in first.

Pay down the one which has the largest interest %.

If you think as multiple mortgages as one giant credit card where different balances attract different rates, you always pay off the one which is costing you the most first.

Again it's one of these things where you think 'Oh, but it's only 0.2% or whatever and I'm probably selling soon', but differences like that make the difference of maybe £40-50 a year, and it's a pretty small adjustment to make that just makes things a little more efficient. It all helps!

Need to add in capital gains tax and income tax into that though, it's not that simple. If I pay off the house up north, I then have to pay income tax on the money when it starts making any, and capital gains on the equity when I sell it.
If I pay into the flat I don't have any of that to deal with.

Increasing pension contributions is the other worthwhile place to put it, especially for higher rate tax payers, but that's even more tied in than a mortgage.

http://www.dailymail.co.uk/news/article ... LLION.html

Ok its the Mail, but doubt they will have too many people viewing this

I think there'll be a fair amount of interest in it.

Locally, some house prices seem to have dropped a bit. My friend sold a house at a loss recently, and I know of a new build three bedroom semi that has gone on the market for less than the purchase price. However, a guy at work has put his house on the market for £10k more than he paid 4 years ago. Now I know 10k in 4 years isn't a lot, certainly not when compared to the profits that could be made 10 years ago but it seems the smaller houses are at least maintaining their value. Larger new build houses are being released on to the market for less than they were 5 years ago, and they still don't seem to be selling, with a lot of them having to let out.

We recently looked at a house that went on the market 4 years ago, in the 4 years, they've dropped the asking price by £30k, it would suggest it was hugely overvalued originally and I know value doesn't necessarily reflect the purchase pice but there does seem to be a downward trend.