Putting offer in on a property

[Coutts]

I'm disappointed in you Coutts.

You could at least have generalised Truman's situation, or provide your own figures as an example.

What a cop-out!

 

I do hate to disappoint you poppet.

[Cyclone]

Literally hundreds of thousands of people have moved from humble beginnings to the top of the property ladder only ever owning one house. How do you think they've achieved it? Must be magic eh. They simply sold and moved up a level each big market rise. Just as people have done it in the past they will do it in the future whether you believe it's possible or not.

 

It's very simple maths. A basic spreadsheet proves how easy it is to move up the ladder over time with just one property. It worries me that you as grown adults believe that the only way for a family with one property to prosper is by waiting for a rise and then downsizing. If you believe this nonsense what are our kids learning in schools. What chance have they got. I worry for them.

 

You're making several claims here.

The first is a strawman, I never claimed that it wasn't possible to move up the housing ladder whilst only owning one house.

The second is that house price inflation somehow benefits someone who is still moving up the property ladder. It certainly is basic maths, and the maths shows that inflation is a detriment to someone moving up the ladder. Common sense would also tell you the same thing.

 

 

 

 

It's difficult to comment on individual cases because it would be seen as giving strategic financial advice which I am not licensed nor wish to do so.

Tosh. Did you not see the E.G.?

It's an example.

 

It's not difficult to comment on hypothetical examples and nobody believes you have the slightest clue what you're talking about, so there's no danger of anyone confusing you for a financial advisor.

You would have to consult with your own financial advisors and planners to help you with your specific situation. I would however say that you should pursue and discuss your goal with a professional. Don't get in the way of yourself.

 

Way to duck the question and example.

 

If inflation just makes the next move up more expensive, in what way has the person moving up the ladder benefited?

Edited May 30, 2014 by Cyclone

[Coutts]

It was hypothetical...just to show that in a rising market you have to borrow even more to get a "better" house...

 

It depends how much further up the ladder you're going to go in one hit. No need to make it painful. Just move up in a responsible and manageable way. Every time you sell your only main residence there's no capital gains tax to pay so it's very wise to sell and move up the ladder when there has been a significant rise in the value of your property. You put down a hefty deposit on the new more expensive place, keep some of the profits back for a safety net, and hey presto you're moving on up, moving on out, time to break free, nothing can stop you.

 

Downsizing, no way I'm going out like that. I'm going to die at 98 alone in a 40 bedroom mansion on a dark and bleak winters morning feeling thoroughly proud of myself. Downsizing indeed!

[truman]

It depends how much further up the ladder you're going to go in one hit. No need to make it painful. Just move up in a responsible and manageable way. Every time you sell your only main residence there's no capital gains tax to pay so it's very wise to sell and move up the ladder when there has been a significant rise in the value of your property. You put down a hefty deposit on the new more expensive place, keep some of the profits back for a safety net, and hey presto you're moving on up, moving on out, time to break free, nothing can stop you.

 

 

But you still have to borrow more money......you're further in debt...

[Coutts]

But you still have to borrow more money......you're further in debt...

 

It's good debt. Good debt is your friend. Good debt makes you money. Investment 101. Come on! SERIOUSLY! Is this where we are at! Right down here!

[poppet2]

It depends how much further up the ladder you're going to go in one hit. No need to make it painful. Just move up in a responsible and manageable way. Every time you sell your only main residence there's no capital gains tax to pay so it's very wise to sell and move up the ladder when there has been a significant rise in the value of your property. You put down a hefty deposit on the new more expensive place, keep some of the profits back for a safety net, and hey presto you're moving on up, moving on out, time to break free, nothing can stop you.

 

Downsizing, no way I'm going out like that. I'm going to die at 98 alone in a 40 bedroom mansion on a dark and bleak winters morning feeling thoroughly proud of myself. Downsizing indeed!

 

And have you taken your own advice and done all this?

[truman]

It's good debt. Good debt is your friend. Good debt makes you money. Investment 101. Come on! SERIOUSLY! Is this where we are at! Right down here!

 

It's as though the last 7 years has never happened

[Coutts]

And have you taken your own advice and done all this?

 

That's a difficult question poppet because if I tell you about my own circumstances you will say that I have done things differently to what I've said in this thread. People will call me out, make excuses for themselves and it will be irritating for me because they will use it to miss the point.

 

---------- Post added 30-05-2014 at 11:04 ----------

 

It's as though the last 7 years has never happened

 

Nobody is saying you should borrow more than you can afford. By the very nature of a significant rise, you can now afford a bigger house even if you are still in debt without too much of an increase in mortgage payments. It's very simple.

[Cyclone]

It depends how much further up the ladder you're going to go in one hit. No need to make it painful. Just move up in a responsible and manageable way. Every time you sell your only main residence there's no capital gains tax to pay so it's very wise to sell and move up the ladder when there has been a significant rise in the value of your property.

Why?

The property you're buying has also just seen a significant rise, you see no benefit at all by moving (that you wouldn't have seen if prices had stayed flat).

 

Let me give you an example. It's all hypothetical, so don't worry about unlicensed financial commenting, the government won't prosecute you.

 

No Inflation Example

Purchase house 1 - 100k

5 years passes, amazingly with zero inflation.

Sell house 1 - 100k, buy house 2, 150k.

You've had to find an extra 50k (you were paying interest only to keep thins simple).

 

Inflation Example

Purchase house 1 - 100k

5 years passes, 5% annual inflation applies. (27.6% increase over 5 years)

Sell house 1 - 127.6k, buy house 2, £191.4k

You've had to find an extra £63.8k

 

You are claiming that having to borrow an extra £13k due to 5 years inflation is somehow a good thing for the hypothetical person in this hypothetical scenario.

How is borrowing more money a good thing?

 

They moved from the same house (1) to the same house (2) in both examples, but in the second example the additional cost due to inflation was 27.6% higher.

 

---------- Post added 30-05-2014 at 11:22 ----------

 

It's good debt. Good debt is your friend. Good debt makes you money. Investment 101. Come on! SERIOUSLY! Is this where we are at! Right down here!

 

Since a house isn't an investment, it's somewhere to live, it isn't making you any money.

Any notional increase in value is exactly that, notional, unless you move out to live in a box.

[truman]

Why?

The property you're buying has also just seen a significant rise, you see no benefit at all by moving (that you wouldn't have seen if prices had stayed flat).

 

Let me give you an example. It's all hypothetical, so don't worry about unlicensed financial commenting, the government won't prosecute you.

 

No Inflation Example

Purchase house 1 - 100k

5 years passes, amazingly with zero inflation.

Sell house 1 - 100k, buy house 2, 150k.

You've had to find an extra 50k (you were paying interest only to keep thins simple).

 

Inflation Example

Purchase house 1 - 100k

5 years passes, 5% annual inflation applies. (27.6% increase over 5 years)

Sell house 1 - 127.6k, buy house 2, £191.4k

You've had to find an extra £63.8k

 

You are claiming that having to borrow an extra £13k due to 5 years inflation is somehow a good thing for the hypothetical person in this hypothetical scenario.

How is borrowing more money a good thing?

 

They moved from the same house (1) to the same house (2) in both examples, but in the second example the additional cost due to inflation was 27.6% higher.

 

---------- Post added 30-05-2014 at 11:22 ----------

 

 

Since a house isn't an investment, it's somewhere to live, it isn't making you any money.

Any notional increase in value is exactly that, notional, unless you move out to live in a box.

 

I'm glad someone else understands my point....