A risk too far?

[andyinluton]

While past performance is a pretty useless way to predict future performance, it can be a useful illustration of what can be achieved.

Consider a couple sitting in a £240,000 2 bed flat pre pandemic (and pre stamp duty holiday). Each earns £30,000 pa.

They take out a new 2% BTL mortgage, releasing 60% equity in their flat (£144,000).

They buy a £360,000 house with £144,000 deposit and £216,000 2% pa mortgage (3.6 * salary) and pay the £18,800 stamp duty and second home stamp duty surcharge from savings.

Remind me please how they've actually paid off the mortgage on the flat that they are in ? and saved another mere £18,800 for stamp duty and all the fees etc.

Also you will struggle to get a BTL mortgage on what is your current property - need a LTB - into specialist market higher rate.

Then lets put a more realistic figure in the rental income minus £5000 a year, thats just the legal fees in the year trying to evict the tenant who lost their job & hasn't paid a penny.
Meanwhile the couple are struggling to service the new repayment mortgage on the new house at £1037 a month along with the £240 interest only loan on the old flat.
Theres also maintenance costs now for 2 houses, 2 lots of insurance.

Their disposable income has dropped by the £1277 a month that they are now forking out every month as a year ago they had a flat that was totally paid for.

They've gone from being comfortable with disposable income in a paid for flat to owning a little bit of a flat and a little bit of a house & no spare cash, and two mortgages to service, short term it sounds like bad move to me.

 

[Amarillo]

Remind me please how they've actually paid off the mortgage on the flat that they are in ? and saved another mere £18,800 for stamp duty and all the fees etc.

Also you will struggle to get a BTL mortgage on what is your current property - need a LTB - into specialist market higher rate.

Then lets put a more realistic figure in the rental income minus £5000 a year, thats just the legal fees in the year trying to evict the tenant who lost their job & hasn't paid a penny.
Meanwhile the couple are struggling to service the new repayment mortgage on the new house at £1037 a month along with the £240 interest only loan on the old flat.
Theres also maintenance costs now for 2 houses, 2 lots of insurance.

Their disposable income has dropped by the £1277 a month that they are now forking out every month as a year ago they had a flat that was totally paid for.

They've gone from being comfortable with disposable income in a paid for flat to owning a little bit of a flat and a little bit of a house & no spare cash, and two mortgages to service, short term it sounds like bad move to me.

You forget that I have been through this process. Bought a flat in 1990 for £57,000 with a £40,000 mortgage, and repaid a little over a decade later. Revalued at £200,000 in 2011 and a 60% *standard* BTL mortgage used as deposit to buy a house for £348,000.

Now three and a half years away from repaying the house mortgage, and the size of the BTL mortgage reduced from £120,000 to £90,000; an approximate value for the pair is £1,000,000.

In the period between me giving up work and setting up a holiday let business, when we had no children, we both took advantage of the additional tax free rent-a-room allowance, and let our two spare bedrooms on Airbnb.

And while we were both not working, travelling around Europe for a year, we had tenants in our family home and continued to overpay our mortgage.

It hasn’t been difficult.

 

[Jubilado Tim]

In 1990 I bought my first home: £57,000 with £17,000 deposit and £40,000 mortgage.
By 2005 the mortgage had been repaid, and I had 6 years of glorious mortgage free living.
In 2011 Clare and I bought a house together. £348,000, with £120,000 from a buy-to-let mortgage on my first home and a £228,000 mortgage on the house we bought. Clare had her own flat which she also rented out. We both worked full time and we each had rental incomes.
Rental income on my old flat and rental income from Clare's flat more or less covered both mortgages.

We are now in the fortunate position where we might go mortgage free again in three or four years time.

Can we risk repeating the trick to buy our dream home for retirement?

Mortgage our current home with a 60% buy-to-let loan.
Use that 60% as a 40% deposit on a Retirement Interest Only (RIO) mortgage for our dream seafront retreat.

For illustration: if our current home is valued at £700,000 we could borrow £420,000, and use that as a deposit on a home worth up to £1,050,000 by taking out a 60% RIO mortgage of £630,000.

Or is this too much of a risk at our stage of life?

Borrowing a total of £1,050,000 at 3% would incur interest payments of £2,625 per month, broadly in line with our expected *gross* rental income from our current family home.

But interest rates are at a record low - the only way is up. 6% would double the interest payments; 9% would triple them; 12% would quadruple them; and 15% (I was paying 15.75% in 1990) would quintuple them to £13,125 per month. We can mitigate the risk for a limited period with a fixed rate mortgage, and have the escape route of selling both our current home and my original flat to repay both mortgages in full at current estimated values.

So the risk would come from high interest rates *and* falling house prices. Is this a risk too far for a dream home for retirement? I have about four years to work this out. There are four substantially identical houses, all in a row, that we have our eyes on.

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

 

[flying banana]

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

I was going to say that 11 pages ago but didn't bother

 

[soulstyledevon]

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

Well sod off and read something else.
It’s an open and varied forum here and some of us find subjects other than the Volkswagen, interesting…

 

[WelshGas]

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

Because he can.

 

[Scoobz1]

Its in the general chit chat not the California or a directly related section. I found it very informative and interesting - particularly the bit about old rental houses having to achieve higher and perhaps unattainable levels of insulation in the future !

 

[GrannyJen]

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

Understand your point but this forum has always been a community first, one based around those enjoying the small camper van lifestyle, but as with any community, whether pub based, church based, library based or internet based, anyone is entitled to ask or offer an opinion on anything.

This is why in the beginning a section was specifically created for subjects that have nothing to do with VW's or necessarily the camping lifestyle.

 

[vwsween]

Understand your point but this forum has always been a community first, one based around those enjoying the small camper van lifestyle, but as with any community, whether pub based, church based, library based or internet based, anyone is entitled to ask or offer an opinion on anything.

This is why in the beginning a section was specifically created for subjects that have nothing to do with VW's or necessarily the camping lifestyle.

Actually Tim, when GrannyJen says you are "entitled to ask or offer an opinion on anything" dont take that too much at face value, its is naturally subject to the laws of the land and the rules of this forum. You can find those rules, funnily enough in the Rules section. So there you will see some things you should not do. For example you should not swear and should treat people with courtesy. Oh maybe I got that wrong as I see you have already been told to "sod off". There seems to be an unwritten rule, maybe even an expectation that some of those who post a lot can bully and be rude to those who dont post a lot. Please dont take it personally, you are certainly not the first.

 

[WelshGas]

Actually Tim, when GrannyJen says you are "entitled to ask or offer an opinion on anything" dont take that too much at face value, its is naturally subject to the laws of the land and the rules of this forum. You can find those rules, funnily enough in the Rules section. So there you will see some things you should not do. For example you should not swear and should treat people with courtesy. Oh maybe I got that wrong as I see you have already been told to "sod off". There seems to be an unwritten rule, maybe even an expectation that some of those who post a lot can bully and be rude to those who dont post a lot. Please dont take it personally, you are certainly not the first.

I disagree to some extent. Too many members post problems, without relevant details regarding their vehicle details, without using the Search function and expect assistance. When they get it - silence. No one knows if the problem is solved or the information helped them, basically taking and not giving.
This is a SELF help Forum and especially when it comes to the vehicle and accessories there are a small group of members who through knowledge, experience etc; give their time to help out and answering the same questions time after time gets a bit boring.
If you or others are upset then I suggest they could go and check out some of the other Forums and then you’ll see what bullying and rudeness is like .
This Forum is well run but it depends on members Giving as well as Getting help and assistance.

 

[vwsween]

WelshGas, you perhaps misunderstand me. I would be one of the first to agree with all you say in your last post except for the last 3 lines.
I am not upset by anything in this thread and I have had assistance from others including you and I have provided assistance to others. But I was not referring to those issues as you can see from what I posted, so you seem to be changing the subject. I was talking about rules and telling someone to sod off. I suppose this disappoints me rather than upsets me even if other forums are worse.

 

[soulstyledevon]

WelshGas, you perhaps misunderstand me. I would be one of the first to agree with all you say in your last post except for the last 3 lines.
I am not upset by anything in this thread and I have had assistance from others including you and I have provided assistance to others. But I was not referring to those issues as you can see from what I posted, so you seem to be changing the subject. I was talking about rules and telling someone to sod off. I suppose this disappoints me rather than upsets me even if other forums are worse.

Apologies to anyone offended.

However I find it rude when people (please don’t take this the wrong way) who don’t contribute an awful lot to the forum. Question, discussions other members are more than happy to partake in.

For those who have been here a longtime. Discussing mattress toppers and wind breaks, becomes a bit dull & boring.
I guess we are all on different paths/stages of the California journey.

Anyway.
If this is a thread you’re not interested in reading. By all means look at something else.
There’s plenty here to see and explore.

 

[clarinetbcn]

. There seems to be an unwritten rule, maybe even an expectation that some of those who post a lot can bully and be rude to those who dont post a lot. Please dont take it personally, you are certainly not the first.

[IMG alt="GrannyJen"]https://vwcaliforniaclub.com/data/avatars/m/5/5790.jpg?1618219123[/IMG]

GrannyJen​

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Messages9,227LocationWest SussexVehicleT6 Ocean 204 4Motion

• Mar 30, 2021
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• #21

"A lot of talk also about the "usual suspects." Sadly all forums have them and by one of those ironies of forum life they tend to be the ones that in other guises are the most helpful to members, especially those new to the forum wanting to pick brains of those more experienced so a certain amount of "give and take"| is appropriate."

___________________________________________________________________________________________________


Edit: It's my view that if the point being made is valid, the poster doesn't need to include an insult for it to stand on its own. In fact, posts with insults are often a sign that the facts are shaky, and are a response to errors being questioned.

 

[GrannyJen]

A few of my posts being resurrected here that seems to give the impression that I Condone rudeness in any form.

I think that my six years record as a moderator of this forum would prove otherwise, there is no need for it, but, sadly, it sometimes happen. It was after all correcting rudeness by a certain member that resulted in me being attacked in the most vile and disgusting way on other forums where I had no means of reply, but that would never put me off calling it out when I saw it.

The people who run this forum. Kev and Martin, do a great job of exercising a light touch balancing act between allowing robust, often opinionated, discussion and trying to suppress overt rudeness. Sometimes they win, sometimes they lose, only one thing is certain, they can't win all the time.

 

[clarinetbcn]

A few of my posts being resurrected here that seems to give the impression that I Condone rudeness in any form.

I think that my six years record as a moderator of this forum would prove otherwise, there is no need for it, but, sadly, it sometimes happen. It was after all correcting rudeness by a certain member that resulted in me being attacked in the most vile and disgusting way on other forums where I had no means of reply, but that would never put me off calling it out when I saw it.

The people who run this forum. Kev and Martin, do a great job of exercising a light touch balancing act between allowing robust, often opinionated, discussion and trying to suppress overt rudeness. Sometimes they win, sometimes they lose, only one thing is certain, they can't win all the time.

Jen, that was absolutely not my intention! I thought you gave a nuanced and balanced observation that there is a small group that indulges in rudeness, but some of them are also among the most knowledgeable and contributing posters on the Forum. I don't think for a minute you condone rudeness, which we could all do without, but as you pointed out, it's not as simple as just banning the "usual suspects" when they step over the line.

 

[clarinetbcn]

What has this got any connection at all to a volkswagen california. Why would you post this on this forum, I am perplexed, to say the least!!

I am convinced that you didn't notice the location of this thread:

• Home
• Forums
• Off Topic Chat
• General Chit Chat

If you were to read through the thread (which you certainly don't need to do!), you would notice that you were not the only one. Conclusion: the page graphics and design are not achieving that members easily see the location of the sub-forum they are reading. I've noticed this also when posts are made about T4 issues or Grand California issues, and receive a lot of answers which only apply to T5/6. Since it happens so regularly to so many different people, I think it's something worth fixing.

 

[The Blue Merle]

I am convinced that you didn't notice the location of this thread:

• Home
• Forums
• Off Topic Chat
• General Chit Chat

If you were to read through the thread (which you certainly don't need to do!), you would notice that you were not the only one. Conclusion: the page graphics and design are not achieving that members easily see the location of the sub-forum they are reading. I've noticed this also when posts are made about T4 issues or Grand California issues, and receive a lot of answers which only apply to T5/6. Since it happens so regularly to so many different people, I think it's something worth fixing.

I wonder whether it maybe better not to send off topic section in weekly emails.
I do like reading off topic stuff and the ones that I have no interest i dont read, so not including it I’ll still find what I want.

 

[Scoobz1]

I know nothing about this, so do your own research, but I saw somewhere that the futures market in the states is predicting very high inflation on many commodities.

What a good insight this proved to be .... from May 2021

 

[andyinluton]

What a good insight this proved to be .... from May 2021

Also worth noting that the hypothetical couple took Amarillos advice above & remortgaged their flat to raise a deposit on a bigger house.

The interest on their mortgage is now 3.5x what it was when they bought the house, the rental income from the flat is less than the mortgage cost, they are broke every month, having gone from having some spare income to their mortgage costs wiping out a massive chunk of their income. Fuel costs have also trebled & they didn't realise a big old house would cost so much to heat.

A divorce is pending following massive arguments as to who's persuaded them to get into this financial mess, both citing the cause of all their problems some bloke on the internet that said it would be a good idea to borrow loads as it's what he did previously.

That same bloke is hovering in the background waiting to pounce to buy the flat when it's sold at a bargain price as a distress sale, to add to his empire of BTLs needed to fund his kids education.

 

[jimmywease]

Also worth noting that the hypothetical couple took Amarillos advice above & remortgaged their flat to raise a deposit on a bigger house.

The interest on their mortgage is now 3.5x what it was when they bought the house, the rental income from the flat is less than the mortgage cost, they are broke every month, having gone from having some spare income to their mortgage costs wiping out a massive chunk of their income. Fuel costs have also trebled & they didn't realise a big old house would cost so much to heat.

A divorce is pending following massive arguments as to who's persuaded them to get into this financial mess, both citing the cause of all their problems some bloke on the internet that said it would be a good idea to borrow loads as it's what he did previously.

That same bloke is hovering in the background waiting to pounce to buy the flat when it's sold at a bargain price as a distress sale, to add to his empire of BTLs needed to fund his kids education.

It’s okay - the couple took a 5-year fix and the property’s rental value has rocketed since the purchase, so they’re counting their blessings.

 

[jimmywease]

Are interest rate hikes fuelling inflation? Discuss.

 

[66tim99]

Are interest rate hikes fuelling inflation? Discuss.

How would interest rate rises fuel inflation?
People spend less, prices fall...isn't that the theory?

 

[willwander]

Are interest rate hikes fuelling inflation? Discuss.

Quite the opposite, in theory.

 

[Velma's Dad]

How would interest rate rises fuel inflation?
People spend less, prices fall...isn't that the theory?

Yes of course, that's basic monetary theory. A bit of a recession is usually the way to drive inflation down (Jeremy Hunt said as much last week). Despite the fact that a lot of people are finding it hard to get by, there's also a bunch of people who built up cash during the pandemic and who have had no incentive to save it at zero return, so have been spending it instead. The Bank of England left it too late to edge up rates, unfortunately (easy for me to say in retrospect of course).

 

[andyinluton]

How would interest rate rises fuel inflation?
People spend less, prices fall...isn't that the theory?

Approx 37% of the population have a mortgage, they are worse off, some to the point of needing payrises just to pay the bills.

The other 63% are not affected by the interest rate change unless they have savings in which case they could be better off & have more to spend.

As the main driver for inflation has been fuel & energy costs, if the Govt just lowered taxes on those it could lower inflation without hurting anyone.