Renting and renovating.

[FamilyWiggs]

Very jealous of you all.

We also set ourselves on our 30th birthdays (height of the property boom and considering a little rental property to start off a portfolio) the goal of being mortgage free by the time we were 40. 7 years on, and not much progress made! We should be ploughing our ridiculously low SVR interest payments at present on both mortgages into overpaying - but are ploughing them into doing the work instead.

The only tips I can offer today's "youngsters" is to do whatever is necessary to get on the property ladder as quickly as possible; then within reason mortgage yourselves to the hilt, as with a bit of luck, the pain recedes each year as salaries increase (recessions ending and redundancies excepted!); and to always, always, always maintain the orginal term whenever your remortgae/move. We orginally took a 22yr mortgage and despite moving 3 times and trading up we retained that term. Only about 12 to go....

 

[philpjuk100]

When the endowment policy on my endowment mortgage exeeded the amount owing on the mortgage I cashed in the policy,on the way to the halifax with the cheque in my pocket I had to walk past a ferrari showroom! Paid mortgage off,still got an old landrover! phil.

 

[FamilyWiggs]

When the endowment policy on my endowment mortgage exeeded the amount owing on the mortgage

Err..... I don't understand that comment. How does that work then? We keep getting statements telling us we are a Ferrari short!

 

[worms]

When the endowment policy on my endowment mortgage exeeded the amount owing on the mortgage ..

Like Schoolmarm, I have been overpaying on the mortgage - I just never reduced it after the very high rates it went to on "Black Wednesday", so at the moment that is an overpayment of £320 per month. Sadly, 18 years later, it is still only just ahead of the fall in endowment value.

our ridiculously low SVR interest payments

I'm not sure I agree that svr's are low (compared to the rest of the interest market). As someone who has never been a rate-tart and been on the variable rate from the same building society (give or take a few banking mergers and takeovers) for 20 years, I feel that my loyalty has been taken advantage of, to subsidise all the introductory schemes and risky offerings that they have been used to encourage more take-up of credit.

 

[philpjuk100]

Err..... I don't understand that comment. How does that work then? We keep getting statements telling us we are a Ferrari short!(quote)
Yes how things have changed! Do you remember the mortgage rates from 1980/1990 15%!,took out a double indemnity endowment mortgage in the mid 70s which in 25 years should have given twice what was owing on the loan,then as the rate rose the mortgage payments got very painfull,(difficult times,young family,wife working,lots of overtime) but on the plus side the interest on the endowment also rose by a similar amount so I was able to close the mortgage very early and have a bit left over! For folks getting new mortgages now at the current low rates there is the depressing thought that rates can only go one way.I know that owning your own home is the best investment you can make but "getting on the ladder" is now so difficult,neither of my sons have yet managed it. phil.

 

[Flyfisher]

We took out an endowment mortgage in the late 80s. Sometime in the 90's we received a letter saying our endowment was running below expectation and we had to quadruple our monthly payments to get it back on track.

I wrote them a fairly tongue-in-cheek letter saying that we had a contract whereby we paid £x per month and they paid off our mortgage after 25 years and that I expected them to keep to their part of the bargain.

Somewhat unexpectedly, they took my letter very seriously and sent me a bunch of complaint forms. To cut a long story short, we ended up with a lump sum of about £35k and a new mortgage with our choice a lender with all arrangement and legal fees paid.

 

[Feltwell]

To cut a long story short, we ended up with a lump sum of about £35k and a new mortgage with our choice a lender with all arrangement and legal fees paid.

I'd say it's well worth trying to complain if you think you stand even a slim chance of success. My parents complained of mis-selling over their endowment policy and won their case - mortgage was paid off as a result, it saved them probably another 5-7 years of payments.

I wouldn't hesitate for a second to be a "rate tart" and switch lenders if you're on a repayment mortgage - we swopped after 2 years on our current house, saving £200 a month in the process, no fees. It was a bit of a hassle but not that much. I'm convinced that these transfer deals get funded by all those who don't shop around.

I do feel sorry for those starting out now - many can't rely on the "bank of Mum & Dad", nor should they need to - I would never have wanted to ask mine, not because they couldn't or wouldn't help, but simply because as far I'm concerned it's their money that they've earnt and should be enjoying. As for my kids - who knows what it will be like in 20 years time? We've already decided that we'd downsize to help the kids start out if necessary, hopefully that won't be required though.

 

[Pford75]

/grump on

As a relative youngster (I'm not as old as I look :wink: )...I do push back a little on the notion that it's impossible to afford a house.

We (and I guess a lot of people here), saved over a long period before we could afford a deposit on our first home. It meant my wife and I staying with our respective parents so we saved on rent payments. There were no overseas holidays and every bit of overtime went towards the house fund.

My brother is an estate agent and reports that plenty of FTB's are so incredibly demanding/picky about what they will/won't consider - they have been seduced by the property shows on TV and are looking for their dream home. The whole concept of saving for something seems to have disappeared in todays 'instant gratification society'

/grump off

 

[Feltwell]

Does your brother admit publicly to being an Estate Agent?? :wink:

I do agree with you to a certain extent, but the gap between the salary levels of those in lower-level jobs and house prices is huge. We pay the going rate for this area for a warehouse operative - £14 to £18k per year dependant on skills and if they supervise others or not. A general office based administration type role pays about the same. All overtime has been stopped since the downturn started, we've lost a few staff through natural wasteage but we haven't laid anyone off.

To try to afford to buy a house or flat anywhere in this area on that kind of salary would I think be very hard indeed - and we are a relatively cheap area for housing.

 

[MurrayPrice]

I once heard of a tenant spending £25k on a new kitchen in a rented mannor house in Dorchester. He was a London man who had the money but properties were not available to buy for love nor money! The guy even signed up to a 10 year contract with rent increesing 6% per annum! Seems crazy

 

[Penners]

/grump off

Pford - how do you do that? I've been trying to turn off my grump for years now, but it just keeps re-appearing.

Any tips?

 

[Pford75]

Pford - how do you do that? I've been trying to turn off my grump for years now, but it just keeps re-appearing

Penners - I can't do it myself. There are only a few people who seem to know how and luckily, one of them is my lady wife. She seems to know which buttons to press

 

[Moo]

many can't rely on the "bank of Mum & Dad", nor should they need to - I would never have wanted to ask mine, not because they couldn't or wouldn't help, but simply because as far I'm concerned it's their money that they've earnt and should be enjoying.

but -

As for my kids ... We've already decided that we'd downsize to help the kids start out if necessary,

It's amazing, isn't it, how one's view changes when one moves to a different side of the generation gap .....

 

[ilona73]

many can't rely on the "bank of Mum & Dad", nor should they need to - I would never have wanted to ask mine, not because they couldn't or wouldn't help, but simply because as far I'm concerned it's their money that they've earnt and should be enjoying.

but -

As for my kids ... We've already decided that we'd downsize to help the kids start out if necessary,

It's amazing, isn't it, how one's view changes when one moves to a different side of the generation gap .....

We did the opposite my eldest is twenty married with a child , We actually bought a much larger house and they have the entire top floor which we have transformed so they have their own lounge, kitchen, two bedrooms and two bathrooms. Plus its much larger than they could ever afford to buy themselves right now and as they are still quite young most banks wont even lend to them . while they live with us they have the best of both worlds. They have their own self contained home to be a family in, plenty of space for Maddie to play in. A lovely small school just up the road that only had sixty children from nursery right through and best of all while they are here they are saving on average £1000 a month even though they do pay us a nominal rent for the top floor. This is also due to the fact her husband is airline cabin crew and work can be quite unstable during the winter months.

 

[Moo]

What a brilliant set-up, Ilona.
The only downside I can imagine is that though, with savings of that magnitude, they will soon have accumulated a healthy deposit for their own house, they have no incentive to move out of the idyllic place they now live in!

 

[Feltwell]

many can't rely on the "bank of Mum & Dad", nor should they need to - I would never have wanted to ask mine, not because they couldn't or wouldn't help, but simply because as far I'm concerned it's their money that they've earnt and should be enjoying.

but -

As for my kids ... We've already decided that we'd downsize to help the kids start out if necessary,

It's amazing, isn't it, how one's view changes when one moves to a different side of the generation gap .....

My point Moo is that it shouldn't be necessary to have to do that, but the ways things have gone & are going it may be the only option left by the time my kids reach an age to leave home. We started out relatively recently and were able to do it on our own - but could we do it now? Not for the house we first bought, that's for sure.

My grandparents were of the very thrifty wartime generation and had always "saved for a rainy day". When they retired their 3 children ganged up on them and told them to make sure they spent their savings on enjoying themselves in retirement and not worrying about leaving money for the family - just leave the house, which was a modest bungalow. That's exactly what they did, they had a great retirement, and I sincerely hope my parents do the same.

My kids may well have the same attitude of wanting to be independent and not relying on parents to get them started with their first home, but I suspect by the time that day comes it won't be possible for them to do that.

 

[Penners]

Pford - how do you do that? I've been trying to turn off my grump for years now, but it just keeps re-appearing

Penners - I can't do it myself. There are only a few people who seem to know how and luckily, one of them is my lady wife. She seems to know which buttons to press

Oo-er...!

 

[ilona73]

What a brilliant set-up, Ilona.
The only downside I can imagine is that though, with savings of that magnitude, they will soon have accumulated a healthy deposit for their own house, they have no incentive to move out of the idyllic place they now live in!

To be honest we don't mind as although they live in the same house as us , we rarely notice they are there unless passing through on their way in or out!
But when the time comes they do fly the coop Leah will want their floor of the house so it hasn't been money wasted.
My parents saved for all five of us so that by the time we were all 18 we all had enough for a deposit on a house. Paul and i haven't had the luxury of being able to do that for the girls as we spent every penny trying to get mortgage free so we feel we should help in other ways . At the end of the day you want your children to learn the importance of being frugal and to work hard to achieve what you want with property etc...but not to be mean with it. Finding the correct balance took us years and i am still trying to get Paul out of Victor Meldrew ways!

 

[jocelyn plummer]

I admire you Ilona. I think that we tend to forget that countries, such as Spain, Italy, and France are very much generation oriented. If a house has a natural, convenient division then it makes sense.

My Stepson ( aged 35) lives in the Czech Republic with his Wife and three children. For the past 3 years they have been living with the 'in laws', in return for renovating the top floor of their house. Now they have just purchased a small piece of land and are about to self build their own home.

I have to say that I am quite envious of their adventure, and 'im indoors' is very proud of his middle Son for achieving so much.

 

[Alex]

That Grand Designs is on again tonight on More 4 at 7.25pm but its the revisited one this time. Just thought it would be of interest to anyone who missed it the first time round as I did.

Alex