On Wed, 11 Nov 2009 21:28:42 +0000, Orchid XP v8 wrote:

>>> £300,000 divided by 30 years = £10,000 per year. So, a third of the
>>> highest income available. And that's neglecting the fact that they
>>> presumably charge you 80% APR or so on the loan...
>> 
>> 80% is illegal pretty much everywhere.  Try more like 5%-7% for the
>> average.
> 
> Illegal? That's impressive. I wonder how the banks have managed to not
> campaign to get that "fixed". You know, given that banks basically
> operate by extorting money from people...

Pretty easy that they wouldn't get that "fixed" - at 80%, nobody could 
afford to borrow money from them, so they wouldn't make any money.  But 
mortgage rates generally tied to a national index (in here, it's set by 
the FED as I understand it).  80% interest would be seen as being 
predatory and even those in the government wouldn't be able to afford 
that.

>> And 30K is not the "highest income available" - I know plenty of people
>> who make more than that.
> 
> OK, I rephrase. If you happen to be a doctor or a politician or have a
> PhD in something, sure, maybe you can earn more than £30,000 a year. I
> personally don't know of anybody who has managed to do this. (With the
> obvious exception of the upper management at the company I work for.)

I know people who work in IT who make that kind of money.  I had 
suggested to a friend in Scotland (where we're likely to move to in a 
couple of years) that I need a job, and I suggested 25K GPB (since that's 
the minimum to qualify for a work permit), and he said "oh, no, we'll pay 
you much better than that - don't worry about that").

And I have no degree.

But consulting work does pay well; generally, it pays very well.

>> Clearly it's not an impossible feat as there are millions of homeowners
>> in the UK, right?
> 
> As I understand it, most of them bought houses before the prices became
> as stupid as they are today...

Many of them certainly did, but I know people down around Hastings who 
bought just a few years ago.

> (I gather the idea was that eventually when prices were so high nobody
> could afford them, prices would start to come back down again. Instead,
> the banking sector went thermonuclear.)

Prices tend to adjust over time, partly because of inflation, partly 
because of "the market", but they do tend to settle out at times to where 
they're reasonable.

I've a friend in Colorado who paid $60K for her house some 20 years ago.  
Another here in Utah who paid about $25K for a house in the downtown 
area.  Ours?  $165K, and we're expecting to get about $350K for it when 
we move out (if we can't get that, we basically won't be in a position to 
move).

But we've also put a lot of money into fixing the place up.  There's a 
house just down the street from us that sold for $725K just a few weeks 
ago.  It's new construction, and that's a factor, but it's clearly the 
most expensive home in the neighbourhood.

But one other thing that's fairly common is to buy a house and let the 
value increase - and then sell it for the increased value and roll that 
over into another house.  If one is smart about it, one can make a pretty 
decent amount of money doing that through "trading up" like that.  It's 
rare at least here for anyone to live in the same house long enough to 
pay off a 30 year mortgage.

Jim

Post a reply to this message