>> On the one hand, I don't want to slow things down any more than they
>> already are. On the other hand, I want to find the best deal.
>
> That's sensible.  Also bear in mind, though, that if you do a 30-year
> term, most people don't stick with that term.  They refinance when the
> interest rates go down, sometimes adjusting the term (in the US, it's not
> uncommon to start with a 30-year term and then later to switch to a 15-
> year term, or to just refinance with a new 30-year term).

Can you actually do that?

Obviously, I've never had a mortgage. But from other loans I've had, if 
you try to pay back more money or pay it off early, they charge you very 
steep penalty fines.

> Just remember that the term isn't "the rest of your entire working life",
> it's "until you refinance or sell the property".  What you want is to
> increase the value so when you sell, you get more than you paid (or will
> pay in principal by the end of the term)

I had assumed that the value of a property can only go down, never up.

I mean, think about it. The longer I have the property, the older and 
therefore less desirable it becomes. The green fields around it get 
built on, reducing the value. The surrounding properties get cheaper so 
the wrong sort of people start moving in and making the neighbourhood 
undesirable. And so on.

I guess if you did something to massively transform the property you 
could conceivable raise its value. (E.g., taking a derelict shell and 
turning it back into a habitable building.) But other than that, it 
would seem obvious that property, like everything else, gets less and 
less valuable over time.

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On Thu, 11 Apr 2013 18:38:18 +0100, Orchid Win7 v1 wrote:

>>> On the one hand, I don't want to slow things down any more than they
>>> already are. On the other hand, I want to find the best deal.
>>
>> That's sensible.  Also bear in mind, though, that if you do a 30-year
>> term, most people don't stick with that term.  They refinance when the
>> interest rates go down, sometimes adjusting the term (in the US, it's
>> not uncommon to start with a 30-year term and then later to switch to a
>> 15- year term, or to just refinance with a new 30-year term).
> 
> Can you actually do that?

In the US, certainly.  We've refinanced once already, it's a fairly 
standard practice here.

> Obviously, I've never had a mortgage. But from other loans I've had, if
> you try to pay back more money or pay it off early, they charge you very
> steep penalty fines.

Home ownership is a different sort of thing.  Refinancing is different 
than paying it early, but some mortgages do have early payment penalties 
attached.  Others don't.

>> Just remember that the term isn't "the rest of your entire working
>> life",
>> it's "until you refinance or sell the property".  What you want is to
>> increase the value so when you sell, you get more than you paid (or
>> will pay in principal by the end of the term)
> 
> I had assumed that the value of a property can only go down, never up.

That's actually fairly rare.  Usually property appreciates in value.

> I mean, think about it. The longer I have the property, the older and
> therefore less desirable it becomes. The green fields around it get
> built on, reducing the value. The surrounding properties get cheaper so
> the wrong sort of people start moving in and making the neighbourhood
> undesirable. And so on.

And you also make improvements to the house.  You might (for example) put 
a new roof on it, or build an addition, or redo the kitchen.  Those 
things add value.

> I guess if you did something to massively transform the property you
> could conceivable raise its value. (E.g., taking a derelict shell and
> turning it back into a habitable building.) But other than that, it
> would seem obvious that property, like everything else, gets less and
> less valuable over time.

It doesn't take a massive transformation.  You'll want to talk to your 
estate agent about how to increase the value of your flat if/when you 
decide to sell it.

I bought my first place for $89K, and sold it for about $120K.  This 
current place we bought for $145K, and will likely get about $250K for.  
On the first place we did very little.  On this place, we've put a new 
roof on (paid for with $20K in equity), did a lot of repainting and some 
other not-so-insigificant things (proper vent for the stove, strip out 
the paneling and properly finished/updated the walls in the addition, 
improved the condition of the yard, installed a sprinkler system, added 
additional capacity to the circuit panel, and so on).

Before we move, we'll get the floors refinished as well (they're hardwood 
and need a good sanding/polishing).

Jim

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>> I mean, think about it. The longer I have the property, the older and
>> therefore less desirable it becomes. The green fields around it get
>> built on, reducing the value. The surrounding properties get cheaper so
>> the wrong sort of people start moving in and making the neighbourhood
>> undesirable. And so on.
>
> And you also make improvements to the house.  You might (for example) put
> a new roof on it, or build an addition, or redo the kitchen.  Those
> things add value.

Hmm, OK. I'm not sure how much of that I'm allowed to do since I'm not 
actually buying the entire thing, I'm renting part of it from somebody 
else. It's just one more of the things on my list of stuff I need to 
figure out...

Post a reply to this message

Orchid Win7 v1 <voi### [at] devnull> wrote:
> I just bought a house.

> I'm renting part of it from somebody else.

Quite different things.

-- 
                                                          - Warp

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On 11/04/2013 08:39 PM, Warp wrote:
> Orchid Win7 v1<voi### [at] devnull>  wrote:
>> I just bought a house.
>
>> I'm renting part of it from somebody else.
>
> Quite different things.

I bought 30% of a house. I'm going to rent the other 70% of it.

Oh, and if we're being pedantic, it's actually a flat...

Post a reply to this message

On Thu, 11 Apr 2013 20:09:56 +0100, Orchid Win7 v1 wrote:

>>> I mean, think about it. The longer I have the property, the older and
>>> therefore less desirable it becomes. The green fields around it get
>>> built on, reducing the value. The surrounding properties get cheaper
>>> so the wrong sort of people start moving in and making the
>>> neighbourhood undesirable. And so on.
>>
>> And you also make improvements to the house.  You might (for example)
>> put a new roof on it, or build an addition, or redo the kitchen.  Those
>> things add value.
> 
> Hmm, OK. I'm not sure how much of that I'm allowed to do since I'm not
> actually buying the entire thing, I'm renting part of it from somebody
> else. It's just one more of the things on my list of stuff I need to
> figure out...

Rental is a different thing, obviously - we own our home, we're not 
renting it.

The arrangement that you've got, are you getting ownership/title in the 
property?  Or are you signing a rental agreement?

Jim

Post a reply to this message

On Thu, 11 Apr 2013 22:37:41 +0100, Orchid Win7 v1 wrote:

> I bought 30% of a house. I'm going to rent the other 70% of it.

If you're going to rent 70% of the place (ie, you're the landlord), then 
you own it and can change what you like as long as it's to building code 
and whatever local regulations are.

Jim

Post a reply to this message

> Interestingly, all the products I've looked at give you something like
> 5% fixed rate for a few years, and then it reverts to 3.2% or something.

Odd, when I looked about a year ago all were around 2.9-3.2% for a few 
years then reverting back to around 4%. I guess it depends on your loan 
to value ratio (a quick look at a few sites mentions 30% deposit is 
needed for their "special offers"). Still strange that you actually pay 
a worse rate during the fixed period than the standard rate, that's 
usually meant to be a better deal - I assume you can't just ask to go 
directly on to the standard rate then?

> Heh, yeah, because comprehending financial documents is actually
> possible. :-P

The sites I looked at clearly listed the "fee", interest rate and any 
other items (eg no early repayment fee, free valuation/conveyancing, 
cashback offer) in a simple table.

> According to channel 4, the deal you get from your estate agent is
> always the worst one. And yet, everywhere I've looked or asked has
> either offered a far worse rate, or at best the same rate as I've
> already got.

You mean for the mortgage or the solicitor fees? I've never had the 
estate agent (especially not the one representing the seller of the 
house I'm buying) try to sell me a mortgage, but often estate agents 
have a deal going with local solicitors to get business. If you're 
selling you can sometimes use this to get a really good deal on the 
combined fees, and of course your agent knows the solicitor very well so 
communications are a bit smoother.

> It seems the only way to lower the interest rate is to have a bigger
> deposit. Now if I could just magic tens of thousands of pounds out of
> thin air...

Probably true - I must admit I didn't look at how the interest rate 
offered was affected by deposit, I assumed it wasn't much (as long as 
you had 5% or 10% or whatever they require).

> (My mum is seriously suggesting that I should take out a credit card and
> put the shortfall on that, just to get the cheaper interest rate on the
> mortgage. Because, you know, *that* won't be expensive at all...)

If you're very close to a round deposit amount that will allow a much 
lower interest rate then it may not be a bad idea, assuming you can find 
a 0% offer for 6 months or something, by which time you could pay it off.

Post a reply to this message

>> That's sensible.  Also bear in mind, though, that if you do a 30-year
>> term, most people don't stick with that term.  They refinance when the
>> interest rates go down, sometimes adjusting the term (in the US, it's not
>> uncommon to start with a 30-year term and then later to switch to a 15-
>> year term, or to just refinance with a new 30-year term).
>
> Can you actually do that?
>
> Obviously, I've never had a mortgage. But from other loans I've had, if
> you try to pay back more money or pay it off early, they charge you very
> steep penalty fines.

Once you're out of any special offer or fixed period usually you only 
pay a very minor early repayment charge (like under £100) to pay it off 
completely. If you are moving to a new provider often they will pay that 
fee for you.

Also a lot of mortgages allow you to pay back extra up to a certain 
amount (it's £500/month on mine) without any fees, even during the fixed 
period. It's surprising how just doing that for a few months can take a 
year off the length of the mortgage!

> I had assumed that the value of a property can only go down, never up.

http://www.moneyweek.com/~/media/MoneyWeek/2009/090309/09-03-11-MM2.ashx?w=450&h=362&as=1

> I mean, think about it. The longer I have the property, the older and
> therefore less desirable it becomes. The green fields around it get
> built on, reducing the value. The surrounding properties get cheaper so
> the wrong sort of people start moving in and making the neighbourhood
> undesirable. And so on.

If you really do believe that then surely *buying* a property rather 
than renting one is a very stupid thing to do?

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>> I bought 30% of a house. I'm going to rent the other 70% of it.
>
> If you're going to rent 70% of the place (ie, you're the landlord), then
> you own it and can change what you like as long as it's to building code
> and whatever local regulations are.

No, I'm renting 70% of it *from* somebody else.

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