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...

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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

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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

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> 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.

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>> 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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>> 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!

OK, that's interesting.

>> 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

So, prices rising approximately in line with inflation. Except for that 
bit in the middle where prices drastically fell.

Besides, this is the average rate for *all* properties. I'm sure buying 
new properties gradually gets more expensive. What about the ones that 
are already built?

>> 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?

If you rent something, you must pay rent for the rest of your life. If 
you mortgage something, then (hypothetically) you will eventually *own* 
it, and then you don't have to pay any more money.

Sadly, because I've started so late in life, I will never actually pay 
the whole of the mortgage off. And even if I do, I'll still be renting 
the other 70% of the property. But hey, it's all I could afford.

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>> 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?

For the mortgage itself.

> 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.

My estate agent does seem to be offering drastically cheaper legal fees 
than anything else I've seen.

I'm not sure if that *requires* me to take their mortgage though...

(And "their mortgage" is actually the result of a price comparison 
search. Hypothetically that should mean I'm getting the best possible 
deal - but I'm sure there's actually some markup involved.)

>> (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.

It's news to me that you can *get* a 0% loan, but anyway...

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> 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?

I'm not sure precisely how shared ownership works. What I do know is 
that it doesn't make buying a place any simpler...

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