The whole system is by accident or design setup so everyone is in perpetual debt, if you're in debt you're essentially a slave to the system, there is only so much wealth in existence at any moment, the idea of supply and demand is a bit of a joke, a house costs only so much in materials and labour, on top of that you can add a reasonable profit for the building company but now the price must be fixed based on actual value, which is less than that added profit for whoever next sells it, like with second hand stuff if anything it should go down in value.
If there were no mortgages
- Thread starter taximike
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Owning a home or renting both have pros and cons, always being tied down to the house and having to pay to maintain it vs moving out of rented place and having someone foot the bill for big improvements/maintenance
Personally I would rent but if you had a family and a secure job and little debt then a mortgage is not all doom and gloom.
Personally I would rent but if you had a family and a secure job and little debt then a mortgage is not all doom and gloom.
Yeah nice argument there, care to actually contribute to the thread with a proper response?
Im just guessing here but i suspect you're someone who fails to see the bigger picture.
He's not seeing the bigger picture? yet you're suggesting all houses of equal build cost are of equal value...
New build houses do actually tend to lose value very short term, however houses last for so long that that depreciation is absorbed by market forces.
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Don't bank on that. A huge chunk of the public sector aren't paid enough to afford their own places. I live with one of the better paid ones and they can't afford their own place by any stretch of the imagination.
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My property costs me roughly £550 per month less to rent than it would do for me to mortgage it. London.
50% deposit is huge, here in The Netherlands a deposit isn't really needed at all, the first house I bought I had a mortgage of 110% with no deposit, only a 10% bank guarantee
Another advantage of increasing house prices is the fact you can get a better mrtgage rate if the house is worth more than the mortgage, we recently got a 0.3% interest rate discount as the mortgage was <75% of the value of our house, when we bought the house 5 years ago we had to finance 100%
as i said im not 100% sure about this. but i think i remember speaking to my old boss once and he was saying if you want to buy a flat you bring 50% in cash, that's in switzerland tho =/
I rent for two main reasons.
1. I don't want to be tied down. If I want to move I can do so quickly and easily.
2. I run my own business. If I had £20-£40k for a deposit it is much better invested in my company rather than in property.
These kind of discussions are pointless - each of us in a different situation and each of us may be better served by renting or buying. I've done both long term and neither are 'better' in my opinion, they are just different.
If there were no mortgages, society would be far more unequal than it is now. Rent prices are currently controlled by purchasing ability, if you remove that, then for those who can afford to own it, renting property becomes much more lucrative when people have no alternative but to pay whatever you are asking...
Do you ever post alternatives, or just nay-say everything you see?
Whilst the thread title is "If there were no mortgages", the rest of the thread doesn't seem to be about scrapping mortgages completely. I think a fairer title would be "If there were no 100%+ mortgages" or "If mortgages were capped to 1*salary"
Do you ever post alternatives, or just nay-say everything you see?
Whilst the thread title is "If there were no mortgages", the rest of the thread doesn't seem to be about scrapping mortgages completely. I think a fairer title would be "If there were no 100%+ mortgages" or "If mortgages were capped to 1*salary"
The end result is pretty similar. The cost might change, but the affordability would not, because affordability is determined by supply and demand.
if mortgages were limited to 1*salary, houses wouldn't be more affordable, even though the price would drop, because the point where supply and demand are equal is what matters, and as such the price would settle at the point where the number of houses available limits the number of people able to actually buy them to the correct level.
And that is assuming, of course, that those with large amounts of capital don't choose to buy more houses than they do currently...
The end result is not being in a lifetime of debt though, surely? If I apply for a mortgage of £300k, then I'll be pretty tied down for a manner of 35years with a huge proportion of my income paying it off.
If I have a mortgage for £50k it'll be much, much easier to manage, and would have a much better chunk of disposable income to spend on the things that matter
Those with large amounts of capital are already here today. They're yet to buy up every building in the country ... It wouldn't make any significant difference if mortgages were a lot lower.
The end result is not being in a lifetime of debt though, surely? If I apply for a mortgage of £300k, then I'll be pretty tied down for a manner of 35years with a huge proportion of my income paying it off.
If I have a mortgage for £50k it'll be much, much easier to manage, and would have a much better chunk of disposable income to spend on the things that matter
Those with large amounts of capital are already here today. They're yet to buy up every building in the country ... It wouldn't make any significant difference if mortgages were a lot lower.
Perhaps affordability isn't quite the right word, accessibility of housing is a better description of what I'm meaning.
Just because you spend less on housing does not make better housing more accessible, nor does it necessarily mean you end up better off overall. Free up a massive amount of disposible income in the economy and the main thing that will happen is inflation will go up as prices rise to compensate.
If we were talking about setting such a system up from scratch, then inflation would be less of a concern, but there is still the issue of market dynamics which really determine how much buying power each individual has and the distribution of goods and services...
