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AJP

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  1. Hi All, My wife, Son and I have just moved into a new area and are renting for a year before deciding whether to buy or not. Probably a common thing heard on this forum. When it comes to houses we are on opposite ends of the spectrum. She is under the belief that you should always buy, that house prices always go up and never go down (she bought a property in 2011 in with no research and has done well out of it). I on the other hand think that houses in the South-East are overpriced and we should continue to rent while we wait for prices to drop. I must say that I've been laughably stuck in that thinking since 2003! A recent article opened my mind a little to buying even if I believe it's overpriced. https://monevator.com/why-im-not-scared-of-my-interest-only-mortgage/. As an example we are currently paying £1600 in rent per month on a property worth about £400,000. If we got a repayment mortgage with a 25 deposit it would cost us £1150 (plus maintenance costs) while an interest-only mortgage would currently only be £315 (double that for a ten year fixed), with the saving going into a broad index fund. With the example of a ten year fixed IO and maintenance costs of 1% we would save £72,000 over renting. Even if the house is still only valued at £400,000 ten years later we're ahead. We plan to stay in the area (Crawley, West Sussex) for between 5 and 25 years. If we were to leave after five years to move abroad we may rent the property out. I'm still very negative towards buying so it would be great to get any comments that would help change or confirm either of our beliefs, push us to think in other ways or pick holes. Thanks. *Stamp duty we may be ok as I'm a first time buyer. *Obviously a lot of unknowns and assumptions
  2. AJP

    Anyone know Coulsdon?

    Hi, Listened to a lot of the guys podcasts but haven't posted on the forum before. Long shot but wondering if anyone has knowledge of the town Coulsdon? I'm from Herts but living in the US and may be moving back and Coulsdon seems to good, fast train links but I've no idea about the area, if its a nice place for a family, what the market is like there, better to rent or to buy, etc? If no one knows the area does anyone have suggested for how to find out about a place without being able to visit there? Any help would be great. In the meantime I'll be exploring via google maps and real estate sites. Thanks, Andrew
  3. Hi all, We bought a property back in 2011 which we lived in but have recently moved abroad and so decided to rent it out. We bought the 2-bedroom apartment for 175k, which is now valued at 240k. We are renting it out for £920 a month with a gross yield of 6.3% and a net yield of 5.04% which I understand to be good? After the mortgage payments and expenses though we actually lose £82 a month (not including the property value growth). My questions are: - Is it quite normal to lose money during the first few years of renting due to the cost of the mortgage? - There is now 100k of equity in the property which isn't doing anything. Should we remortgage and use the money to invest elsewhere? I guess this is a question of if you can make more than the odd 4% that the mortgage would cost elsewhere. Many thanks.
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