Just recently I had a brilliant idea for young people to help themselves get onto the housing ladder. I have every sympathy for them, I know how hard it can be and it is much harder now than when I was young. However, there is no phone app for this, you will have to overcome your inertia and it will require you to co-operate with others, face to face and put a lot of effort into it. When I start my alternative society foundation I will provide a forum/format, maybe even finance for this idea, in the meantime you are on your own. I think you are nearly all too idle and unprepared to step outside the box for this, so go on prove me wrong and let my me know how you get on. It would be nice if more of YOU gave ME a bit of encouragement and started following my blog, I am trying to help and I haven’t even asked for any money yet.
Nearly every town and city has scummy districts where property is dirt cheap; the reason these properties are cheap is mainly the people who live there although most of the properties will need a bit of renovating. But what if several like-minded people got together and started to buy them up with a view to changing the demographic of the area? In many cases you can buy these properties for less than the deposit on the house you would want to buy. I know of one case when a property speculator bought a property unseen at auction because he couldn’t believe now cheap it was. When he went to see it he didn’t feel safe to get out if the car and put it back in the next sale. They are not all as bad as that but there is a risk and it unlikely that any of the mainstream mortgage lenders would lend on them; hopefully they will be so cheap you won’t need to. If you do need to borrow money think about commercial mortgages and try to make out that you are an experienced property developer. Or take out a loan to buy a car, if you have a good enough income to support it, and then don’t buy the car. I know of people who have bought properties on credit cards. If you do it that way switch the debt to one with a long interest free period ASAP. If you are not a sensible person and already in debt you will need to clear that first but this is probably not for you. Those who got in first would get the cheapest ones, they would deserve to as they would be taking the greatest risk and would have to do the most work. Once the area started to be gentrified the prices would rise rapidly and the landlords of all the benefits tenants would cash in and sell up. So, I have given you a starter for ten, think about it and run with it.
Owning your own home is such a no brainer that you should do everything you possibly can to fight your way through all those people standing around the bottom and get on the first rung. Go without, defer having a family, save that deposit; there is now a savings plan that pays a better rate of interest than most and the government will add a 25% bonus if you use it for a house purchase. Compared to normal interest rates of about 1% or less on savings it is a fantastic deal and you should be putting as much as you are allowed into it. I must confess to being a bit feckless myself when I was younger and I used to spend my money as fast as it came in, fortunately not faster as there was not the same credit available in those days. Please do not even think about buying stuff on credit the interest rates are horrendous and will keep you in wage slavery for the rest of your days When it comes to buying a property just get the best you can afford, even if what you can afford is not up to much. In a few years the value will have gone up so you will have bigger deposit when you move up to the next one. DIY skills are very useful and you can make a lot more profit by renovating yourself. I was in my thirties when I bought my first house. It had formerly been the storeroom for Millom Co-op and it took me 2 more moves and a lot of hard work to get back to civilisation.
Suppose I approached you and said I am in the process of saving for a pension and I want you to pay £800 pounds a month towards it; you may well say OK but what’s in it for me. I say nothing at all except that when you see me enjoying a wealthy retirement in thirty years-time you can say I helped pay for that. You may well think that is not a very good deal for you and yet if you are living in a house or flat and paying rent that is exactly what you are doing. Let’s say I have a bit of capital, enough for a deposit on a modest house, I buy a house with a buy to let mortgage and rent it to you. The rent you pay me covers the mortgage payments with a bit left over. So I now have a house and all it is costing me is the interest I would have received on the capital used for the deposit, I may need to spend a bit on maintenance and repairs and cover periods of no tenants (voids) but HMRC very kindly allow me to take that and the mortgage interest payments (now restricted to basic rate) off from any profits I have made before they tax me. Over the years the house goes up in value and the rent I am charging goes up but the mortgage stays the same, this is called financial gearing. For example; perhaps initially I own 15% and the bank 85%, the property goes up in value but the mortgage owed is still the same and ten years later I own 65% and the bank 35%. If you are buying a house for yourself to live in the maths gets even better because your monthly mortgage payments will probably be less than the rent you would pay only now it is going towards your retirement not mine. Not only that but any capital gains you make on the value of the property are tax free so it really is worth working your butt off and doing without to save that deposit. Some statistics; house prices in UK have risen by an average of 4,300% in the past 40 yrs; if food had gone up at a comparable rate a supermarket chicken would cost £51.18. £1000 invested in a buy to let property purchased with a 25% deposit in the final quarter of 1996 would by the final quarter of 2013 have been worth £13048. This represents a compound annual return of 16.3% and this is in period of recession. More importantly you will have security and whatever happens and no matter how poor you are you will have a roof over your head and no one can turf you out onto the street. I know what I am talking about, sign up to follow my blog now, it will eventually increase your wealth and your well being.
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