When you’re at one point in your life it’s often nearly impossible to imagine having much more than what you’ve got – or maybe that’s just my lack of imagination – anyhow, in this podcast I recount the steps we went through to move from our £385,000 beautiful terraced home to a £1.1m detached bungalow in the same neighbourhood.
We did all this in 2020 but, even as recently as in 2017, when I walked past the homes on the street where we now live, I thought actually living in one of them was pure fantasy for us and at that point, it was.
It took getting a proper second income, a stamp-duty holiday and an all-time low 5-year fixed interest rate of 1% to achieve this, oh, and a few consumer loans for a short period.
Was it worth it, 100%.
One thing I forget to mention in the episode is that one of the key drivers was I saw already expensive properties getting more expensive and mid-priced (like our terrace) to low-priced properties appreciating very little in value or even falling in price – how does that work? I am not sure but I figured there was some kind of bifurcation in the property market with average incomes driving prices on the lower end and something bigger at play with bigger, more expensive properties – they tended to be owned by business people not restricted by average incomes, some people with inheritances and hence large sums to play with and people with much larger incomes…whatever it was, I wanted in.
The funny thing is, if we sold our new house right now, we would be in a position to buy our old house mortgage-free AND still have £200,000 to £300,000 in change ALTHOUGH our old house has gone up by about £30-40k!
Listen to the episode and let me know if you have questions.
Here’s my property course on Udemy.
If you’re looking for ideas on how you and your partner can split the household bills without arguing about it, I have a few ideas for you.
Obviously what you ultimately go for depends on your own specific circumstances, e.g. whether you’re married or in a civil partnership or not in either, employment status, differences in income and personal beliefs, however, you can either:
1.Split bills fairly – this can mean equally, i.e. 50-50; or in proportion to your incomes.
2.Approach finances with unity – i.e. all money earned belongs to the household regardless of who earned it and is managed in a unified way. This can work whether your salaries are paid into personal accounts or a single joint account.
This is all food for thought, not advice, if you want advice based on your own circumstances, speak to a personal financial advisor.
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If you’re over 55 and own your home outright or have significant equity, banks target you for equity release schemes. There are two types: lifetime mortgages and home reversion schemes.
With a lifetime mortgage you generally get a loan based on the value of your house and your age – the higher your home’s value and the older you are the bigger the loan you can get. Then, rather than pay interest monthly, compound interest is charged and accumulates without payment until your death at which point your house is sold to pay off the borrowed money and accumulated interest. Most lifetime mortgages have a ‘no negative equity’ clause which means you can lose the full value of your home if you live long enough but no more – there’s a sexy deal if I ever saw one!
With home reversion you part-sell your home with a right to stay in it until you die or move to a car home. Typically, the loan is worth far less than the actual value of your home. So, if you own a £100k home you might be offered £30k for half ownership. Any increase in value is also shared 50-50.
In this example, if the house doubles in value from £100k to £200k you’re only entitled to half, i.e. £100k.
Most people who enter into these schemes are not fully aware of the risks and I don’t believe financial advisors and banks market them in an appropriate way.
My personal opinion is that to go from owning your home outright to releasing equity, you introduce a potential stressor to your life that you previously didn’t have. Getting lodgers or letting rooms on AirBnb or even getting a part time job may well be able to address your financial issues more efficiently than releasing equity.
Anyhow, in this episode, I talk about equity release. This is all information and not advice. If you need advice on specifics, speak to a personal financial advisor.
Ask me a question.
Heather on Wealth
I enjoy helping people think through their personal finances and blog about that here. Join my personal finance community at The Money Spot™.