Here’s a little snippet from the Z-Files. Those cash-strapped first-time-buyers might just have a giggle with this….and this is a FREEBIE!
About Buying a House the first time.
Years ago, when I was 23, I managed to get my own home and by the time I was 28 it was paid for! Yep. Then it was quite an achievement but by no means unusual – today doing such would seem to be IMPOSSIBLE.
The advice given to FTB’s lately seems to be more like sales-blurb from the vast army of bankers eager to lend their raw-material at top-of-market rates. So here’s a few pointers from an UN-biased source – from one in fact MUCH MALIGNED, over the years, by the greedy, money-grubbing conglomerates that pass as ‘Local Banks’.
So there will be no discussion of the various ‘mortgage type’ here – they are all designed to extract, from a borrower, the MAXIMUM interest on the SMALLEST loaned capital sum. I.E. Usuary at it’s basic and devilish worst. Not to mention the PUNITIVE measures taken against folk that dip into the red now and then. And once dipped it is almost impossible to surface because of the charges imposed.
So advice here of a different kind. That of an investor rather than a borrower.
But, take a look at house prices. I mean a CLOSE look. On the face of things here in the north of England, I’m going to need about £100,000.00p in order to get a FTB style terraced…..but that’s on the face of things. And I’m not looking here for the sort of house a developer buys at auction – I’m looking at clean and liveable from day one.
But again, looking more closely, I do find a few homes for considerably less than that initial mind-numbing £100,000.00p. In fact I’d say somewhere between £50,000.00p and £100,000.00p is more the mark.
So let’s put a figure of £75,000.00p for a house purchase. (More on EXACT price later)
Faced with such a figure many FTB’s would simply try and book a spot on Deal Or No Deal or buy a shedload of lottery tickets! But these are ‘luck’ based cash-generation methods and, although possibly lucrative, need to be part of the planning if they’re to be used. And therein is the secret of ANY cash purchase – that one word – PLANNING.
Planning is the secret to any cash deal. But say ‘Start to plan’ to a FTB and they’ll probably just draw-up a list of mortgage-lenders with their telephone numbers.
No. I meant Planning from a Business context. Planning entrepreneur style. Take a look at The Rich Lists, or most daily papers. Stories about celebs etc. with wads of cash……..well, how far would any of them have gotten if someone hadn’t planned it all for them? In the case of The Rich Lists many so named did their own planning – the plans to get a home probably just a MINOR irritation amid the main Business-Plan(s) that they must have had.
With any plan there are two main criteria. 1) Cash. 2) Time.
Everything else either falls under one of these or is outside the maths and can be shelved as far as planning goes. So, we have an idea of the cash aspect – £75,000.00p. So we just need to plug-in a realistic TIME frame as you might say. (At this stage you could, if not already doing, ear-mark a set, weekly amount for lotteries – it’s not ’scientific’ but who cares.)
For a time-frame I’d suggest two years. For a young couple, both working their butts off, getting say £10,000.00p plus, in a bank-account as a mortgage deposit, might take two years. Possibly one, but planning is best done cautiously at the start. You can amend later if all goes well.
But here we’re not interested in DEPOSIT, we’re interested in total capital sum. So two years is quite plannable.
£75,000.00p is a huge sum. A frightener for a youngster. And, to be honest I have to make it even more scary by adding to it about 25%!!
Say another £20,000.00p. That’s a monster £95,000.00p. Might as well call it £100,000.00p.
Really scary now. But to cut that huge, impossible figure down to size the entrepreneur would simply bring his Time Frame to the rescue. Two years. So, in reality, the cash becomes £50,000.00p per year – which is slightly less daunting.
And £50,000.00p per year is just (approx.) £4,170.00p per month, or (approx.) £1,050.00p per week, or (approx.) £27.00p per hour. (40 hour week)(And I’ve based this on 12 months of 4 weeks per month – the additional four weeks per year are of course holidays! Take one!)
Are you scared now?
You can pull £27 per hour cleaning windows for gawds sake!
The added 25% was to allow for basic income-tax. And all figures are rounded up – you could afford at least 10 lottery tickets per week. Include their weekly cost in your cash requirement calculations and they’re bought from Profit rather than adding to any Loss. (Simples eh?)
And a £75,000.00p house might be bought for £70,000.000p or less with a cash-offer…
…mind you, after all that graft you might fancy (another) holiday!
I more or less did this all those years ago! Mind you, my first house cost just £575.00p! But then weekly wages were about £15.00p. A different world eh?