From: jim@jibbering.com (Jim Ley)
Newsgroups: uk.finance
Subject: Re: Help and advice please (Mortgage)
Date: Sun, 31 Oct 2004 16:04:35 GMT

On 31 Oct 2004 15:43:37 GMT, John  wrote:

>jim@jibbering.com (Jim Ley) wrote in news:4185062e.16223788
>@news.individual.net:
>
>> 
>> No, they don't   but if you have 100,000 in the bank today, you'll be
>> earning say 3000 a year in interest, by having that 100,000 in the
>> property instead, whilst saving you some rent, you'll also be losing
>> the 3,000 a year interest recieved.
>
>I see. So if I had say £70k in the bank, I would also receive 3%, which 
>could pay some of a year rent?

Hopefully you could do a better than 3%.   but even that 3% gives you
~175 a month towards your rent.

>But surely the property would increase in value and the capital would 
>simply decrease due to inflation?

If you had to use all the income from the 70,000 to pay your rent yes
inflation would reduce the amount (at about 1.5% per year currently,
so not that rapidly)  

The assumption that house value would increase in value isn't really
sustainable, it'll depend on your timeframe and more, but the last a
couple months it's probable that any prospective house has decreased
in value, and many people think that house prices are about to drop
significantly, and just about everyone agrees they're considerably
more expensive now than they've ever been before - something that's
previously triggered significant reducations in house prices.

Currently for example, I'm renting rather than buying despite being
able to afford it (although I've not sold an investment one, but that
would be more complicated as it's not sole ownership)

Jim.