Trying to follow Buckminster Fuller's example in life, one step at a time to bring you brain scrapings for a new millennium.

Any home as long as it's borked

13 Mar 2012 - Nic Ho Chee

Our current ConLib government appears to have been smoking ju-ju grass again after creating a fund which will indemnify a 95% mortgage as long as the house is a new build from one of a range of accredited agents including the likely lads otherwise known as Persimmon. After spending a few moments with the matter, a number of minor flaws leapt out and cudgelled some unsuspecting innocent bystanders…

Over the last few months I’ve been attempting to fathom whether it was worth purchasing a house (lots of unknowns there, but at least I could work out the sums involved and look at the risk/reward ratio.) I’ve attached the spreadsheet (XLS) (EDIT: I’ve taken the spreadsheet out, as it is quite old now… will write a new tool when I get the chance…) I created to look at a 20 year example mortgage with example savings, interest rates for savings and mortgage, compounded inflation etc and try out some scenarios and see what came out. I’ve added the spreadsheet here if people need something similar. It doesn’t take into account the lost opportunity cost of the deposit, but should give you a feel for the cost of a mortgage over the time period. It was looking like saving and renting was going to end up a better bet, even with such low savings rates as I’d expect mortgage rates to increase over the next few years… however, after seeing the government’s new mortgage policy sitting and waiting may be my best policy.