Drawing up a Plan for PO

grinu · Post by **grinu** » 14 Sep 2005, 21:21

Please could I pick everyone's brains on this....

We're living in a 3bed terrace in the centre of a Market Town that was eaten up a bit by industrialisation. Still has weekly markets etc. and lots of good sized parks and allotments dotted round all over the place. Lots of good countryside around - 10minutes walk from house. Main-line train station is a minute's walk, town centre a minute's walk. Big back yard and a small front forecourt garden. Currently growing things in pots and just put in a water butt. Planning to put raised beds in the yard to grow veggies and use roof run-off for watering. Got a large wormery for composting our food waste and for fertlising plants. No central heating at all - we use a couple of electric radiators with renewable energy tarriff, and they do a fair job cos very well insulated house. Definitely a sustainable solution for the time being but got a mortgage (it's valued at 80-85k and I paid 70k total with a 60k discounted mortgage 1.5yrs ago) and I'm a bit worried that we may get stuck (although prices would need to drop by around 25% to be in negative equity, I'd be pretty pee'd off at losing 10k deposit!!).

Just wondering how best to prepare. Paid off all my debts except student loans and the mortgage. Invested in bits here and there and started working on storing food and water, but that's as far as I've got to date - been so busy with other things. What's everyone's thoughts on whether it's a good idea to stay put? It's in the north-east, so there's a much lower population density up here compared to a lot of the country. Feel a bit selfish with this post but I suppose it does show what preparation work we've done.

Ballard · Post by **Ballard** » 14 Sep 2005, 21:51

It has taken me a while to mull over similar issues, I think that I have come to the opinion that a mortgage is a debt, pure and simple.

Best guess is that we have 30 years of oil left, we will be on the down slope from tomorrow onwards, the immediate (3 year) picture is one of rising inflation, spiralling unemployment, falling house prices, repossessions, basically hard times.

If you believe that you will be able to cover your mortgage on a quarter of your current wages (and will not lose your job) then get a fixed rate mortgage for the whole remaining term (Cheshire do one for 20 years). However if this looks unlikely I think you should consider selling, the risk is that you could lose the house AND be left with a mountain of debt.

If you take this dramatic move you could be in the position to purchase a larger house than you currently own for a bargain price in the future.

But I'm no financial advisor, these are just my thoughts and they have led me to put my place (which I love) on the market.

It's an unpleasant thought, but it's time to prepare for the second great depression.

grinu · Post by **grinu** » 16 Sep 2005, 07:38

Yeah, that's my gut feeling too. It's a difficult one. Thanks.

RevdTess · Post by **RevdTess** » 16 Sep 2005, 09:09

Personally I'm throwing everything into paying off the mortgage as quickly as possible. I think I can do it fairly quickly, so it's just a matter of whether I can clear the debt before the SHTF.

fishertrop · Post by **fishertrop** » 16 Sep 2005, 16:38

grinu wrote:Please could I pick everyone's brains on this....

If you have a job (such as a doctor or policeman) then you might be able to - in principle - manage your mortgage.

If you have the kind of job where getting laid-off is likely then you need plan for that.

If your are married/have a partner, then maybe you could pool your income and live a very merge life for a few years or so and try and make big inroads into your debt (tap your parents also!) - obv managing less debt will be more do-able.

See this thread for a few more long-term mortgage deals:
http://www.powerswitch.org.uk/forum/viewtopic.php?t=531

The average wage in the Uk is around 25k, with stopages you'd see about 1200-1500 of that each month, right?

If you pay for all the essentials of life, but no more, how much can you set aside? 500-750 ?

If you and your partner do the same, you could set aside 1700-2300 - in a year (if you could last that long eating cold beans...) that's 6k-9k on your own and 20k-27k with two of you.

It doesn't take many years of that kind of repayments (lump sum) off a <100k mortgage to make a real dent in it.

Plus, if you flog the widescreen telly and the car(s) you can set aside even more.

Doing such would be no fun whatsoever, but you should consider such as a realistic alternative to giving up your home.

To me, having a roof over your head is one of THE most important things - I can live without cars, TVs etc if push comes to shove.

I'm a firm believer in getting rid of debt and that such could become a terrible burden in years to come; but if you can find a way to both keep your own home instead of facing rental for the rest of your life, then I think you have to look at it seriously.

grinu · Post by **grinu** » 16 Sep 2005, 17:33

The main issue is that, while we're happy here for the time being, we are only intending to hang around for a couple of years, and then we were planning to head up to Northumberland or Ireland.

I'm fairly hopeful about my job - I'm a Landscape Architect (and am aiming to get some experience in permaculture and in the short term more Env Impact Assessment experience - because that is going to be huuuuuuge when the scale of wind-farms, biomass etc. increases).

Just don't want to be stuck in negative equity for the rest of my life. I was hoping if house prices go down, I would be able to buy one cheaper in a few years time.