Agreement in Principle
Yep, it's official: some crazy, misguided man from a reputable brokerage has agreed to lend myself and housemate A an absolutely obscene amount of money, that we may begin the long process of hunting for a location between Clapham Common and Stockwell, so we can then start throwing our money at a heartless bank instead of a landlord. In the eternal struggle of the smug and the damned, I am in the process of switching camps.
For the first few years, as is the nature of these things, we will be paying more in interest than we would have in rent, so it's sort of a voluntary increase in rent, which sounds sort of stupid. But we will also be putting a certain amount into equity, so it's a savings vehicle, and the bet is that the property will increase in value by more than the extra rent we're paying, so it'll be at worst no worse than renting for that period and any better will make some money.
That sounds dicey, but actually the sums say that anything more than about a 2% annual increase in value will do that for us, and London house prices have been growing by a lot more than that for quite a while. But yeah, past performance is no guarantee of future results, and the name of the site I got my house price growth data from is "housepricecrash.co.uk" -- don't think we're not aware of that possibility. It's a gamble, and it's scary. But that's what investments are all about, right? And most investments don't give you an excuse to redecorate.