Tomorrow is only Wednesday, but for me, it is going to be the start of the weekend, as Thursday is a public holiday and I have used some of my copious amounts of flexi hours to take Friday off - so at 4pm-ish (I might kick in early) tomorrow, I will have a 4-day weekend.
Most of what I have on my to-do list is continuing on with the renovation, mostly filling and sanding work will need to be done. But, hopefully I will find some time to do something else as well, perhaps a barbeque since the weather is meant to be okay.
I am not sure if I will need nipple covers, but as they say, be prepared.
One of my colleagues today was talking about his house hunting and the potential to get a loan from a bank. For those who remember from last year when my wife and I bought this place, getting a loan was very easy for us, as long as we were buying new. Getting a loan on a place that needed renovation was very difficult. The reason was that they can only loan a maximum of 85% on the value of the property, even if it requires renovation. This means that the renovation costs have to come out of pocket and there aren't many people who have that kind of money in cash. We did manage to eventually wrangle a loan, but we are on a deadline in order to increase the value of the property enough to be able to cover it.
The deadline is looming, but at least if what our colleague says is true, the value of our property should be going up over the next few years. The reason is that it is supposedly now possible to get a loan from a bank in Sweden, instead of a Finnish bank and there, they can offer loans of up to 105 years. Yes, a one hundred and five year loan on a house. What this has meant is that housing prices have increased rapidly over the years in Sweden to the point where they had to cap the terms to 105 years as it was apparently possible to have longer terms.
The longer terms obviously mean that in the long-run, the loan is far more expensive, but it also means that people can take larger loans because their monthly costs are lower. These costs obviously creep up as the houses get larger, fancier and there is more demand for the better ones, but there are other affects too. As people have "more" disposable income, they spend more as consumers and all prices trend upward quickly, until a new equilibrium is reached. For the people who bought early and own their homes, they ended up in a very good position, in the housing market, but everything also got more expensive.
So, if true and my colleague is able to buy his home on a 100 year loan, meaning he will not pay it off himself and the mortgage will pass to his kids, housing prices are going to increase very fast. A lot of people over the last few years have been unable to get into houses because of the rules around renovation loans, so have gone into new apartments that do not require renovation, but are very expensive and have maintenance costs as well as rent on the land. There are thousands of these being built, while for years and in some nice suburbs, old houses are rotting away unsold, no matter what price they ask.
With Corona forcing people home and making them rethink their environment, many are wishing for homes for the space to have an office, as pretty much no apartments cater for an office space in Finland. If they can now get low monthly repayments on getting into a house instead, I predict many are going to leap at the chance, even if they know that they will pay far more over the 100 years. not only that, because the monthly payments are low, they will also be more confident in being able to deal with interest rate rises, when they happen.
this could see the value of houses increase significantly and outstrip the increase to apartments, however I think apartments will also increase even further, as people shift form renting to owning - well, perhaps their grandchildren will own it. 100 years is a very long time and if you imagine that a 30 year person takes the loan, at the average mortality rate, they will still have 50 years left to pay it. If they make it to 80, their kids are likely in their 40s or 50s and will still have 50 years left on the parent's loan to pay, if they want to keep the family home. So, going on averages, the last 10 years of the loan will be paid by grand children in their 50s.
Anything to kick the can down the road.
100 year loans are a great way to boost the economy for several reasons, especially for the investors who own many properties and can sell into the boom to desperate house-hunters flush with fresh debts and low monthly payments. It keeps the economy alive artificially, instead of letting it crash, by passing the cost of the created bubble to future generations and, those future generations aren't going to be inheriting a house, they are going to be inheriting a debt on a house that likely needs a lot of renovation work and there is still another 50 years on the loan to pay.
The desperation of those who control the current economy to extract as much value as fast as possible our before the music stops is incredible, yet, no one seems to care. The funny thing was that the colleague started talking about this because we were talking about DeFi opportunities and he was saying how sketchy it all sounds.
People fear the loss of investment now, but don't mind being bled dry by a bank and government for a lifetime. They do not want to lose any money, but don't mind buying a TV on credit. Bit by bit and in the quest for security, the average person is going to lose their shirt and will not have enough incoming capital to cover their nipples, let alone their debts.
It is going to get cold out.
Are you covered?
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
A 100 year loan :|
Take it out at max lvr, and dump it into DEFI :)
Break the economy. lol
:D
Just imagine. I hope people do this of course.
Posted Using LeoFinance Beta
I think saddling kids with debts before they even hit adulthood proper (whether it's in this ridiculously long mortgage fashion or exhorbitant student debts) is an extremely selfish and disgusting thing to do.
Who does this?
I say and then remember the parent who coached a young adult child through repaying a debt while lambasting them severely for not saving up for that stupid pair of pants that they bought on Afterpay (I still don't understand how people think of credit cards and that kind of "service" as "free money").
Never mind XD
Many, many, many. BNPL services have exploded globally - as have home electronics sales.
And then I read the next sentence :D
And then you read the news and they talk about all the "winners" who will get handouts from the government. That is future taxes being handed out and it is going to drain into the pockets of those who are at the top of the pyramid already. They will die a good life, leave the world in shit.
Posted Using LeoFinance Beta
Bahahhahahaaa XD
I saw BNPL and thought of the Whitlams song x_x
I don't read the news. I probably should at least glance at it every now and again so I have a vague idea of what's going on but then I do and remember why I don't want to know what's going -_-
100 year loan. You might as well rent, LOL Ah but debt is how banks stay in business. We are quickly turning into a society of renters instead of real owners. I say if you have to pay a monthly payment or yearly taxes... you don't truly own it. I own my blue jeans. but still pay yearly taxes on the house.
And it looks like they assume they will be around for awhile.
Yes. It can be taken away at anytime.
Posted Using LeoFinance Beta
Just today I listened to a talk with an investor and "conspiracy theorist" (he's called that way because he dares to describe problems with today's economy and foresees a great collapse, so of course he's an conspiracy theorist and a biggot and maybe even an anti-waxxer ha ha). He touched on the same problem with the bubble in the real estate field. Already there are appearing voices that the government will be offering a partial cover for people wanting to get a loan for buying houses and flats... Today's economy is a courtesan who's chewing on a bubble gum and inflating it more and more. It will surely pop sooner or later.
I'm in my mid 20s at the moment and I'm getting into an age where I'm starting to think about having my own place to live (preferably a house in the countryside) and seeing the current situation isn't really uplifting for me. It's mind boggling for me that my parents where able to build a large house from the scratch without ever taking a loan, but times have changed since then. I'm also following your journey with the new house and its renovation and I'm drawing a lot of inspiration from it. Let's see what time will bring to the table ;)
They are throwing some pretty drastic measures in to keep the bubble growing. When it bursts, it is going to burst big.
Back in the early 90s, interest rates were very high - terrible if you have a loan, great if you have money in the bank. Savings used to be a possible earner, now they have made saving a sin, by applying a cost.
Looks like the future requires many tables to eat a meal :D
Posted Using LeoFinance Beta
I've been here and I know the feeling. That need for stability even in obviously unsustainable situations. it unfortunately takes a bit of 'World rocking' to realize the fallacy of it
I get the feeling that with everything going on, a lot of people are going to have their world rocked - and they are not going to enjoy the experience.
Posted Using LeoFinance Beta
Twenty to Twenty-five years is all we were offered, not sure current offers in our market today. Pleased we paid up with normal monthly expenses, as mentioned the next generation are the ones battling to obtain homes.
Will inherit when I kick-start the broom, hope they are able to carry on....
No inheritance on a 100 year loan for 2.5 generations. The house is generally the main part of an inheritance, so I am assuming that most will get nothing.
Posted Using LeoFinance Beta
That is just about the stupidest thing I have ever heard. I get the thought behind it, but it just seems like a bad bad bad idea to me. There are going to be so many people who are buying houses that they really can't afford simply because the loan terms are so horrible. I remember when I bought my first car I went with a six year loan instead of a five year loan and that was just such a huge mistake. When my friend told me they took out a 15 year loan on their travel trailer I just about choked. I hate loans, so I like to keep them as short and sweet as possible.
Posted Using LeoFinance Beta
We have built a culture of "on-demand" services and the habit gets applied to every part of life, including the consumption of debt.
Posted Using LeoFinance Beta
@tipu curate :)
Thank you :)
Upvoted 👌 (Mana: 24/48) Liquid rewards.
100 year loans!?! I cannot begin to say how horrifying I find that. I fully aim to pay my bast&rd house off so that when I ride off to Valhalla astride a magnificent black steed, axe in one hand and beer in the other, that my kids will have a solid backing behind whatever nonsense they want to do in life. The idea of essentially renting with no prospect of paying off is repugnant and that's not a word I think I have ever written down!
The Swedes have lost their Viking helms and replaced it with a rented tux.
It is pretty crazy - though, perhaps with a 100 year loan, with the excess income put into crypto... :D
Lol, bloody renting Swedes!
I can see some advantages in a way, house prices are increasing to such a degree here that some people will never be able to afford to buy in their lifetimes and increasing the term would help, but hell, I feel the weight of a 25 year one pulling me down. Then again, some excess into crypto and become a whaley king!
What i see happening is that a lot of people are going to lose their houses as they overpaid, or be forced into refinancing for a longer loan. Back in the day it was "taking a second mortgage" - scam.
Posted Using LeoFinance Beta
I particularly think that I would be mortgaging my future and that of the next two generations since it is not only a question of paying the monthly installments of the loan, amortization, or others, but we must not forget that real estate is subject to depreciation due to damages and deterioration that also imply the disbursement of money that we may not have at the moment. Nor should we forget that our capacity to generate money often decreases with age and not always the next generation will want to take over a debt even if it involves the loss of the house, especially if they fail to establish clear rules of the game in terms of rights if there is no testamentary document in the middle (whoever gets the house, pays?). There are many sides to this and I think I'll leave it aside. I prefer the 30-year lapse. That is my opinion
Translated with www.DeepL.com/Translator (free version)
My weekend starts with Wednesday afternoon. I am taking a half and two days off in this week bcoz of EID. I am also planning to do a barbeque tomorrow. Have a good holiday. .
A debt that lasts three generations. Reminds me of North Korea.