diamond geezer

 Tuesday, October 11, 2016

25 years ago today I bought a flat. Twenty-somethings bought flats in those days, it wasn't an impossibility.

More importantly, 25 years ago today I started out on a 25 year mortgage. 11th October 2016 seemed impossibly far distant at the time. I cannot believe this last day has finally arrived.

If October 1991 seems a very long time ago, that's because it is - think Bryan Adams at number 1 for the 15th week, John Major's first conference speech as Prime Minister and the final episode of Dallas on BBC1. For the previous four years I'd been lodging in a single room, sharing a house with people I might rather not have shared with, and feeling generally encroached upon. Then, with a new job in a new part of the country, I finally sold my soul to eternal debt, took the plunge into home ownership and, for the first time, tasted independence. My new flat took forever to purchase (Bryan was number 1 throughout the whole saga) but at last I had more than one room of my own, my own front door, my own phone bill and my own space.

I feel almost guilty mentioning this now. The very idea that a single 26 year-old might be capable of owning their own home seems entirely unrealistic today. The modern default is very much a flatshare in a rented property, either with a partner or a number of random folk grouped together for support. And yet I own my own place, and have done for 25 years, which means nobody need clog up my bathroom or kitchen unless I invite them in. I am blessed, and unduly fortunate, and I recognise this.

Taking on a mortgage is a scary thing, and was especially so in 1991. Interest rates were over 10%, and looked like staying high for ages, which meant a substantial payback burden. As it turns out interest rates have never been that high since, indeed they've stayed below 6% since 1999, and below 1% since 2009, thanks to external pressures unimaginable at the time. Our current pitiful mortgage rates make taking on substantial debt a breeze, or would if only people could afford the massive deposits required, and if banks were keen and willing to lend.

The price of my flat seemed a very large amount of money back in 1991. I'd pushed the boat out and found a property costing just over three times my salary, which was below the national average at the time. There are no properties in southeast England valued at three times the equivalent salary today, so out-of-reach has the home-owning dream become. But in 1991 it got me a nice two-bedroom flat within walking distance of Bedford station close to all local amenities, plus a parking space I didn't need because I hadn't got a car. I hoped that the monthly haemorrhaging of my bank account would be worth it in the end, and as things turned out it got me onto the housing ladder before getting onto the housing ladder became all-but impossible. Just in time.

I was fully intending to go ahead with a repayment mortgage, but some young upstart in a suit persuaded me that an endowment mortgage was the answer to my financial needs instead. He was very wrong, although I didn't realise this at the time, and neither did the hundreds of thousands who embraced similar deals. It meant I wasn't paying my mortgage off, merely paying towards a life assurance deal which would pay out at the end, supposedly covering all costs. And with interest rates in the stratosphere all looked promising for a surplus payout, initially at least.

Eleven years later, despite tumbling interest rates, the insurance company were still sending me letters saying my mortgage would be fully paid off. But after twelve they starting sending red alerts admitting there was a high risk my policy wouldn't pay out enough, and then they invited me to write in and complain. I wrote in and complained. I pointed out that I'd been sold a life assurance policy when I was single with no dependants, and the Sales Complaints Manager agreed, offering a financial settlement equivalent to 10% of the value of the mortgage (in line with the Financial Ombudsman's calculations). It sounded good. But it still wasn't enough.

Today my 25 year endowment policy pays out. The plan was that the full cost of my mortgage would drop into my bank account this week, whereas the reality is I'm only getting three-quarters. Even with the extra 10% for being missold I'm quite a few thousand short, such are the inadequacies of our financial institutions' future projections. If my salary hadn't increased since 1991 I might be in trouble, except of course it did, so I'm not, which is nice.

I no longer live in that Bedford flat, I rent it out, which is one of the reasons I've been able to pay off the extra. Crucially I didn't sell it off when I moved to London, having calculated that the price differential between shire and capital was too great. Silly me, the differential is far greater now, indeed in 2016 I'd reckon I'd need to sell off two Bedford flats to afford a flat half the size in town.

Instead I rent myself in London, which is a whole different level of insanity. Every month I hand over more to my landlord than he'll be paying to his mortgage lender, and every year the amount I pay goes up, not down. I've forked out a fortune over the last 15 years, enough to buy the flat I'm living in outright, but have absolutely nothing to show for it... other than the opportunity to be a Londoner, that is.

So although I'm a winner in the home-owning lottery, I'm a residential loser because I choose to live in London rather than elsewhere. Skyrocketing rents mean I too am being shafted by the system which makes London one of the most expensive cities on earth, but cushioned by having a property of my own elsewhere, so lucky me. If you're under 40 I am one of those comfortable Sixties-born bastards you economically despise, for which I apologise. In my defence I didn't choose to be born back then, and I'm going to die before you, and I recognise I've taken advantage of opportunities unavailable to the next generation down.

I could quit the capital and go and live in Bedford, especially now the flat there is truly mine. I'd save a fortune every week, even if I threw an annual rail season ticket up to London into the mix. But I'd lose time travelling every day, and be at the whim of Thameslink, and I reckon I've moved on since living up there in 1991. You'd not be reading this blog if it was Bedford-centric, that's for sure, and I'd really rather not head back unless I had to. If you ever spot a month of posts about the Harpur Centre, airship hangars and locations from Some Mothers Do 'Ave 'Em, you'll know I've lost the battle.

Instead here I am precisely 25 years on from becoming a homeowner and preparing to receive a financial windfall, a present to myself from a quarter of a century ago. The sheer utter privilege of my situation does not escape me. And while the hike in house prices in Bedfordshire since 1991 is nowhere near as much as I'd expect, it is far more than I deserve, and it makes my mortgage look like the bargain of the century. And a bargain that completes today, hurrah! Beers are on me.

<< click for Newer posts

click for Older Posts >>

click to return to the main page

...or read more in my monthly archives
Jan18  Feb18  Mar18  Apr18  May18  Jun18  Jul18
Jan17  Feb17  Mar17  Apr17  May17  Jun17  Jul17  Aug17  Sep17  Oct17  Nov17  Dec17
Jan16  Feb16  Mar16  Apr16  May16  Jun16  Jul16  Aug16  Sep16  Oct16  Nov16  Dec16
Jan15  Feb15  Mar15  Apr15  May15  Jun15  Jul15  Aug15  Sep15  Oct15  Nov15  Dec15
Jan14  Feb14  Mar14  Apr14  May14  Jun14  Jul14  Aug14  Sep14  Oct14  Nov14  Dec14
Jan13  Feb13  Mar13  Apr13  May13  Jun13  Jul13  Aug13  Sep13  Oct13  Nov13  Dec13
Jan12  Feb12  Mar12  Apr12  May12  Jun12  Jul12  Aug12  Sep12  Oct12  Nov12  Dec12
Jan11  Feb11  Mar11  Apr11  May11  Jun11  Jul11  Aug11  Sep11  Oct11  Nov11  Dec11
Jan10  Feb10  Mar10  Apr10  May10  Jun10  Jul10  Aug10  Sep10  Oct10  Nov10  Dec10 
Jan09  Feb09  Mar09  Apr09  May09  Jun09  Jul09  Aug09  Sep09  Oct09  Nov09  Dec09
Jan08  Feb08  Mar08  Apr08  May08  Jun08  Jul08  Aug08  Sep08  Oct08  Nov08  Dec08
Jan07  Feb07  Mar07  Apr07  May07  Jun07  Jul07  Aug07  Sep07  Oct07  Nov07  Dec07
Jan06  Feb06  Mar06  Apr06  May06  Jun06  Jul06  Aug06  Sep06  Oct06  Nov06  Dec06
Jan05  Feb05  Mar05  Apr05  May05  Jun05  Jul05  Aug05  Sep05  Oct05  Nov05  Dec05
Jan04  Feb04  Mar04  Apr04  May04  Jun04  Jul04  Aug04  Sep04  Oct04  Nov04  Dec04
Jan03  Feb03  Mar03  Apr03  May03  Jun03  Jul03  Aug03  Sep03  Oct03  Nov03  Dec03
 Jan02  Feb02  Mar02  Apr02  May02  Jun02  Jul02 Aug02  Sep02  Oct02  Nov02  Dec02 

eXTReMe Tracker
jack of diamonds
Life viewed from London E3

» email me
» follow me on twitter
» follow the blog on Twitter
» follow the blog on RSS

my flickr photostream