Theo said:From reading some of the threads in some of the forums, it seems that a number of people are equating an estimated increase in value of their home with money in the bank.
One poster i recall yesterday said that his/her apartment had made a profit of Euro50,000 since bought! This despite the fact that he/she lives there and has probably never seen a cent of money enter his/her bank account from it.
I saw another post today that got excited about a valuation that was higher than the purchase price. I do not understand how an arbitrary value on a home that a person lives in means that the person is suddenly wealthier. How can people lack the financial intelligence that should tell them that it is only worth these values when the deal has been signed and you have your money in the bank?
Personally, the way I see it, my home costs me money, not the other way round. I have to pay a mortgage, maintenance and upkeep etc. Surely, the feeling of wealth that people seem to get when they think about the price of their home should only apply to investment properties that pay for themselves.
I think this lack of financial intelligence must be contributing greatly to a lot of the madness going on in the property scene at the moment.
MonsieurBond said:.. when your LTV goes below 80%.
So your LTV ratio is (€74K / €750K) * 100 = < 10%.TarfHead said:I don't know what this means - can you elucidate for my benefit please ?
The market value of my house is approx. €750K.
My mortgage is currently €74K with 14 years to go.
MonsieurBond said:True up to a point.
However, it is always useful to know the current market value of your home, so that for example you can shop for a cheaper mortgage rate when your LTV goes below 80%.
Some people. I don't know if there is any objective measure of how many people might be throwing caution to the wind in this sort of context so (a) it may be more or less common that people may be assuming it to be and (b) so what - it's up to them to make choices and if the ones that they make are not prudent and lead to discomfort later on then that's their problem.Purple said:I do accept that people thinking that they are in the money (and behave as if they are cash rich) because an asset that they have no intention of selling goes up in value is nuts.
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