Part 263: America. Why?

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss buying property at auction, and look back at the US election.  Also, a very busy week, getting birthdays wrong, and bleeding out of my ears. 

Weekly Update

Guess who’s back, back again.

Donald’s back, tell a friend…

Or, as a social media post stated;

“America.  What the fuck?”

Politics is an emotive subject and otherwise reasonable people can do stupid things in the UK like voting Tory.  In the US, we now have the orange manchild back in power.  I don’t understand what can drive tens of millions of people to vote for a misogynist, racist, narcissist.  He is not just stupid, he’s nasty and hateful.  I read that someone voted for Trump because they felt they could trust him with their child.  I have no words.

The Democrats made mistakes in this campaign, with the main one not pushing President Biden to one side much sooner.  Now, we have to endure another Trump term in office which will likely see less cooperation between Europe and the US, tensions rise with the US and China, and in all likelihood a reduction in the aid going to Ukraine.  

As I said above, Trump is not just stupid.  He can’t be trusted.  There’s a Wikipedia page titled False or Misleading Statements by Donald Trump.  In 2021 The Washington Post reported that their fact-checkers had compiled a list of all the times Trump had made false or misleading statements in the previous four years.  They catalogued over 30,000.  My mental calculation puts that at around 20 per day.  

Seriously, America… Why?

Job Search

Anyway, moving on from politics to my week which has been quite eventful.  I’ve had several job interviews and received one formal offer, and I’m waiting to hear back from two which I think will be offered.  

The first job interview was in mortgages for a high street lender.  It wasn’t for an advised position though.  The job spec gave a salary range of around two-thirds of my current salary.  On the application, in response to the question about my salary expectation, I put a figure slightly above the range and would have paid 70% of my current salary.  When they called me for an interview I assumed this would not be a problem.

Low Balling

I smashed through the interview and received a call a couple of days later offering me the job.  During the call, I asked for more information about the offer, and they explained the salary would be £3,000 lower than what I stated as my expected salary.  I pointed this out to the recruiter and they offered to increase the salary by £500p/a.

They’ve given me some time to think about it, but I’m not feeling hugely enthusiastic about the role.  Not only is the salary lower, but the job requires 40% work from the office and the rest from home.  

I also interviewed with a company I used to work for but I cut the interview short.  The person who called me did not seem to know anything about my background (all the info I was asked about was on my CV and in my application).  Then, I was told that the advertised salary range was not quite right and that they were only offering a flat salary at the bottom of that range; £17,000 less than what I currently earn.  The rest of the interview went like this:

Interviewer: Will that be a problem?

Me: Yes.

Interviewer: …

Me: …

Interviewer: …

Me: Ok then, thanks for your time I guess. 

I don’t necessarily expect to earn what I’m earning now, but I won’t be taken for a ride either.

The third interview took place Friday morning for a mortgage advisor position.  It sounds like an exciting opportunity with an up-and-coming business.  I spoke with the MD and I like their energy.  I should hear something this coming week, and I’m hoping for good news.

Ear Pain

A few days ago I started feeling a lot of pain in my left ear.  It felt like a mix of pressure and pain, almost like a foreign object was inside the ear.  It also itched and tickled a little.  I tried putting a cotton bud in there to see if there was something trapped or an errant hair, or maybe even a bug.  I did not expect the bud to come out covered in fresh blood.  

It took a few days to get to the GP and my fear of a ruptured ear drum was unfounded.  I’ve got some sort of inner ear infection on both sides, with the left ear being much worse.  I’ve been prescribed a spray which feels very strange when used.  I will have to deal with the pain for a few more days, possibly weeks.

Poppy

Our sweet Poppy had to go for surgery this week.  She’s had some problems with her teeth and we tried some less drastic treatments initially but they were not effective.  So, on the vet’s guidance, we had her booked in.  Taking her to the clinic on Thursday morning was horrible.  She was yowling and panicking but calmed a little when we got there.  We had to be at the vet for 8:45 and we couldn’t pick her up until 16:00.

The operation went well and she had one tooth fully removed, with a second tooth partially removed. We brought her home and she was finally able to be fed, as she’d had to fast for a while before going in.  She ate, and ate, and ate some more.  She seems a little anxious but is still affectionate and spending time with us.  Her purr has changed and is now louder.  

It’s so strange when you have a cat but they’re not in the home.  They are so small but it’s almost like their presence permeates every part of the home.  You can almost feel them even when they’re in a different room.  When they are not there because they’re at the vet or the cattery, for example, the place just feels emptier.  

We had to take Poppy back on Saturday as she’d not yet pooped despite eating a week’s worth of food in a day and a half.  She was checked out and prescribed antibiotics, and then as soon as we got back from the vet she must have heard drums in the deep as she went to her litter tray to summon the balrog.

A busy end to the week…

Between job interviews, work, GP visits, and multiple vet visits, it’s been a busy old end to the week.  I also managed to get the birthday wrong for a good friend of mine, sending them a happy birthday the day after their birthday despite speaking with them on the day itself.  As Oana said when I told her, I’m “useless with that stuff”.

Loose Ends

My current employment is coming to an end in just a few weeks.  I’ve got loads of admin to do as part of that, like getting payslips saved and dealing with returning my laptop, and one of the tasks on my list is to speak with Bupa about continuing my health cover.  I have called them a few times and have not been able to get any information from them, but finally received a call back on Friday afternoon.    

I went through a few quotes as there are five different levels of cover.  The lowest two are basically pointless as hardly anything is covered.  The remaining three levels, which are not quite at the level of cover I have now, ranged from £186 to £277.  These are monthly figures.  I looked at other scenarios involving different excesses but increasing the excess by £250p/a lowered the premiums by £23, and as I will probably use a policy fairly regularly it’s just moving money from one pot to another.  Also, the premiums would increase each year, and it’s just a non-starter.  

Hello darkness NHS my old friend.

Wrapping up my weekly update, I will just mention I published a little impromptu post this week which you can find here.  I discuss paying for things over time, and how companies are extremely reluctant to give money back once they have it.

Movember

I’ve started a new walking challenge, this time for the Movember Foundation.  For those who don’t know about Movember, it’s a charity that primarily raises awareness for male mental health, suicide prevention, and male-related cancers such as prostate and testicular.  A few years ago I raised a few hundred pounds for them when I completed a virtual bike ride from Land’s End to John o’ Groats on a bike at the gym.  It was hard work but very satisfying.  

This time I’m aiming for 500,000 steps in November.  If you would like to follow my progress or donate, you can do so here.

Letters to Oana

Part 2 of the series Letters to Oana is now live.

Looking Back

Part 17 of the Looking Back series is also live.

What I’m Doing

Listening: The Stone Giant: Stone Man Book 3 by Luke Smitherd

Watching: Star Trek: Deep Space Nine

I’ve enjoyed The Stone Man series again on my second run-through.  Once I’ve finished the third book, I’ll be in new territory with the fourth.  The story would make a fantastic show for the streaming era.    

I don’t want to spoil the books for anyone who might be interested, but if you like sci-fi/horror from a British perspective, you should give them a go.

Oana and I have started a watch of Deep Space Nine.  I’ve seen it a gazillion times since it ended in the late 90s, and Oana has seen bits and pieces but never watched it through fully.  So, we’re going to watch the whole thing.  

We’ve watched the feature-length pilot episode, Emissary, and it’s a bit rough around the edges.  The picture quality isn’t great and you can tell that everyone is just finding their feet.  The show doesn’t find consistent quality until partway through the second season, but then it’s off to the races.  I might try and skip the first season episode Move Along Home.  If you know, you know.

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Financial Update

Assets

Premium Bonds: £15,100.00.

Stocks and Shares ISA: £88,137.13.

Fuck It Fund: £1,234.94.

Pensions: £87,704.43.

Residential Property Value: £237,447.00. 

Total Assets: £429,623.50.

Debts

Residential Mortgage: £185,094.90. 

Total Debts: £185,094.90.

Total Wealth: £244,528.60.

First Trillionaire?

My ISA is back below £90k which is annoying, but it will bounce back.  Now that the US election is done and dusted, there should be some stability until Trump takes office.

It will be very interesting to see if Elon Musk is appointed to a formal position within Trump’s administration.  If it happens, it could see his net worth drastically increase as policies are changed to his advantage.  The first USD trillionaire, perhaps?

The Bank of England lowered the base rate to 4.75% this week but there’s a note of caution that further cuts may take time.  I think that’s wise as we don’t want a situation where rates are moved too quickly in either direction, which would cause even more uncertainty.  Stability is vital at the moment.

One common result of lower interest rates is that mortgage rates come down, which in turn can lead to higher house prices.  The short, simple, explanation is that lower rates generally mean people can borrow more, and if they can borrow more they tend to look at the upper end of their price range.  Lower rates also mean that more people can get a mortgage, and the more demand outstrips supply, the more prices increase.

A common message in this blog is that people should only invest in what they understand.  The same thing applies to buying property.  If you don’t understand something about the purchase, you should seek independent advice to make sure you fully understand before going ahead.  

Buying at Auction

I was recently approached by a friend who wants to sell their current home and move, with the new property being sold at auction.  Unless someone is an experienced property investor or is extremely well-read in the auction process, I would not feel comfortable with them going down this route.  Auctions can be complicated, and it’s easy to get swept up in the excitement of competing against other people so you can “win”. 

If a property is being sold at auction, you have to ask yourself why.  It could be a repossession.  It could also have something very wrong with it.  

As I said to my friend, “Would you spend £2,000 on a device you don’t know how to use?  If not, why would you spend a hundred times that on a process you don’t understand?”  Many people view auctions as something they can benefit from.  This can be the case, but the auction is not there primarily to benefit the buyer; it’s there to benefit the seller.  

One of the most common questions I get from strangers about property has to do with buying at auction, and my normal reply of “Don’t do it” never seems to dissuade them.  So I’ve put together a little list that expands on some of these points…

Limited Inspection and Research Time

Auction properties are typically sold “as-is,” and buyers have limited time to inspect the property and understand its condition. Issues like structural problems, unapproved alterations, or planning restrictions may not be obvious and can lead to unexpected repair costs. Inspections are essential, but with auction deadlines, there’s often not enough time to conduct thorough surveys.

Complex Legalities and Hidden Costs

Auction purchases are legally binding, so buyers need to have solicitors review the property’s legal pack beforehand. This includes checks for potential issues like restrictive covenants, disputes, or leasehold limitations. Legal packs can be complex, and inexperienced buyers may miss key issues that could lead to financial or legal problems later on.

Upfront Financial Commitment

Unlike traditional purchases, winning an auction requires an immediate deposit, typically 10% of the property price, with the balance due within a short time frame (often 28 days). This tight payment deadline can be difficult for buyers relying on mortgage financing, as mortgage approvals and valuations can take longer than the auction timeline allows. If the buyer fails to complete the payment on time, they risk losing their deposit.

It’s also important to understand if you are buying at auction with a mortgage, that the lender will need to issue a formal mortgage offer for that property before they will lend against it.  A formal offer will normally require a valuation/survey of the property.  Depending on the lender, you may not get a mortgage on a property that requires significant work to be habitable.  At the risk of sounding like a broken record, seek expert advice before committing to any course of action.

Unpredictable Final Price

Auction properties sometimes start with low guide prices to attract bidders, but the final sale price can escalate quickly during bidding. Inexperienced buyers can get caught up in the bidding process, often resulting in overpaying.

Unlike private sales, there’s little opportunity for price negotiation, which can lead to paying more than the property’s actual market value.  Also, the cynic in me would worry about other bidders being there at the behest of the seller just to pump the bidding. Ask yourself if you have the knowledge or experience to accurately value a property.

Potential for Problematic Tenancies

Some auction properties may have sitting tenants or complex lease agreements. Managing a tenanted property, especially one with tenant issues or non-standard lease terms, can be challenging and require legal and property management knowledge. Inexperienced buyers may find these tenancies difficult to navigate.

I’m not saying that auctions are always bad, or that it’s impossible to get a good deal at an auction.  The key is to have enough knowledge and experience, either your own or borrowed from someone you trust, to understand what you are doing.  If you are considering buying at auction, please seek independent, impartial, expert advice before committing to anything.

Random FI Thoughts

I was sent the following by a friend and it made me chuckle.

“Random FI thought of the evening…

35 hours a week on the new minimum wage will be £22,222.20 a year (surely someone started with that in mind and worked backwards. Bit weird it’s all 2s).

Anyway, £22,222.20 a year is £1626.78 a month net of tax and NI. 

Assuming a 6% return, to achieve £1626.78 a month you’d need a portfolio of £325,356. 

So, hit that figure and at 6% compounding, it’s like having a little minion who goes out, works a full-time job, and gives you all the money for free.”

The key to FI is having minions working for you.

That’s all for this week. Thank you for reading.

Disclaimer

The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.  

If you want personalised financial advice, seek an appropriate professional.  If you are in financial difficulty, seek advice via the resources below:

StepChange

MoneyHelper

Biolink 

You can now find all my social media pages by checking out my Biolink:

bio.link/davidscothern.