Why do we want to own a house?

spottydog

For me its the thought of not having to pay rent when I'm retired so I can spend all my pension on me rather than giving a large chunk to someone to rent a place. Also by continually working and buying bigger places (with bigger mortgages) when I retire I will be able to downsize and release equity (therefore an extra tax free allowance as it will be my home I'm selling).

[Deleted User]

Is it just me or someone needs a sugar pill? :rolleyes:

For me, it is the thought of owing something where I can do what I want i.e. being able to decorate it to my taste, security, not having a Landlord and in the end pass it onto my son. :beer:

Rebob

When we bought the last house our mortgage was the same as the council rent amount that nextdoor was paying. By the third year we were there we were paying less than the rent charged to nextdoor and if we had stayed there we would have cleared the motgage in 15 years with no additional payments. This is when it all becomes worth doing.

meanmachine_2

I love renting because I HATE DIY of any kind (I'm useless at it) and my rent is half what the I/O mortgage payments would be on an equivalent property.

Oh no sorry. Wrong thread.

No, of course there are definite advantages to buying in the longer term. Just not right now.

kinster_2

meanmachine wrote:

You buy a house so that you can boast about rampant house price inflation on forums such as this one, surely?

That and the idea of "locking in" your equivalent of rental payments - unless interest rates rise, of course.

Oh, and so you can pass it on to your kids, causing arguments, when you snuff it.

But that's just a personal thing.

Robert, you forgot to finish your post:

£55000
1994 £45000
2005 £600000
2007: 300000

Yeah, well it might happen...

you crack me up LOL... you just hate people 'with' property

IN_LIKE_EVERYONE_ELSE!

Can somebody do the math:

250K property
£50k deposit
25 year mortgage @ 6%
+ £10 Buildings insurance
+ £20 upkeep
Total amount payable.

Rent:
£700 per month for 25 long years.
£50K savings at 4.75 interest
Totals?

I know it`s very basic, like me.

In Like.

elisebutt65

Well renting works for me as I'm a mature student/single mum. Got a nice little council house and HB so I pay £113/ month rent

jianren

For me,I would like to buy a house instead of renting one.
For renting a house , the owner of the house will disturb me, and I cannot do all the things freely.

Woby_Tide

IN_LIKE_EVERYONE_ELSE! wrote:

Can somebody do the math:

250K property
£50k deposit
25 year mortgage @ 6%
+ £10 Buildings insurance
+ £20 upkeep
Total amount payable.

Rent:
£700 per month for 25 long years.
£50K savings at 4.75 interest
Totals?

I know it`s very basic, like me.

In Like.

All depends on my excel skills but

Owning:
Mortgage over 25 years at £1269.80 = £381K
Maintenenace(assuming 3% inflation per year) = £13.1k
Total outlay = £394k

Renting:
Rental over 25 years (and this assumes for full 25 years you can rent a house that costs £1270 to mortgage for £700) = £210k(putting rent up in £100 increments to max rent of £1100) = £240k/£270k/£300k/£330k
Money in bank = £159k after interest

So overall outlay is much lower on rental on paper, however the £50k invested in a property worth £250k means you now own a property worth £317k (property increasing 1% pa) or £402k (2%property increase per annum) and so on

This is where it all goes off though due to assumptions. Say you bought at 35 years old, you're now 60. Average of another 20 years lifespan by then say.

So now the sums add in after 45 years of this life model

Owning
Mortgage: Nil x 20 years
Maintenance: still increasing at 3% per annum = £20k
Property value: £387k at 1%pa(for last 45 years), 2% £597k, 3% £917k

Renting:
Rental for 20 years at £700(good landlord never increases rent) = £168k (£100 increments again up to £1100 gives £192k/£216k/£240k/£264k)
Deposit in bank: £401k

Also you have to factor in that if you are renting you are saving money potentially plus maintenance into the deposit fund (details below), however the home owner has also just spent the last 20 years investing their saved mortgage payment of £1239 a month in the same bank as you and now has £488k sat in their bank

So dodgy assumptions included:
the property owner over 45 years has spent
Mortgage: £381k
Maintenance: £33k
Total: £414k

Assets:
Property: lets say 2% inflation on property over 45 years £597k
Bank: £448k

The renter:
Rental: £378k min(at £700pm) £540k (at £1kpm)

Assets:
Property: nil
Bank: Deposit £401k
Maintenence money and savings on mortgage invested: say £600pm (£500 mortgage/£100 maint): £236k(if the rental saving is only £200 pm savings in account are £118k)


So all depends, renter has more ready cash, property owner has more 'assets' even taking a 20% drop in the asking price of the house at 45 years as the homeowner will have blatantly overpriced it on the market still probably realises more 'cash', roughly looks like renter would have around £600k mark, property owner £850k say?

Hope thsi makes some sense


Edit: I was trying to find some figures for annual price rises over longer period than just the recent indicies and found this chart from the nationwide back to 1952(also has stuff like earnings ratio to house price and other useful indices)
http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

There is also links to some other charts they have, know they are all Nationwide biased but I struggled to find any real historical porices to use for calculations

www.nationwide.co.uk/hpi/historical.htm

But according to chart prices have risen average of 9.2% a year over last 53 years, which makes the £250k house worth £2m at 25 years and £12m at 45 years so my calculations in the example get a bit skewed, guess my 1%/2%pa was a bit too understated. But 45 years with no rent increases was also not a bad deal for the renter!

KK

15 years ago my hubby and I rented a tiny flat in Battersea so that the owner could go travelling for 6 months. It was a lovely flat but cost £600 per month to rent. We then bought a similar flat in the same area and paid the approx the same in mortgage repayments. Sold for a small profit 4.5 years later but we were able to move out of London buy a 3 bed house (needing LOADS of work) which 9 years later is worth nearly 4 times what we paid for it.

In those 15 years we have never paid more on a mortgage than we paid in rent in that tiny flat and slowly we are buying our house. It has been a simple equation for me. Yes, we have paid out to do up our house and all maintenance is down to us, but to rent an equivalent house in our area would cost loads more. The only plus I can think of for renting is portability, but of course I sympathise greatly with those who don't own property because they can't afford to get on the first rung of the ladder.

We are saving for our daughter's future so that she can go to University if she wishes and hopefully have a lump sum to put down for her first property. We didn't get any help and struggled for the first few years of property ownership but what we have now is as a result of sheer hard work. I know we have been fortunate to have twice (3 times if you include my husband's flat he previously owned) benefited from a rise in the property market but that has been a gamble too.