Sellers on strike

Really2

Mr_Matey wrote: »

Oh and btw you don't *own* your house until you've paid off the mortgage. Until then you're just renting from the bank.:rotfl:

Thats not true though is it unless you are paying it off interest only, then paying it off in one lump sum in 25 years time.

But if you are doing that you could buy now cheaper than renting and sell it for 2-4X what you paid for it in 25 years time.

Very "bullish" view, thanks for pointing that out to everyone.;)

Mr_Matey

The point is everyone rattles on about how they own their own home after putting down a 5% deposit.

You own the proportion that you've paid off. If you're on interest only with 100% mortgage then you don't own anything, but if you've paid for half of it you own half etc. I suppose if you want to get all accountanty you own the property but also a liability of equal value. Net worth 0.

It is not always cheaper to buy than rent. The place I'm living in is definitely cheaper to rent than buy right now.

sympatex

baileysbattlebus wrote: »

My daughter bought in 2005 - despite being advised to rent first (by me), the logic behind buying was the cost of renting - she lives in Lower Earley - to rent a nice 2 bed semi with a driveway and garage was about £900 per month, it's still about the same now.

So she decided to buy, the mortgage was a bit less than paying rent, they remortgaged recently and according to the Nationwide valuation are still not in -ve equity, infact had enough equity to remortgage.

Does she have any regrets about buying when she did, we were discussing this at the weekend, no she doesn't. She has her house and is happy regardless of what happens to prices. She says every time she walks through the front door, she still can't believe it's her house.

She lived at home until she bought, it would have been very difficult to pay rent and try and save for a deposit here on an average salary. It would have taken her years.

BBB, yes i can see how your daughters situation, mirrors mine and m gf's. I'm not advocating buying, i'd personally rather not i live at home right now saving a 3rd of my wages, gf is the same so our deposit is rising and house prices 'appear' to be coming down to meet it. When it all adds up we'll go. Will we buy an watch our "asset" plummet in value? Probably, but it costs less on a monthly basis to buy than to rent and at some point its value will return if you bought sensibly.

Really2

Mr_Matey wrote: »

The point is everyone rattles on about how they own their own home after putting down a 5% deposit.

You own the proportion that you've paid off. If you're on interest only with 100% mortgage then you don't own anything, but if you've paid for half of it you own half etc. I suppose if you want to get all accountanty you own the property but also a liability of equal value. Net worth 0.

It is not always cheaper to buy than rent. The place I'm living in is definitely cheaper to rent than buy right now.

I agree on what you say there, I just did not agree with the "you rent it off the bank bit"
Equity is the only mesure of how much you own. In theory you own a house but also have secured a loan of the same value against that house. (based on 100% mortgage)

Mr_Matey

Ok. Perhaps I didn't explain that well.

I guess sometimes when you try and put things in layman's terms you, well, put them in layman's terms.

GracieP

Really2 wrote: »

Like for like would be interest only mortgage , so it would be cheaper like for like. Also if you are renting planing to buy you would need to save for a deposit as well as paying the rent.
Not saying buy now, but for most it makes sense to stay put and pay their mortgage at below rental costs untill transactions increase at the earliest.

Even when prices have fallen by at least 25% in the last year. Your ltv won't remain at 75% as prices fall. And these houses are too small to live comfortably in long-term. If you get yourself into NE you are stuck.

Really2

GracieP wrote: »

Even when prices have fallen by at least 25% in the last year. Your ltv won't remain at 75% as prices fall. And these houses are too small to live comfortably in long-term. If you get yourself into NE you are stuck.

Sorry you lost me compleatly, the fact is at the moment with low interest rates it is currently cheaper to have a mortgage than rent in most cases.

My mortgage is £350(IO/offset) on a house that would cost me £1100-1200 to rent.
I don't see why anyone would STR at the moment you would have to be a fool now as you can pay off your mortgage quickly.

Mr_Matey

Really2 wrote: »

My mortgage is £350(IO/offset) on a house that would cost me £1100-1200 to rent.
I don't see why anyone would STR at the moment you would have to be a fool now as you can pay off your mortgage quickly.

The answer lies in whether the price of a house is falling. Consider if your house was falling by £1k a month.

Even in your situation with a large amount of your house paid off, it may be better to rent. Owning a place would've cost you £12k + £350 x 12 = £16,200 (then take off capital repayments). Renting would've cost you 1,100 a month = 13,200.

Also, you've paid off a large chunk of your house by the sounds of it, which means the equity you would release from selling can earn you a return. This is quite tasty. :cool:

Of course there are other factors, including transaction fees. Property is a chunky thing to buy and sell.

In your situation I think it's worth sticking with your place and paying it off, but for those who haven't bought or have only paid off a small percentage of their property, renting is very attractive right now.

GracieP

Really2 wrote: »

Sorry you lost me compleatly, the fact is at the moment with low interest rates it is currently cheaper to have a mortgage than rent in most cases.

My mortgage is £350(IO/offset) on a house that would cost me £1100-1200 to rent.
I don't see why anyone would STR at the moment you would have to be a fool now as you can pay off your mortgage quickly.

If you can't pay it off at a faster rate than the price is falling and your house isn't suitable for your long-term needs, then you are better off without it. If you end up in negative equity you can't move, and if your property is too small for you to have the family you are planning, for example, then you are in a better position if you don't own.

GracieP

chucky wrote: »

do you think that this will be the case in the short term or long term?

I can't say, I suspect rents will fall a little more here as a lot of people living here work in the city. I know a couple of ex-Lehmans employees who are leaving. And a friend of mine who's partner is from S.Africa says a lot of their friends are out of work and are heading home, as being unemployed but near their families is more appealing than being unemployed here. If that trend continues there will be a lot less demand on properties here.