Why FTB should Resisit buying now and Save instead! explained

confused31_2

I personally think if you can get any fixed deal between 4 ang 5% for 10 years it as to be looked at, just one thing i would do though is make sure its portable so if you do want to move you can move the mortgage with you.

Mr_Matey

I liked Panda's original post as did at least 13 others (see thanks). It made sense because it lists the savings you can acquire on a bigger deposit on a mortgage at today's rates. The second bit about assuming 1% falls is speculative, but fair enough if that's his opinion.

I don't really understand why everyone has jumped on him, except that I've noticed a few posts recently seem to be attacked because they're either:
1) Telling people how to get better deals on rentals
2) Telling people not to buy

Twirlypinky, to answer your question, if you get a mortgage you pay interest to the bank. The "interest-only" component of a 100% mortgage needs to be taken into account when comparing against renting as in both cases you have paid off the same amount of the property and have no equity invested.

whathavewedone

This thread has really made me chuckle.

I can't believe that a 24 year old who doesn't sound particularly canny with money (or in any way frankly) feels qualified to start a post giving advice to all FTBS on this site.

To call people who choose fixed rate mortgages foolish and incapable of managing money is a really dangerous statement to make if the people he was supposed to be addressing are as naive as he seems to think.

I'm with Housesitter all the way as far as interest rates are concerned. At 38 I'm old enough to remember all the hoo ha about them in the last recession.

If you are sensible you put yourself in the best position that you possibly can to avoid being exposed to high interest rates which is namely to fix your mortgage and use the time period that your mortgage is fixed for to save money in case you end up in negative equity/with a small amount of equity so that you can afford to pay your mortgage if interest rates go sky high.

If you ignore the fact that interest rates can go up you can end up getting repossessed simple as.

twirlypinky

Mr_Matey wrote: »

Twirlypinky, to answer your question, if you get a mortgage you pay interest to the bank. The "interest-only" component of a 100% mortgage needs to be taken into account when comparing against renting as in both cases you have paid off the same amount of the property and have no equity invested.

When did I say anything about 100% mortgages? I'm only comparing renting to the example on Panda's original email and at the moment I don't think the savings written on there are a fair comparison. The example given in the OP was 80% if i recall correctly.

And I'm not daft, I know you pay interest to the bank, I have had mortgages before, I just don't at the moment due to having "run away" from a bad marriage, house, mortgage, husband and all. You might want to rethink the wording in your posts so they sound slightly less patronising.

Mr_Matey

All I'm saying is you need to compare like with like. The easiest way when comparing rent vs buy is to do that with a 100% interest-only loan.

For this example the costs for year 1 are either:
1) Rent - Interest earned on Deposit
2) Mortgage Repayment - Capital Repaid + Additional Expenses that aren't paid by renters.

If it's a purely financial decision choose the one that's lower.

Obviously each situation is different and the numbers will change, but the OP did not say his example is paying £650 a month in rent. I would guess that if you are paying that much the property may be worth more than £130k and the savings he mentions would thus be higher.

housesitter

That's what I do when people suggest renting is dead money. If you start from a base of no savings as many a FTB over the last few years it's a mortgage at 100% or renting. The figures speak for themselves.

Once you have some capital, the equation is somewhat different. People fall into the trap of assuming one situation or the other without explaining what scenario they are basing their figures on.

StevieJ

Mr_Matey wrote: »

I liked Panda's original post as did at least 13 others (see thanks). It made sense because it lists the savings you can acquire on a bigger deposit on a mortgage at today's rates. The second bit about assuming 1% falls is speculative, but fair enough if that's his opinion.

I don't really understand why everyone has jumped on him, except that I've noticed a few posts recently seem to be attacked because they're either:
1) Telling people how to get better deals on rentals
2) Telling people not to buy

Twirlypinky, to answer your question, if you get a mortgage you pay interest to the bank. The "interest-only" component of a 100% mortgage needs to be taken into account when comparing against renting as in both cases you have paid off the same amount of the property and have no equity invested.

You think him advising people not to take out a fixed rate mortgage is good advice :eek:

Mr_Matey

StevieJ wrote: »

You think him advising people not to take out a fixed rate mortgage is good advice :eek:

Horses for courses really. Tracker and fixed both have their place. At the moment I bet a lot of people wish they were on trackers, but if rates go up fixed will be looking more attractive.

Also remember you pay the most interest at the start of the loan as you pay off the capital, so if it takes a few years for rates to reach the "fixed" percent it may still be worth taking the tracker, but you'd have to do the numbers.

StevieJ

Mr_Matey wrote: »

I liked Panda's original post as did at least 13 others (see thanks).

Proves one thing, those Grizzleys will thank any piece of trash as long as it is talking the market down

pandamonia

Mr_Matey wrote: »

I liked Panda's original post as did at least 13 others (see thanks). It made sense because it lists the savings you can acquire on a bigger deposit on a mortgage at today's rates. The second bit about assuming 1% falls is speculative, but fair enough if that's his opinion.

I don't really understand why everyone has jumped on him, except that I've noticed a few posts recently seem to be attacked because they're either:
1) Telling people how to get better deals on rentals
2) Telling people not to buy

Twirlypinky, to answer your question, if you get a mortgage you pay interest to the bank. The "interest-only" component of a 100% mortgage needs to be taken into account when comparing against renting as in both cases you have paid off the same amount of the property and have no equity invested.

thanks for agreeing with me, i stopped posting back to the idiots on here since they stopped talking about my original post.

they dont understand my original post makes perfect sense.

regarding fixed rates i talked to my IFA today and he advised me on 2 things. dont fix for 10 years now and dont buy anything at the moment.

he advised that the money you would save over the period of the mortgage for 10 years would out weigh the money you would save when interest rates were higher. he advised that if you were on a good tracker then you should bank the money saved between your rate at the average rate or 5.5% he said to pay into a high interest savings account and by the time you need to call on this money to add to your mortgage for when it goes over 5.5% you will be much better off. not only that by the time the rate rises there will be better products on the market than now and a remortgage to a new tracker of 0.5 above or 0.5 below the baserate will be highly possible. leaving all the money you saved in the bank.

regarding house prices falling the general feeling is that we are not out of the woods since mortgages are poor and generally unavailable and this lack of good credit will hurt prices just like the abundance of credit in the past made prices rise.

the idiots can say what they like but to me this makes perfect sence and if you read the crap they posted you will see they havent given any info to prove otherwise.