100% Mortgages gone - other options?

Jonbvn

jpowell79 wrote: »

fair enough...thanks for the responses......it just annoys me to think I'll be spending close to £22,500 in RENT for the next two and a half years.....money down the drain...ah well, I guess I have no choice!

Do not be fooled by the rent is dead money argument. Interest payments on mortgages are equally as dead ......:cool:

jpowell79

mitchaa wrote: »

Please explain the maths behind this as a £50k pa salary is only £3000pm or £2800pm if making typical pension contributions.

If you can save £2500-£3000pm, what on earth are you living on? I realise you have put £50k+ but to me that means low £50k otherwise you'd put £55k+, £60k+ £65k+ etc etc

Hi mitchaa...i'm on £56k...... to be fair, saving £3000 a month is a bit extreme (was just talking "best case" scenario).....which is why I quoted the saving of £2500 a month over 10 months to get the £25k deposit, which is achievable if I'm careful.


Good point about the intrest on the mortgage being dead mony JohnBV :-)

opinions4u

Jonbvn wrote: »

Do not be fooled by the rent is dead money argument. Interest payments on mortgages are equally as dead ......:cool:

About as dead as a reduction in the value of a property after you buy it.

If there's no increase in value, there's little financial benefit in home ownership.

brianrhill

£56K pa could net you £3,279pm after tax & NI, but excluding any other deductions taken from your wages. Assuming you spend £1,500pm on living expenses and rent, that would leave you about £1,500, so you could look at regularly saving around £1,000pm - this means it'll take you quite a while to save up the deposit, especially as you need to be starting to condider adequate pension provision and protectng your income in the event of incapacity.

You should also have as a minimum, around 3 months salary as an emergency fund, which means you wouldn't be able to start saving for a property for about 9 months.

Your parents, if they have income, may be able to go on the mortgage with you. They may also be able to raise funds from their own property for you, if they can afford it, and gift it to you (i.e. not a loan).

Brian

jpowell79

my parents don't have a pot to p$$s in in terms of savings, and they don't own their own home, so borrowing money from them is out of the question.

Anyhow, I've just had a really interesting chat with a guy from work.....he genuinely believes that house prices will still drop again (even though they've climbed slightly over the last few months)....he believes that Gordon Brown is doing everything humanly possible to sustain the economy up to election times, and that things will get worse with unemployment, and that intrest rates will have to increase which will have a knock on effect.

He can afford to buy (he has a 25% deposit saved) but is gonna wiati it out another 12-18 months, before he believes the market will truly bottom out.

So in fact he actually thinks now is a really bad time to buy, so I'm better off renting.

mitchaa

Jonbvn wrote: »

Do not be fooled by the rent is dead money argument. Interest payments on mortgages are equally as dead ......:cool:

Now now.

25yr rental vs 25yr mortgage, who is going to be better off at the end of it? Who is going to be living rent/mortgage free and who is going to need to keep forking out further?

Every penny you spend in interest you recoup back and more through property growth. Buy a house for £100k now and it will cost you in real terms £200k on a typical 25yr mortgage but in 25yrs time that house will be worth 3/4/5 x the original purchase price so you recoup that £200k back + the additional. With rental what do you get back?

Rental rises with inflation throughout those 25yrs aswell. You may pay £1000pm for rental at the moment but you may be paying £2000pm at year 15 and £3000pm at year 25. Your mortgage should remain fairly static throughout, £1k pm now should be £1k pm in 25yrs time (Probably lot less with remortgage better LTV rates etc)

Renters kid themselves that it is not dead money but really it is. I see their point if property is plummeting, why buy now at £150k when i can buy next year at £135k but all thats wishful thinking at the moment. No-one has a crystal ball and i personally think we have already reached our bottom and we are now in long stagnation (+/- 5% either way being maintained)

If your friend waits 18mths, then he's not just playing with theoretical figures, he's playing with interest rates which may not work out as a smart move.

£150k @ 5% now or £150k @ 10% next year. The nationwide are telling us that house prices now are around the same as they were this time last year, so the same could be said for the next 12mths.

brianrhill

jpowell79 wrote: »

Anyhow, I've just had a really interesting chat with a guy from work.....he genuinely believes that house prices will still drop again (even though they've climbed slightly over the last few months)....he believes that Gordon Brown is doing everything humanly possible to sustain the economy up to election times, and that things will get worse with unemployment, and that intrest rates will have to increase which will have a knock on effect.

He can afford to buy (he has a 25% deposit saved) but is gonna wiati it out another 12-18 months, before he believes the market will truly bottom out.

So in fact he actually thinks now is a really bad time to buy, so I'm better off renting.

That's what, in the FS profession, is called a pub adviser. Good luck to ya!

Jonbvn

mitchaa wrote: »

Now now.

25yr rental vs 25yr mortgage.

Take off those rose tinted spectacles for a while, and you may notice that we are in a recession. Increases in property prices are no longer a given as you seem to assume.

Who said the OP was going to rent for 25 years? The OP only mentioned renting for 2 years. I was only pointing out that some of the usual BS about rent money being dodo was.... well complete BS.

You seem to completely ignore the fact that interest paid on mortgages is still dead.

Best you stick to helicopters......:p

danielanthony

Yeah and when you rent you can be kicked out of the property any time after the initial 6/12 months, have the property checked by the agency every 3 to 6 months, and generally have no security or say about your 'home'.

Get real, no one would want to rent long term in this country as you live at the whim of some else (landlord). In europe 10-12 year agreements are the norm and you can treat the property as your own, therefore renting is a much more attractive proposition.

jpowell79

am looking into an opportunity with Barratt Homes..... they will "topup" your deposit from 5% to 30% in the form of a 10-year interest free loan.

Looks like it might be my only option. Problem is that Barratts don't have that many new places to choose from in London.

Does anyone know of any other "topup" opportunities or incentives?