Psychology of Home Owning

JonnyBravo

Harry_Powell wrote: »

Your example of "50 years of renting compared with 25/30 years of paying a mortgage" misses the real comparison which is 50 years of renting vs 25/30 years of paying a mortgage and 25/20 years of sitting on unaccessible equity.

Agreed but surely we should look at 50 yrs renting and investing vs 25 yrs paying mortgage then 25 yrs investing??

Interesting.

I'm gonna do some sums but got to go now and won't be back til Fri.... so til then..... tatty bye!

JonnyBravo

Harry_Powell wrote: »

Why can I only invest in 'low risk' products giving 4% (I could get better than that in a cash ISA until just recently, in fact I think my current account was paying more than that before the credit crunch!). You can also invest your money in a diversified portfolio of both low, medium and high risk bonds and equities, even a property fund if you like. History has shown that the stock market beats all other investments long-term, including property. In the last 6 months we've seen, what, 25% or more increase in stock market funds? What increase have we seen in property values in the same time?

How did the stock market do the 12 months before that? You're investing over a long period so get the ups and downs of both markets either way.

Harry_Powell

JonnyBravo wrote: »

How did the stock market do the 12 months before that? You're investing over a long period so get the ups and downs of both markets either way.

True, but everything I've read has said that the stock market performs better than the housing market over the long term (and 25 to 30 years is 'long term' to me ). What I especially like is that fact that you can 'cash out' of the stockmarket a lot quicker, cheaper and easier than you can 'cash out' of a property when you see the storm clouds gathering...

Certainly Hamish's derisory 4% stock market gains over the 50 years is laughable even with some 'bumps' in the economic road.

Here's some quick figures for your calcs:

Research produced by the Royal Bank of Scotland (RBS) has revealed the average UK homeowner will move house 6 times after purchasing their first property.
http://www.mortgageintroducer.com/ccstory/13596/18/Moving_Frequency_Index.htm
The average mortgage fee rises to £947
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/6395124/The-average-mortgage-fee-rises-to-947.html

Independent financial comparison website MoneyExpert.com has released research which shows that the average price of a basic mortgage valuation is £189, with some lenders charging as much as £405. This is the basic valuation fee, with higher fees for customers borrowing larger amounts.
http://www.loan-arrangers.co.uk/blog/moneyexpert-comments-on-mortgage-valuation-fees.html

7 House purchases:
arrangement fee: £947 x 7 = £6629.
Valuation fee: £189 x 7 = £1323.

Total cost: £7952 for no financial gain whatsoever!

You then need to add in the stamp duty costs over those 7 house purchases (ok the first one or two might not be liable but the rest will), any redemption fees to pay, Estate agency costs over the 6 house sales, solicitors fees over the 6 house sales....

Good luck

Harry_Powell

Just found this on the BBC:

The average cost of moving house in the UK has now risen to £9,486, according to the website Propertyfinder.

http://news.bbc.co.uk/1/hi/business/6483697.stm

If the average person moves 6 times in their life, then that's £59,916 spent just on buying and selling. This figure does not include the purchase of their FTB.

That's £60k spent with no financial gain!


Over to you Hamish........

Graham_Devon

Harry_Powell wrote: »

Just found this on the BBC:

The average cost of moving house in the UK has now risen to £9,486, according to the website Propertyfinder.

http://news.bbc.co.uk/1/hi/business/6483697.stm

If the average person moves 6 times in their life, then that's £59,916 spent just on buying and selling. This figure does not include the purchase of their FTB.

That's £60k spent with no financial gain!


Over to you Hamish........

Blimey.

When you look at it that way, that's some serious dosh!

Harry_Powell

Graham_Devon wrote: »

Blimey.

When you look at it that way, that's some serious dosh!

Indeed! And dosh that a lot of people simply add to their mortgages, increasing their monthly interest & repayment figures.

Even if people stay put, they still get hit with mortgage arrangement fees and valuation fees. I couldn't find any figures on what the average number of Mortgages people have in their lifetime is, but I'm guessing it's more than 6.

The renting vs buying argument is not such a 'no brainer' after all.

lostinrates

You have removal costs renting too, and of course often those letting agency fees. Not as much though.

We hd a five year period where we moved 13 times. We've also had renters freedom to move internationally, which even done on the cheap isn't so cheap.

Weirdly, having a whole load of stuff brought over from Tuscany was cheaper than the same company's domestic move to storage for us though.

ess0two

Harry_Powell wrote: »

Just found this on the BBC:

The average cost of moving house in the UK has now risen to £9,486, according to the website Propertyfinder.

http://news.bbc.co.uk/1/hi/business/6483697.stm

If the average person moves 6 times in their life, then that's £59,916 spent just on buying and selling. This figure does not include the purchase of their FTB.

That's £60k spent with no financial gain!


Over to you Hamish........

6 moves in a lifetime?more like 3 taking into account someone starting at the bottom,potentially 2 if they miss the bottom rung off.
Plenty of deals also offering free fees etc for re-mortgages,that needs factoring in.
Dont forget to add on HPI made along the way,to cushion the fees further.

Graham_Devon

ess0two wrote: »

6 moves in a lifetime?more like 3 taking into account someone starting at the bottom,potentially 2 if they miss the bottom rung off.
Plenty of deals also offering free fees etc for re-mortgages,that needs factoring in.

I'd have to lean more towards Harry's 6 moves myself, basing it on my experience of people I know.

Also, not sure about the "free" stuff. You are paying for it either way!

Harry_Powell

ess0two wrote: »

6 moves in a lifetime?more like 3 taking into account someone starting at the bottom,potentially 2 if they miss the bottom rung off.
Plenty of deals also offering free fees etc for re-mortgages,that needs factoring in.

Go to the link, I haven't made up the figure. Though feel free to contact the BBC and let them know you have more accurate statistics...

Graham_Devon wrote: »

I'd have to lean more towards Harry's 6 moves myself, basing it on my experience of people I know.

They're not my figures, I got them off the BBC. I was surprised myself at the figure TBH, especially as it's an average!!

I agree with you about the 'fee free', you simply just pay via a higher interest rate than via a fee.