I'm not buying

baileysbattlebus

Procrastinator333 wrote: »

Halifax, £189k to £169k.

Nationwide, £173 to £162k.

I see where you got the £11k from - Nothing like picking the statistic that helps your argument

So avg drop Jan 07 to Dec 09 is £15.5k or 8.6% (different to the 12% I guessed at before, but can adjust).

Rental costs of 5.5 - 6%, guessing that is your £28k, yep.

No to anyone on the average rate or tracker would have saved between then and now. See calculation below:

Average base rate of last 3 years + 0.5% = 4.09%.

Take a £250k house. Rent costs £43k (@5.75% - (Though still, this feels high, i'm paying £1,100 on a house that was up for sale at £290k, that ain't 5.75%)

Saving on house purchase £21.5k.

So buy after 3 years and have a remaining mortgage of £228.5k

Or consider buying. You have paid interest of 30.7k. But the saving of interest over rent can be used to pay down mortgage. So you have a remaining mortgage of £237.7k.

Hence the person who rented is better off. This can be tweaked with different numbers and %'s, but to me, the numbers and %'s used are on the bullish side anyway.

Regarding the difference in rates that a person is now on if they still have their tracker from back in the day. Yes, 12 months of constant or rising house prices coupled with constant interest rates would quickly see them catch up this deficit. But that is far from a certainty, and to me is less likely than others that end badly for that person. We could debate what is going to happen going forward in a different thread, but the fact is, these bullish %'s and numbers support the fact that a renter is better off as at today compared to 3 years ago. Which part of my calculation above do you disagree with (other than the fact I have excluded the better margin a buyer would now be on)?

@Pagg, as I have said, I agree that over any long term 25 year stretch, buying is better than renting. What I disagree with is that getting on the property ladder the first possible opportunity is the best course of action. Renting to bide your time can, as shown above pay off.

@Pagg, as mentioned, these examples exclude repayment element as it is irrelevant for comparing the money saved on the assumption that if the person can afford the repayment mortgage, they can afford to save the difference between renting and the repayment mortgage and use it as a larger deposit at the point of purchase.

@ Pagg, interest rates have to rise to give the government a better return on their loans?! Do you know what the deficit is?

I have an example for you - btw I'm using my daughter's laptop and it doesn't have exel.

It's a real example - DD and her partner are splitting up - they bought in 2006 - been in the house about 40 months. They accepted an offer on the house of £215k. House on the market on Tuesday for £219,950 accepted the offer yesterday after turning down first offer of £212k - if the house wasn't occupied I would put the RM link on - but I don't feel I can.

I looked for a comparable property on Rightmove (2 bed semi with driveway and garage) to rent and there wasn't one - but there was a 2 bed mid terrace with allocated parking for £800pcm

Here are the figures

Paid £190k
Mortgage £180k
Selling price £215k
Interest rate 5% - fixed
interest only payments would have been £750pcm
capital and repayments were £1060pcm
rent payments would have been £800pcm
EA fees 0.5% (family friend - who we will be using when we sell our house)
Moving cost - van hire costs - not looked into yet. Someone on here said £200
Money they spent on the house - decking & pergola £800 (brother did it)
Replace central heating thermostat £50
Redecorating - say £500
Garden about £200 on plants and pots
Carpets £900
Buildings insurance for the period about £800 (contents insurance you would need anyway)
Stainless steel extractor for hob - £80 - OH fitted it.
Solicitors fees on buying - as I remember about £3.5k
Solicitors fees on selling - not sure - but a lot less as there are no searches, stamp duty etc. £1k?

Using mental arithmetic here - so be gentle -
If they had rented it would have cost them about £32k over the period
IO payments would have been around £30k
Repayment cost - £42.5k

When they bought the house I actually advised them to rent for a couple of years first - was I right?

Procrastinator333

@bailey - I will let you crunch the numbers in full,

but £800 on a £190k property is pretty much 5%. So the rent is essentially equal to the interest element. So for a rough estimate, you can just take the gain on sale less all the costs. £25k less about £7k. So they were about £18k better off having bought rather than rented over the period.

So on the numbers between then and now, no, you were wrong.

What I would say is that they are not average. They do appear to have done very well on the purchase and sale price, average prices across uk fell 5.4% according to Hali / Nationwide, but they achieved a 13.1% gain.

My example took national averages. The nature of an average is that there are always people either side of it. Good for your DD she was on the nice side! :beer:

moneysaver

property.advert wrote: »

Peace of mind, security

The house is not owned by the mortgage payer until the final payment has been made. Where is the security in this?
Lots of things can happen in 25yrs.



Moneysaver

Dan:_4

moneysaver wrote: »

The house is not owned by the mortgage payer until the final payment has been made. Where is the security in this?
Lots of things can happen in 25yrs.



Moneysaver

Totally wrong. The house is owned by the mortgage payer from day 1. The mortgage is secured against the house, if one defaults against the repayments, the lender can take you to court, and transfer ownership away from you and to the lender.

moneysaver

Dan: wrote: »

Totally wrong. The house is owned by the mortgage payer from day 1. The mortgage is secured against the house, if one defaults against the repayments, the lender can take you to court, and transfer ownership away from you and to the lender.

Splitting hairs.

Still not totally secure then.

ukcarper

Doesn’t the whole thing depend on what house prices do and as seen on here that is hard to predict. So isn’t it a gamble either way.

Radiantsoul

ukcarper wrote: »

Doesn’t the whole thing depend on what house prices do and as seen on here that is hard to predict. So isn’t it a gamble either way.

It is one factor, but others are the cost of buying, the difference between investment rates of return and mortgage rates and the size of deposit. All of these factors are pretty uncertain.

I am sure it is largely a personal matter.

Procrastinator333

StiflersMom wrote: »

... but a whole lot more secure than renting, where the landlord can raise the rent or evict you, pretty much at will.

To a degree, but if you want security of not moving, you can take a fixed term tenancy. neither party can cancel for the agreed period. After that there is 2 months notice. So you will never justhave to up sticks and move. Plus if you are a good tenant, they are very unlikely to ask you to leave. Unless they are selling, why would they?

Regarding rent increases. They can't do it without your agreement and they can't do it in the fixed period. After that if they request a rent increase and you say no, you finish out your notice, paying the same rent.

Also, unless you are on a fixed mortgage, your interest costs go up without your control too

moneysaver

StiflersMom wrote: »

... but a whole lot more secure than renting, where the landlord can raise the rent or evict you, pretty much at
will.

I never said private renting was secure. I was just quoting what another poster had said about home buying being secure.


I am in social housing, so do not have any security issues. My rent increase for the coming year is 1%. I wonder how much the mortgage rates will go up in the coming year.

Moneysaver

Dan:_4

moneysaver wrote: »

Splitting hairs.

Still not totally secure then.

100 times more secure then worrying about the landlord renewing your contract every 12 months.