Buy or rent (cost comparison)

Pimperne1

Milan, the tone of your posts indicates that you knew the answer you wanted to your question before you asked. Just a couple of points, firstly, you should have made it clear that you were talking about an interest only mortgage in your first post so no surprise that you received responses to which you then had to provide a clarification. Secondly, with you attitude you certainly shouldn't be buying a property, heaven forbid that someone with your attitude should have some capital with which to play.

Pimperne1

Better still read the report from Moneyweek in 2004 that said house prices were going to crash. Then again follow the example of the Editor of Moneyweek who often puts forward the crash theory and did so as early as 2004 (but she only sold in 2007 and has recently bought a property).

mostlycheerful

“- Buying option: £800pcm "wasted" on interest & service charge AND £235 invested toward property ownership”

No, no, no! You’re wrong. No, it’s not “wasted”, it’s your money and you continue to own it!!!!!

That’s what you’re still not getting!!!!! It’s your money and you’re putting it into a big pot and it’s all still there, with your name on it, and anytime you want to you can have it back again to do anything you want, such as live somewhere else, go round the world for a year or two, go down the casino and put it all on black or buy a big fat posh car or a leg of a racehorse or anything you want!!!!!

But with renting all you’ve done is give it all away to a landlord!!!!! And none of it is yours any more cos you lost it and wasted it!!!!!

No, you have a fatal mental block regarding this and if there is anyway that I can cut through the cobwebs and get you over the stile into the sunshine and up at the top table with all the rich happy successful sorted people – 68% in UK - rather than still languishing down at the bottom of the hill with all the sad poor losers – only 32% in UK - then it will be job well done.

My dear parents explained it to me when I was young and one of the ways they explained it to me was “in life you can pay rent or charge rent, which would you prefer?” and that very much illuminated it for me, so much so that I can still remember it clearly all these years later.

Oh dear, oh dear, tragic. Open your mind, listen and learn.

Pimperne1

Excellent post, however, you should try re-arranging these words into an easily recognisable sentence "one this wasting time I with am my".

pawlala

I used to rent many years ago, now I'm on the property ladder, have paid off all my mortgage and I'm only 34. For the rest of my life I can afford to think about property investment and how to get other people to pay ME rent, rather than how I started off, the other way around.

Cost in comparison over my lifetime? Probably a swing of £600,000.

pinkshoes

Just to confuse matters further, what about a 2 bedroom flat, and a having a lodger? (as 2 bedroom flats are generally easier to sell over 1 bed flats when the time comes to move on).

It also depends what you're like with money! Assuming the mortgage would be a REPAYMENT one, then if you're good at frittering money, a mortgage might be a good idea, as the repayment part would be paid without question, then you would have the responsibility of putting money aside each month for repairs, maintenance etc... and can spend what is left over. If you rent, then the extra money could potentially get frittered rather than put in savings!!

Personally I would buy, as it's so nice to own your own home!

milan_ns

Pimperne1 wrote: »

Milan, the tone of your posts indicates that you knew the answer you wanted to your question before you asked. Just a couple of points, firstly, you should have made it clear that you were talking about an interest only mortgage in your first post so no surprise that you received responses to which you then had to provide a clarification. Secondly, with you attitude you certainly shouldn't be buying a property, heaven forbid that someone with your attitude should have some capital with which to play.

I understand the maths behind it. I presented my dilemma here hoping that someone would give a useful insight, something I may have missed (some factor I may have overlooked etc). It's more like a discussion, as opposed to a question that I'm expected a definite answer to.

Pimperne1

Yes the rent a room scheme is really fantastic for so many reasons. Providing rooms for those who cannot afford to rent a flat, income for those who would otherwise struggle with their mortgage, generous tax relief, social mobility, potential friendship or (at least) companionship.

Eric1

mostlycheerful wrote: »

“- Buying option: £800pcm "wasted" on interest & service charge AND £235 invested toward property ownership”

No, no, no! You’re wrong. No, it’s not “wasted”, it’s your money and you continue to own it!!!!!

That’s what you’re still not getting!!!!! It’s your money and you’re putting it into a big pot and it’s all still there, with your name on it, and anytime you want to you can have it back again to do anything you want, such as live somewhere else, go round the world for a year or two, go down the casino and put it all on black or buy a big fat posh car or a leg of a racehorse or anything you want!!!!!

But with renting all you’ve done is give it all away to a landlord!!!!! And none of it is yours any more cos you lost it and wasted it!!!!!

No, you have a fatal mental block regarding this ...

so, the mortgage interest & service charge would be still the OP's money, and the OP can have it back anytime. I see.

Now how about this example:
- rent = £800pcm
- interest only + service charge = £1,000pcm
- repayment + service charge = £1,600pcm

still a no brainer?

Pimperne1

Then I couldn't put it better than Mostlycheerful puts it except to say that, even with an Interest Only mortgage it would make sense to buy than rent. In essence with IO - agree the price of a house now and pay for it in 25 years time, in the intervening time mortgage payments effectively go down whilst rents go up significantly (although not everyone agrees with this assessment). Maybe houses will be worth less in 25 years time but I don't know anyone who honestly thinks this.