DWP mortgage cuts could mean rise in reposessions

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Could have, but I think the divorce would have more than destroyed any potential savings!

carolt

silvercar wrote: »

and that you get to buy it in 25 years time at today's prices rather than the price it will then be.

Assuming (a) you have managed to keep paying an amount higher than the rent for 25 years (incl all maintenance costs, which as a tenant would be someone else's problem), and (b) that you didn't fancy moving at any point during those 25 years.

The reality is that
1. rental costs are generally lower than mortgage costs
2. you don't have to wait 25 years - you could buy in 3 or 4 years, say, possibly at a much lower price than now, and unlikely to be much higher, and
3. you are free to move, whatever house prices do, according to your situation and needs, which over 25 years are highly unlikely to remain static. Costs of moving are far lower from rented, and there is no danger of being trapped in negative equity and unable to move, which is a pretty high risk for the person buying interest-only.

silvercar

carolt wrote: »

Assuming (a) you have managed to keep paying an amount higher than the rent for 25 years (incl all maintenance costs, which as a tenant would be someone else's problem), and (b) that you didn't fancy moving at any point during those 25 years.

The reality is that
1. rental costs are generally lower than mortgage costs
2. you don't have to wait 25 years - you could buy in 3 or 4 years, say, possibly at a much lower price than now, and unlikely to be much higher, and
3. you are free to move, whatever house prices do, according to your situation and needs, which over 25 years are highly unlikely to remain static. Costs of moving are far lower from rented, and there is no danger of being trapped in negative equity and unable to move, which is a pretty high risk for the person buying interest-only.

1. you say that, but we first bought as we couldn't afford to rent
Even at the present time, my house at say a rental yield of a low 3% would be more expensive than my mortgage rate of 1.25%.
2. though you have to pay rent in the interrim.
3. I agree that buying is only worth doing if you plan to stay put for at least a few years. The cost of moving is lower in rented. The neg equity trap depends on the size of your deposit not just whether you are interest only. My mortgage is technically interest only, but the LTV is less than a third so I don't worry about neg equity.

Graham_Devon

silvercar wrote: »

1. you say that, but we first bought as we couldn't afford to rent
Even at the present time, my house at say a rental yield of a low 3% would be more expensive than my mortgage rate of 1.25%.

You have to be fair though.

No one can get that mortgage rate.

It's a bit like someone else saying "renting is cheaper, I rent a 4 bed detached from my nan for £100 a month, therefore, renting is far cheaper than mortgages".

silvercar

Graham_Devon wrote: »

You have to be fair though.

No one can get that mortgage rate.

It's a bit like someone else saying "renting is cheaper, I rent a 4 bed detached from my nan for £100 a month, therefore, renting is far cheaper than mortgages".

It is fair because I got a mortgage from a lender not from borrowing off family.

You can't call it unfair because I bought while others sat on the side line waiting for prices to fall and now can't get the mortgage rate. They will pay less for their property but at a higher rate - a choice they made when deciding to wait.

Graham_Devon

silvercar wrote: »

It is fair because I got a mortgage from a lender not from borrowing off family.

You can't call it unfair because I bought while others sat on the side line waiting for prices to fall and now can't get the mortgage rate. They will pay less for their property but at a higher rate - a choice they made when deciding to wait.

I'm not saying your circumstances are unfair, or that having the mortgage you have is unfair.

I'm saying that your comparison is unfair. You are basing mortgages (and buying) being cheaper, on a product which no longer exists. That's what I'm calling unfair, the comparison.

To work out which is cheaper, you'd have to use real life examples, both available in the rental and mortgage market, as carol said "in general".

On a personal level, I think that renting over a 25 year period would be slightly cheaper. BUT, it's far more complex than that, as you'd have to look at equity etc etc.