I've seen a number of threads where people are desperate to get on the property ladder and have indicated that they believe renting is dead money. Renting might not be the ideal long term solution but it can work out a lot cheaper than buying and if you put the savings into an ISA or other savings account you could almost be just as well off after 25 years.
For instance, I currently rent at £375 per month on a property valued at approx £120,000 (although £450 seems to be the average for my area on that property value). For my calculations I have assumed £450 per month as I expect it's more of a realistic value.
Rent Per Month: £450
Rent Per Year: £5,400
Rent 25 Years: £135,000
To buy a £120,000 house on a rate of 5.5% this is what the payments would be:
Mortgage Per Month: £745
Mortgage Per Year: £8940
Mortgage 25 Years: £223500
So by having a mortgage I would have a property worth £120,000 (todays value) but would have to spend an extra £88,500 over 25 years. Surely if his £88,500 was invested wisely it would almost be worth the property value after 25 years? Obviously the mortgage calculations exclude House Insurance, Maintenance etc.. so even more money could be invested every month for a better return.
I believe that renting is no longer dead money whilst the house prices are so high and rent is relatively low in comparison. Obviously these are all rough claculations looking at todays market but the current property prices cannot rise like this for the next 25 years.
Disclaimer: Any spelling mistakes or incorrect grammar is purely coincidental and in no way reflects the intelligence of the author.