Mortgage now Cheaper than Rent in 80% of the UK

Engeroosi

After 25 years if you buy you own the house, if you rent you still have to pay rent. It suits some and not others. But in the long run buying is alot cheaper. specially if you can pay of mortgage quicker.

Ron2256

Why you’re better off renting

Forget getting on the ladder – right now it makes more sense to stick to renting!

http://uk.finance.yahoo.com/news/Why-better-renting-yahoofinanceuk-821408634.html

For every article saying one thing, it's easy to find another one saying the opposite. In the end, it means sweet fa. It's just an opinion from someone who need to fill newspapers.

Cleaver

Engeroosi wrote: »

It suits some and not others.

Ssshhhhh, you're ruining the fun. As a forum it's our job... wait... our duty to analyse, investigate and argue back and forth for pages and pages and pages about the pros and cons of renting versus buying and come up with which one is best.

We came quite close to this utopian scenario in late 2008 when the buying team pummelled the renting team into submission after 357 pages with an amazing polynominal coefficient equation (known as the 'Pastures Equation' after a hero of the board) that proved, beyond any doubt that buying was better than renting:

v = x1e1 + x2e2 + xxy4y + xnen.^

However, after two days of silence, and whilst the buying team were basking in glory, Graham Devon came up with the following:

Graham_Devon wrote: »

But, who pays for your boiler when it breaks down? You don't have to pay that if you're renting.

Amazing. Such a profound mind - he'd spent two days looking of the detail and realised that whilst 'x2e2' included a provision for roof fixing and general wear and tear, it did not include boiler provision. The buying team were distraught as it was such a simple yet fundamental mistake. Things went quiet and although the buying team tried to come back with a new equation in spring 2009, we're still at war and the world still awaits a definitive answer to the question: is buying or renting better?

Hopefully one day we'll reach an agreement before moving on to the just as important argument around which is better: carrots or peas?

Losing_the_way

Is not this an example of why the housing/banking sector has gone to hell in a handcart?

Procrastinator333

HAMISH_MCTAVISH wrote: »

http://www.telegraph.co.uk/finance/personalfinance/8140384/Renting-a-home-is-more-expensive-than-buying-one.html

Generation Rent indeed.

What a horrible position...... to be forced into paying more in rent than a mortgage, wasting all that money, month after month after month just to enrich your landlord, because the banks are still underfunded and rationing the limited funds they have.

I don't think there has ever been a question over the fact that in some places rent < interest cost and in others vice versa. The % is debateable. As a VI with the database to play with, it would be far too easy to get the result you want. But really, who cares, we will never get and agree a single % of locations. People should do this comparison for themselves and their target property / area if they are debating renting vs buying. Also, you say "all that money", the only piece they are actually paying off is the differential, not the whole whack, but yes it is something to consider.

Buying vs renting (short - med term)
For us renting has worked out great. We started renting a flat, then moved to a semi and when we buy after about 4-5 years of renting, it will be into a detached house. During that time house prices have so far gone down a bit and look like being lower than at the start when we do buy. Throughout the entire period we have paid less in rent than the interest element would ahve been on the same house / flat.

We have not spent money on moving costs during our 2 moves. A few hundred pounds on agency fees, but that is it. We have not spent money on each place we have lived in. There is plenty we could have changed, but it is all ok, so we are saving our spending for the first property that we will spend 10+ years in. We have not spent money on all the associated housing costs. A couple of months back the boiler broke down. That was £400 and the LL was advised it was time for a new boiler. Oh well.

During this time we have moved location with our work, so these moves would have been needed if we had bought or would have been long commutes - time & expense. We did miss out on the low tracker mortgages, but I don't think I would have taken a tracker at that time anyway - I don't think anyone had a clue that interest rates were about to fall of a cliff.

So overall we have saved bags of cash which means once we are in the house we buy we will have significantly more equity than if we had bought on day 1 and moved up in steps. In a stagnant or falling market, it makes even more sense to rent if there is a chance you need to move or trade up in the near future as the cost of moving is significant.

So happy days.

HAMISH_MCTAVISH wrote: »

There's no way the government will survive the next election if they don't get lending moving again.

This is starting to sound more like wishful thinking than anything else. But I guess you will get your answer soon enough. A group of housing bodies all wrote to Mr Osbourne the other day begging for the FSA not to implement the proposed changes. I think action or inaction on that will tell us all we need to know about the governments thoughts towards housing. Personally I think they are happy with gradual falls coupled with inflation.

Eric1

Procrastinator333 wrote: »

... But really, who cares, we will never get and agree a single % of locations. People should do this comparison for themselves and their target property / area if they are debating renting vs buying.

Especially if the target property is considerably more expensive than the rented one.
Like-for-like comparisons are meaningless for those who, for example, are renting a 1-bedroom flat to save a decent deposit for a 2-bedroom house.

nembot

I'll use my own situation, to get a baseline.

• Current value £210,000
• Monthly Rent £600
• Interest only 4% £703
• Repayment 4% £1122

Just 1% more equates to an additional £130+ per month

Lets not pull any punches here, interest only mortgages are essentially renting from the bank and research shows, millions have no plans whatsoever to repay the capitol at the end of the mortgage term.

That's not to say they're a bad thing, but hardly something that can be used in the context the OP is suggesting.

Perhaps in some locations it maybe true, but not round my way

System

I'm still not sure why buying something should be cheaper than renting it in the first place.

I could probably rent a car cheaper than buying one, but no one does that, odd.

ukcarper

nembot wrote: »

I'll use my own situation, to get a baseline.

• Current value £210,000
• Monthly Rent £600
• Interest only 4% £703
• Repayment 4% £1122

Just 1% more equates to an additional £130+ per month

Lets not pull any punches here, interest only mortgages are essentially renting from the bank and research shows, millions have no plans whatsoever to repay the capitol at the end of the mortgage term.

That's not to say they're a bad thing, but hardly something that can be used in the context the OP is suggesting.

Perhaps in some locations it maybe true, but not round my way

Where I am it would cost you £900 to rent a house worth £210k

LilacPixie

Seems it is often true in my area.

Quick example clepington road in dundee, http://www.grantmanagement.co.uk/property-to-rent/2707/ 3 bed flat to rent £750 rent.
same road http://www.tspc.co.uk/details.asp?id=99278 105k to buy. I just picked that street randomly because I has a 1 bed flat on same road when a student.