Rent is the real Financial Millstone.....

Procrastinator333

DaddyBear wrote: »

Why does some chump always roll out this argument? IF you are on a REPAYMENT mortgage, the interest is NOT dead money. It is a means to owning your property outright and having no housing costs at the end of it.

No.

Just because a part of your payment is a repayment on capital, doesn't magically make the interest element more valuable.

E.g. Mortgage £1,000 (Interest £900, Capital £100).

Rent £900 and saves £100 in deposit fund.

Renter buys 12 months later with the £1,200 deposit and has exactly the same equity as the early purchaser.

Of course rent doesn't always equal interest cost and of course house prices move, but they are seperate reasons for owning / not owning. This notion that interest itself is somehow money better spent than rent is nothing short of stupid.

Procrastinator333

THE_GHOULISH_CODPIECE wrote: »

Yes food, like rent, is dead money because if you bought your own dream home with a garden you'd be able to grow your own veg, fruit, nuts, and berries and farm your own meat. Try doing that on your landlords premises and you'd sooner be out on your ear.

I do grow veg in our landlords garden. Though this is for a bit of fun rather than any kind of money saving.

THE_GHOULISH_CODPIECE

Orpheo wrote: »

You're a dumbass. As it happens my wife is a horticulturalist, she grows a heck of a lot of our own food. She knows what to grow where and how to maximise the yield of crop in any particular space. She kept us in potatoes for 6 months by growing them in a very large canvas bag, didn't need to touch the landlord's garden. Our xmas dinner this year hasn't cost us a penny, a lovely big hare and two pheasants, courtesy of a local farmer that my wife is acquainted with. We have a confit of hare leg sitting in a jar in our kitchen right now.

You can't live off potatoes and the charity of others for life though. For real nutritional, sustainable growing you need a garden, not a bag of dirt. And as I said landlords won't appreciate you digging up their premises to grow your own dangle berries.

chucknorris

Procrastinator333 wrote: »

This notion that interest itself is somehow money better spent than rent is nothing short of stupid.

Mortgage interest is far better spent than rent because the mortgage allows the buyer to lock in at the price when purchased and the buyer will only pay interest on that capital value, whereas rent rises with inflation to explain further:

Mortgage interest merely fluctuate rather than rise with inflation. Rent will rise with inflation, so the renter years on WILL be paying higher rent, although if rents rise in line with wage inflation he will (in real terms) only be paying the same. However a buyers mortgage payments will only rise if interest rates rates rise and in normal times they are just as likely to fall as rise so the buyer will enjoy reduced mortgage payments over time.

I bought a flat in Battersea in 1991 for 70k at the time the rent was £750/month. It is now worth approx £350k (with a recent fall), but the rent is now £1,600/month. If we applied this to an owner occupied property the owner would be paying mortgage interest on around 100k (I have spent a fair bit on refurbishment) so at say 6% that would be £500/month compared to the rent of £1,600/month. That is why over time paying mortgage interest is better than paying rent.

Orpheo

THE_GHOULISH_CODPIECE wrote: »

You can't live off potatoes and the charity of others for life though. For real nutritional, sustainable growing you need a garden, not a bag of dirt. And as I said landlords won't appreciate you digging up their premises to grow your own dangle berries.

You don't know the difference between charity and appreciation/friendship. If you knew anything about growing then you would know that growers share among friends, that way everyone has a greater variety of produce. I am loving your ignorant furballs as I imagine that if you ever had the inclination to grow anything, codpiece, it would involve little blue pills and somebody getting paid.

molerat

With a mortgage you have the possibility, with a little bit of effort, to make yourself mortgage free. With renting you will always be renting. If the average rent or mortgage is £750 pcm that is £13K per year that I don't have to earn because I took the first option with the added effort.

Orpheo

molerat wrote: »

With a mortgage you have the possibility, with a little bit of effort, to make yourself mortgage free.

Provided that you can keep paying your mortgage and don't keep MEWing.

molerat wrote: »

With renting you will always be renting.

Struggling with this one. Is this a statement of the obvious? Like while eating you are eating, while walking you are walking, while anyverb you are anyverb. I am renting, I wont always be renting, but I will always be renting while I'm renting, I'll give you that.

molerat wrote: »

If the average rent or mortgage is £750 pcm that is £13K per year that I don't have to earn because I took the first option with the added effort.

That you paid off your mortgage is commendable, congratulations. You are a homeowner and no longer a mortgagee, I don't think you represent the majority of mortgagees though. I don't know, personally, of any mortgagees that have. I know plenty that have MEWed for an extension, a car, a holiday or just taken out an even bigger mortgage for a bigger house so that the dog can have a playroom. What can possibly go wrong?

Procrastinator333

chucknorris wrote: »

Mortgage interest is far better spent than rent because the mortgage allows the buyer to lock in at the price when purchased and the buyer will only pay interest on that capital value, whereas rent rises with inflation to explain further:

Mortgage interest merely fluctuate rather than rise with inflation. Rent will rise with inflation, so the renter years on WILL be paying higher rent, although if rents rise in line with wage inflation he will (in real terms) only be paying the same. However a buyers mortgage payments will only rise if interest rates rates rise and in normal times they are just as likely to fall as rise so the buyer will enjoy reduced mortgage payments over time.

I bought a flat in Battersea in 1991 for 70k at the time the rent was £750/month. It is now worth approx £350k (with a recent fall), but the rent is now £1,600/month. If we applied this to an owner occupied property the owner would be paying mortgage interest on around 100k (I have spent a fair bit on refurbishment) so at say 6% that would be £500/month compared to the rent of £1,600/month. That is why over time paying mortgage interest is better than paying rent.

You have gone off on a tangent, that is not the point I was commenting on.

To say that mortgage interest is better because it is a means of owning your property outright compared to renting wrong. Delaying the purchase can mean the home is owned in full at an earlier date than by buying at the first possible moment. E.g. If prices are flat or falling (as they are now) and the rent is cheaper than the mortgage interest (as it is for me now) then I will own a home outright more quickly by delaying the purchase.

To answer your point, yes if prices rise like that again, of course buying wins hands down. I think we still have a gradual grind down over the next 6-24 months before they start the upward trend again. And I will make the most of this stagnation / falls to build a deposit, access higher ltv rates and skip several rungs on the ladder.

molerat

Orpheo wrote: »

Struggling with this one. Is this a statement of the obvious? Like while eating you are eating, while walking you are walking, while anyverb you are anyverb. I am renting, I wont always be renting, but I will always be renting while I'm renting, I'll give you that.

So where will you be living if not renting ?

Procrastinator333

molerat wrote: »

With a mortgage you have the possibility, with a little bit of effort, to make yourself mortgage free. With renting you will always be renting. If the average rent or mortgage is £750 pcm that is £13K per year that I don't have to earn because I took the first option with the added effort.

Yes that is true if all you ever do is pay the rent. But that is not the only option is it.

Rent and save and buy with a bigger deposit. When prices are stagnant or falling and your rent is less than interest expense, you will own a house outright quicker by taking this path.