Better to buy than rent!!

Batchy

the.ciscokid wrote: »

Your last post started "I don't understand", you then proceeded to lecture me about pension provisions. In this post you start by saying that you understand all things financial because it is your "speciality, as a chartered accountant", then say that the short term has no significance long term on the purchase of a property. To add to my confusion, you then say you agree with what I am doing, as you recently did the same yourself.

In the short term I am able to save a larger percentage of deposit. As property that I am intending to buy is, at best, stagnating in the short term this is good. You also need to realise that my current rent is less than what I would be paying in interest to the bank, to rent "their" money if you will.

Now, what happens if I increase the amount of deposit as a percentage of the house value I am interested in buying? The answer is the interest rate that I will be charged on renting "the bank's" money will reduce. The difference between a 90% LTV and 80% LTV in terms of interest rate is between 1% and 1.5%. It also reduces the monthly repayment and thus allows me to save this extra cash, in a pension for example (which of course has the added bonus of being tax efficient) or reduce the number of years of repayment. Compounded, these things make a big difference over the life of a mortgage.

In 1 year, I can save approximately the extra 8% to 10% I require to make this difference. So you see, the short term can make a significant difference to the long term.

The "bet" I refer to is simply my belief that property is over priced, and thus will depreciate, making the savings I have talked about above even more significant. It is not "the reason" I am not buying at the moment, there are other factors.

Just to clarify, this is not speculation in property, I will eventually buy a house to live in. This is financial planning, something which I do not claim to be my speciality. If I were a specialist in this area, I might spend a while longer thinking a little more deeply about it.

As a point of reference, your post is very hard to understand financially, so you may want to work on clarity if you are working with clients. Also, just because you are a chartered accountant doesn't make you infallible, try not to believe your own hype.

If your going to quote me, dont take snippets to suit your argument, take paragraphs or sentances.

You quote me out of context completely, if you quote what i wrote then it explains itself... are you a journalist by any chance?

Take a look at post 1, and pull the figures apart, or come up with your own, this is a discussion forum, and thats whats up for discussion.

If you think your landlords property is worth nearly 100% more than 2000 and 20% more than 2006 prices, just because of a loft conversion and extension (over 100k), then carry on believing chap we are not in 2007 anymore.

PS just for the record to clarify my beliefs at this point in time:-
I think buying is the right thing to do... just like you.
I dont think property prices will increase in the short term (0-3 years) Stagnation maybe. Possibly even more falls, if appears that way.
This supports your position and will help you on your way to home ownership.
The point of my post, was for potential buyers not to be scared about losing or gaining a couple of grand here or there in the first couple of years as a stand alone decision maker, they should take a 25 year view.
The 1%- 1.5% you save on a mortgage initially will be for 2 years... maybe, then you can remortgage anyway, with potentially more equity( if its a repayment mortgage) dont blow it out of proportion, as much as a 25 year mortgage is for 25 years, the tie in, can be for a much shorter period.

I wish you well in your quest, dont be bitter.