Better to buy than rent!!

neas

These calculations are always funny because nobody has a crystal ball but what is certain is... buying a house over 25 years is a no brainer compared with renting.. becase you covertly save towards retirement and hve some land and property to your name. Also buying lets you 'jump up the ladder' but keep paying a similar amount. I could pay 450 quid a month for a 2 bed flat now... and 500 quid mortgage atm for a 3 bed house i own. In 20 years time for arguments sake i will be paying 350 quid mortgage for a 4 bed house and still less than a 2 bed flat.

PasturesNew

Batchy wrote: »

Tax credits are available

Not really. Not for people without kids.

If you take a typical person buying a house they have to pretty much be earning way over any rate that WTC would be paying out for. WTC for single people/couples without kids is very very low.

People who get tax credits pretty much believe "everybody" gets/has them, or can, which isn't true.

sarkin1

Batchy wrote: »

Am in the progress of paying a mortgage at the same time im averaging over £1k per month savings. if you dont earn enough to do that, you will struggle to interest rate movements!

Yes but you started a thread about something completely different

Thrugelmir

Batchy wrote: »

For all those folk who believe by not buying they are making money, its a false dawn... you need to do simple maths.

With the declining activity levels of both house purchase and remortgaging. There are obviously far wider issues in play than pure maths.

Just because punters make a horse an odds on favourite to win a race doesn't guarantee the fact thats its going to romp home in first place.

Batchy

Kohoutek wrote: »

If you get a 0.1% return on your savings and investments you're an idiot.

Let's assume for the purposes of the example interest rates stay the same for 25 years. You get 2.5% after tax, which is doable, especially considering you could fill your ISAs in six years.

After 25 years, you would have made £51,236.65 in interest/capital growth on your £60,000, giving you £111,236.65.

I'm sure buying is almost always better than renting in the long term, but the effects of compound interest is hardly insignificant, is it?

You need to deduct maintenance/insurance too in the buying example too – say 0.5% of the property value each year? That's £25,000.

Can you explain how you expect to get 60k into an ISA in 6 years, at 5100 per annum, with CPI growth per annum added to your allowance per annum... No it would take over 10 years, Thats over 10 years of earning sub 1% per annum Gross until you got it in there... less 40% tax. fair enough when you have 5k its easy to get 2.5%, otherwise its a lot of hassle, and not worth the wait.

The 111k your 60k earns is a hell of a lot less than the expected doubling (reasonable 25 year estimate in price of the corresponding property of which the mortgage for said property is the same as the rent in year 1 for the same property, of which rent will almost certainly go up each year... so thats 200k asset, plus 200k growth.... compared to 60k turning into 111k as well as wasting over 300k on rent for no good reason.

If your living at home with parents and continuing to do so for 25 years, then its a no brainer but ... then thats not what this calculation is comparing too... thats like comparing buying with a mortgage compared to buying with an inheritance really isnt it, which is basically risk free... property is yours from day one! Again no brainer, but we dont all have this luxury

Batchy

Thrugelmir wrote: »

With the declining activity levels of both house purchase and remortgaging. There are obviously far wider issues in play than pure maths.

Just because punters make a horse an odds on favourite to win a race doesn't guarantee the fact thats its going to romp home in first place.

There is more to it, and thats mortgage companies cherry picking best lowest risk customers.

That doesnt mean you have NO chance of getting a mortgage it means its more difficult than it has been!

My point is more about the fact, the time could be really beneficial for most FTBs. If you need to save... save HARD, cut out unneccessary spending, and soon, it all works itself out!

Batchy

sarkin1 wrote: »

Mate if yo drop the deposit to 30k it will still take you 5 years to save and the best rate at 85% will be a tracker around 3.8% on 25 year repayment this will be 880 a month. if rates rise 2% you will be looking down the barrel of 1100 a month.

If you need a KFI let me know

If your saving over 1k per month, what makes you think it will take 5 years to save?

Also, interest rates rising by 200 per month with 2%... if you have been paying rent and able to save 1k per month, what difference does 200 per month make... you can still flex another 8% upwards before any financial pressure starts... whats the likelyhood of that... plus 10% base rates?

I dont know about you but wages generally, but not always I appreciate
, grow in line with inflation. The minimum growth is going to be 100 per month, on a salary enough to cover that level of mortgage affordability which is 1% coverage, so fix for 2 years, expect 2% increase in base over that time and your still breaking even in 2 years when your tracking base by with BOE + 2 to 3%.

Then add a partners wage growth onto that, and your covering the heating and food inflationary increases. The car repayments are still the same so everyones happy!

Forget the tin hats, you cannot go through life thinking if your made redundant that you will never get another job, you have to stay positive and carry on with life.

THE_GHOULISH_CODPIECE

abaxas wrote: »

Incorrect.

The rent is priced due to local market, a LL has no option but either to take what the market will sustain or have no income.

Ie they cant include their costs in the rent as the price is set via the market.

Incorrect.

The rent priced by the local market includes maintenance. I'll explain it simpler for you and in capitals too. EVERY SINGLE LANDLORD IN THE LOCAL MARKET HAS ALREADY PRICED IN MAINTENANCE AND THIS MAKES THE RENTAL PRICE.

Thrugelmir

Batchy wrote: »

There is more to it, and thats mortgage companies cherry picking best lowest risk customers.

Banks have restricted funds to lend. So can afford to reduce risk by lending on sensible terms at profitable rates. Nothing exceptional in this, merely a return to the sensible lending of a couple of decades ago. However this will constrain the housing market until such time as the correction is complete and equilbrium restored.

BOE are pressing for repayment of the £185 billion advanced under the SLS by the end of 2011. So no respite in sight for shrinking mortgage lending at the moment.

chucknorris

THE_GHOULISH_CODPIECE wrote: »

Incorrect.

The rent priced by the local market includes maintenance. I'll explain it simpler for you and in capitals too. EVERY SINGLE LANDLORD IN THE LOCAL MARKET HAS ALREADY PRICED IN MAINTENANCE AND THIS MAKES THE RENTAL PRICE.

He won't understand, believe me save yourself the hassle of trying to explain it to him, it's like getting blood from a stone.