Better to buy than rent!!

ag359

Batchy wrote: »

Hi Guys,

Just thought id do a quick calc

House worth £200k, or 750pm rent at todays values

Disregard inflation, even thou it plays a HUGE part in HPI and the fixed part of buying a house, etc.

Total cost of mortgage 140k with 60k deposit at around 3.9%

Total payments 283k House still worth 200k in 25 years (with no House Price Inflation, hardly likely and more like worst case scenario) in 25 years

Total cost 83k (after deducting house proceeds in 25 years time)


Renting same house today for 25 years £750 per month (with no inflation lol...)

Total cost £225k

Big difference

Wow, it's astonishing that people with obviously such strong views (on both sides of this 'debate') have no ability to make a proper like-for-like comparison.

Batchy

Thrugelmir wrote: »

Current facts -

House prices - 1 year flat
- 3 years down 16.8%
- 5 years down 1.8%
- 10 years up 93%

As house prices doubled between 1999 and 2003 alone. Would appear that the long average is in fact declining and undergoing a correction.

I can't agree with those figures... as I you have not referenced them to any particular index.

However, I asked a question, about in 25 years time.

answer me these questions, do you actually believe that in 25 years time that house prices will be worth less than they are now.

That your CASH ISA will outperform inflation

And that rents will not attract some form of inflationary increase annually over the next 25 years?

Simple and fundamental questions to be honest!:rotfl:

Batchy

ag359 wrote: »

Wow, it's astonishing that people with obviously such strong views (on both sides of this 'debate') have no ability to make a proper like-for-like comparison.

you can only compare one method with another, and I was using NON like 4 like unrealistic assumptions in the FAVOUR of the renters, IF i do it like for like, the scenario is even LESS favourable for renters :-(

No point comparing buying a house with leasing a car, or is it?

the.ciscokid

Batchy wrote: »

you can only compare one method with another, and I was using NON like 4 like unrealistic assumptions in the FAVOUR of the renters, IF i do it like for like, the scenario is even LESS favourable for renters :-(

No point comparing buying a house with leasing a car, or is it?

Maybe I missed it, and apologise if I did, but you don't appear to be including interest on the 60k deposit that the renter wouldn't have sunk into the house.

ag359

the.ciscokid wrote: »

Maybe I missed it, and apologise if I did, but you don't appear to be including interest on the 60k deposit that the renter wouldn't have sunk into the house.

bingo.

It's really very simple. You either rent a property from a landlord, or you rent money from the bank and forego interest on your equity/deposit. Usually the interest that you pay on your mortgage and forego on your equity roughly balances what you would pay in rent for a similar property (obviously this varies slightly according the state of the rental market, returns on savings/investments etc, but BROADLY speaking holds true).

What makes the difference between buying and renting is appreciation or depreciation in the value of the house. If you think house prices are on the way up, then buy one; if not, rent.

THE_GHOULISH_CODPIECE

ag359 wrote: »

bingo.

It's really very simple. You either rent a property from a landlord, or you rent money from the bank and forego interest on your equity/deposit. Usually the interest that you pay on your mortgage and forego on your equity roughly balances what you would pay in rent for a similar property (obviously this varies slightly according the state of the rental market, returns on savings/investments etc, but BROADLY speaking holds true).

What makes the difference between buying and renting is appreciation or depreciation in the value of the house. If you think house prices are on the way up, then buy one; if not, rent.

In otherwords all those ghouls who have been renting since HPC's inception in 2002 have lost out. 8+ years waiting, 1/3+ of a landlords mortgage paid off in full. No wonder they are angry, especially the ones who were financially advised by that horrendous website to STR.

ag359

THE_GHOULISH_CODPIECE wrote: »

In otherwords all those ghouls who have been renting since HPC's inception in 2002 have lost out. 8+ years waiting, 1/3+ of a landlords mortgage paid off in full. No wonder they are angry, especially the ones who were financially advised by that horrendous website to STR.

I don't think anyone would dispute that renting has been worse than buying over the last 8 years. But that doesn't say anything about what will be better over the next 8 years (I don't have a strong opinion one way or the other, just pointing out that past performance is no guide to future performance...)

ag359

THE_GHOULISH_CODPIECE wrote: »

In otherwords all those ghouls who have been renting since HPC's inception in 2002 have lost out. 8+ years waiting, 1/3+ of a landlords mortgage paid off in full. No wonder they are angry, especially the ones who were financially advised by that horrendous website to STR.

PS: not quite right to say 1/3 of landlord's mortgage paid off. Under the comparison I set out in my post, it would be *interest* on landlord's mortgage paid off for 1/3 of the term. Not the capital.

the.ciscokid

THE_GHOULISH_CODPIECE wrote: »

In otherwords all those ghouls who have been renting since HPC's inception in 2002 have lost out. 8+ years waiting, 1/3+ of a landlords mortgage paid off in full. No wonder they are angry, especially the ones who were financially advised by that horrendous website to STR.

You appear to have some rather serious issues with other peoples points of view. For your own sanity, I suggest you stop reading those forums, if it displeased you so much. You sound like a rabid frothy mouthed nutcase.

Kohoutek

Another element to add to the argument is whether you're buying a freehold or long lease. Even a 99 year lease is a wasting asset...