Grrrr If I hear 'renting is throwing money away' from another interest only holder

inmypocketnottheirs

SackYourBoss wrote:

Thanks for this post Martin. There is a lot of negative attitudes towards renting and pressure to buy even though prices have risen so astonishingly high in most areas.

We have a pretty good income but not enough to - responsibly - afford a mortgage on the house we have rented for four years. And we would be foolish to do so anyway. The house price has risen to well over £400,000 and is situated in an acre of land right on the riverside in a National Park, yet we pay rent of £625 a month.

So would you not rather own the equity in the £400,000 house, I'd be more than happy to have a tenant for 4 years paying in to my appreciating asset.

Kelinik

inmypocketnottheirs wrote:

Even experts can be wrong!:eek:

Sorry not sure what you're getting at? My point was that our view was dismissed as 'you don't know what you're talking about' where as whether you agree with Martin or not you can hardly say that to him can you!

tomstickland

inmypocketnottheirs wrote:

So would you not rather own the equity in the £400,000 house, I'd be more than happy to have a tenant for 4 years paying in to my appreciating asset.

The poster was explaining that they can afford to rent a house that's nicer than one they could realistically afford to buy. When you stay in a hotel you don't do a sum on the appreciation of the asset.

nej

Interesting article. We changed to paying interest only when my wife went on maternity leave. Now she is working 2 days a week so we still can't afford to pay the capital as well.

When the rates went up the other day I worked out I could sell my house, pay off my debts and rent and I'd be about £200 better off per month, taking into account a rent of £1200 instead of an interest only mortgage payment of £700 (after clearing debts).

I can't bring myself to do it though!

guppy

Well I'm certainly going to buy rather than throwing my money away renting. I'd be better off burning it than doing that.

Besides I can afford to now with one of these new 999 year mortgages, the bank are going to lend me 27 times my salary too. I can pass on the debt to my grandchildren.

This is all going to be fine though because house prices never, ever fall. Its impossible.

Hmmm...

Anyone remember the early 1990s?

me_me20

Thank you Martin!!!! PLEASE encourage more people to rent! If it makes logical financial sense for them!!!

It is really good news that someone is suggesting the idea as sensible if it fits in with your monthly cash flows!

And is great to hear as we have just purchased our second buy to let property!!!

With regard to the person in the £400k house and paying £625 pcm! I hope I can find someone just like you! Long term tennants are the best!!! And I'm pleased to hear you are happy! Great for you & great for me!!!!

Your money is your money and my money is my money! Do what you want with yours and if your happy with renting, that's great!!!

And for those buying property it's a long term investment not a quick fix! Remember the early 90's? - just about I was at junior school! But I know that house prices crashed but are now worth loads more now than they were before the crash!!!

shredder2001

I think it depends on household size too. As a single person, renting makes a lot of sense for me. I don't need to leave property to children; and renting means I can be mobile and have the sort of freedom you just don't have when you buy.

I always rail against the 'throwing money away' nonsense. I've been renting for over 10 years and my rent is well under half the amount it would cost me if I were to take out a mortgage on a flat of equivalent size. So what is interest on a mortgage then? If that isn't throwing away money I don't know what is! You certainly never see any of it again. And before everyone shouts, 'Sell up and make money!', how many of us actually do?

I intend to move to a nice rental property in a few years time (when some current debts are paid off). I'll be able to rent it much more cheaply than if I were to buy, and the remaining cash I can put into savings accounts with high interest (ISAs etc.), plus increase my monthly pension contribution. Renting means you don't pay maintenance costs; and if you look around (and avoid the letting agents like the plague), you'll find many good deals where council tax, heating and water bills are thrown in too.

But hey, in the UK we simply can't get past this notion that we MUST own. I don't think any of us ever really sit down and work out if it's the financially responsible thing to do, esp. given the increase in the number of repossessions, IVAs, bankruptcies etc. etc. For some, buying is the right option, but only if you can afford it, and only if you've thoroughly thought it through.

I have lots of European friends who think the UK's buying obsession is the funniest thing since Monty Python! Anyway, when you think about it owners are only ever landlords for a while - we're all eventually going to shuffle off that mortal coil and then it becomes someone else's property...such is life...

in_debt_again_but_dealing_with_it

Thank you Martin, oh for the taboo in this country regarding renting!! Us "renties" almost admit it under our breath (oh the shame)! We owned a house for 13 years and hated it (the house) having tried to sell it many times we eventually got a buyer within 6 weeks at the asking price of £43,500 (???? - well it was 2000). We snapped it up and rented from a cousin while we looked around to see what we wanted (the market had been static for at least 5 yrs) big mistake, oh had a near fatal heart attack (aged 39) 2 months later and had to give up his trade, we still hoped that in time we could get back on the "ladder" in time but fate worked against us and the market soared .... we sold in April, by November it would have sold for £90,000 (grrr). We've been fortunate and oh managed to get a job that includes very cheap tied accomodation so we are much better off than if we had a mortgage, however there is still an element of shame attached to not "owning your own home" plus the disadvantage of paying rent forever and ever and having nothing to leave your children. I see it from both sides but really feel that with house prices the way they are there should be no shame or SARCASM about renting - many people have no altenative. Please lets live and let live!!

even_steven

I think the reason people think that renting is just throwing money away is that when you're renting, you're paying off someone else's mortgage, ie you're paying for something you'll never own. Whereas if you're paying off your own mortgage, the aim is to have a house at the end of it. So that once you own it, you won't have to keep on paying rent.

Regardless of what a house is 'worth', I still think it's better to buy than rent. I'm not interested in equity, or profit, I just want a place that by the time I retire will be mine, that I won't have to keep paying someone else to live in when I don't have a salary coming in every week. I'm saving hard now so that I don't need to throw money away on an interest only mortgage, but I'm not about to throw my money away on renting either. And I didn't read anything in Martin's article that would change my mind.

ReportInvestor

Should Martin advise the renters to invest more heavily in a pension as they may have one more expense in retirement than the majority of the population?