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

mccleld

Well, 'interest only' mortgage has certainly worked for us. Where we live, in Surrey in the UK, the rental market was such that it was actually *cheaper* to take out an interest only mortgage (an HSBC 'Homestart Mortgage') than to rent by well in to three figures. The HSBC deal allowed us to fix for 3 years at a little over 4% and to have a 100% LTV (we were 'graduate' customers). Now, three years later, we're supposedly better off not having forked out 36 months paying over the odds for rented accommodation, and our property is (allegedly) worth in the region of £40K more than when we bought it. Even if we only make half or a third of that, it'll have been well worthwhile. Yes, there are some overheads (maintenance, stamp duty, solicitors fees etc), but for us, the interest only option has enabled us a) to get onto the ladder, b) saved us some cash; and c) (will have) given us a hefty deposit for house #2.

DMc - Haslemere

inmypocketnottheirs

me_me20 wrote:

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!!!

I would wish to edit the first statement above to:

Your money is my money and my money is my money!

BTL Landlord V Tenant - Heads I win, Tails you Lose!

There no doubt will be a crash of some sort, but there will then be a recovery. Sit around and wait, then buy when it crashes. With prices in the North West set to increase by 77%, you could be sat around waiting for a long time.

vishpatel

inmypocketnottheirs wrote:

I would wish to edit the first statement above to:

Your money is my money and my money is my money!

BTL Landlord V Tenant - Heads I win, Tails you Lose!

There no doubt will be a crash of some sort, but there will then be a recovery. Sit around and wait, then buy when it crashes. With prices in the North West set to increase by 77%, you could be sat around waiting for a long time.

lol - 77%. so precise with you future telling.

i think you forgot to take your medicine.

Dead_Eye_Jones

Ive never thought renting is a waste because you do actually get something for your money! Its not like you are giving someone £100 each week just for fun, you do actually get somewhere to live, and the maintenance thrown in (the latter was great when the heating failed or the fridge broke, a quick call to the managing agent and it would be sorted before I got home!)

Eventually though I had some bad LL experiences including being chucked out simply cos the LL wanted the house back. At least with a mortgage the house is yours as long as you can find the money, but when renting, a LL can always get you out, by fair means or foul...

I agree with point though, people seem to think they have a right to a house without really having to work for it first - lets just get a huuuuge mortgage! Personally I think people need to put their best MSE skills to use and get saving first. When I first moved out of my folks house I was living in a shared house in London, all bill paid, for about £80 a week, things arent much more expensive now (sadly my peers seem to opt for luxury City flats *sigh*). And even on 16k I was saving hundreds each month, obviously I worked hard and was able to save more, after five years or so I had built up a big deposit that enabled the purchase of a semi in London.

I honestly think jumping in to buy a flat would not have helped me, yes it would have gone up in value but the repayments would have hit my saving ability and the jump to buying the semi with garden would have been out of reach. By being patient and saving I got the family home in London that I wanted, big garden too! The big deposit enables a smaller mortgage and protection against negative equity, infact I want prices to go down so that the next jump to the big detached is even easier! Its win win tbh! If prices go up, my place is big enough for now and eventually ill quit London for a cheaper area and that nice detached place.

By this time I was also old enough to want to be more settled having lived in 5 rented places in 5 years! Renting and sharing is a lot of fun too, your money also buys you flexibility at a time when you may not fully know where you want to live and what you want to do with your life. I dunno, property is very affordable to people like me who are prepared to work and save hard, but if you dont have the cash, why would anyone expect to be able to buy a house? Without any cash I wouldnt expect to even buy a toaster!

lynzpower

I bought a shared ownership flat with my share on an interest only mortgage with a small deposit. After realising the error of my ways Im now selling the place, ( touch wood SSTC) We are selling to rent.

I should come out with a) my deposit back and b) a little extra.

We will stick this in the bank and watch it grow.

In the meanwhile we can rent a flat in a fairly good area ( but not as nice, that much is true) and save a significant amount of money. We will be saving those "savings" in the same bank account for the future. We will find savings from
a) maintainence ( circa 30pcm)
b) buildings insurance & life cover (50 pcm)
c) cheaper rent costs ( saving at least 100pcm)
d) service charges ( 80pcm)

TOTAL ANTICIPATED SAVINGS 260pcm *12 - 3120 per year.

And thats not taking into account
a) needing to go on a repayment mortgage ( ?? not clear but appears to be an extra 300 a month)
b) interest rate rises ( who knows)

I think we are doing the right thing. We might choose to buy later on, we might not. Personally I wanted to sell up while someone was willing to buy, and to beat HIPs, so I didnt have to spend out on that as well.

Id much rather give my money to a BTL LL than the bank. At least the little guy comes out with something.

skooldaze

I was interested in this thread. I've rented for about 10 years nearly since I was a student. And if I had a quid for every time I heard "Dead money", I could buy my own house. In the process of buying at the moment mainly because I would like to think my money is going to pay off my property rather than someon elses. However to add to the thread I can't understand people who treat it as an investment. Its an investment if you have a house already and you buy a cheap one, do it up and sell it to make a profit after a year or so. But not if you buy the house cheap, live in it for a few years and then sell it. Yes the price may go up BUT SO DOES EVERYONE ELSES!

I have a friend who has bought in a area which isn't that great for about a low price. There are going to be investment in that area with a new range of house etc so he is hoping that the house will be worth about about 50k more say in a few years. This might happen but 5 years down the line when he comes to sell and he gets 50k more whats he going to do? Move to a nicer house in a nicer area thats going to be 50k more than it was 5 years ago too.

sozzifer

Hurrah! I've gradually been coming round to this way of thinking - I live in Oxford, and even the cheapest 1 bedroom flat on the grottiest council estate is beyond my means. The way I see it, the market is hugely overinflated - prices are based on what people are prepared to pay, rather than what the property is actually worth. Unless prices fall dramatically, there's no way I'd consider buying now. I'm extremely lucky to be sharing with people I could live with indefinitely, we've found a lovely house, run through a great agency who sort out any maintenance issues immediately. I imagine it's too much to hope that the tide is turning in favour of renting over buying - I blame Maggie Thatcher, personally

Somerled

vishpatel wrote:

lol - 77%. so precise with you future telling.

i think you forgot to take your medicine.

Seeing that it was reported on BBC's Northwest the other day I can believe it. When I arrived in Oldham in 2003 a terrace could be bought for £30,000 now you will be lucky to find one for £70,000. That's a sharp increase in 3 years - plus it is the cheapest area in the region. Rochdale, Bury etc are £20,000 more for similar stock in similar areas.

The average salary means that you have to spend 6.5 times to get any type of first time property. Plus a lot of new council housing stock is being built with 4+ bedrooms - guess who will be the most likely tenants?

Mc4ndy

sozzifer wrote:

prices are based on what people are prepared to pay, rather than what the property is actually worth

I'm no economist but isn't something worth what people are prepared to pay?

Kelinik

Mc4ndy wrote:

I'm no economist but isn't something worth what people are prepared to pay?

I was about to say that value of anything is only what someone is prepared to pay for it.