House ownership - Selling yourself into a lifetime of servitude

Cleaver

debtistheft wrote: »

With mortgage terms now lasting anything upto 30 or 40 years and with houses costing far more than ordinary people can afford, are people blindly and willingly selling themselves into serfdom and servitude to the financial organisations that manipulated the housing market upwards.

Is the tenant the free-est person, unshackled by the false dreams pushed by the banks and their puppets, the politicians? The start of this manipulation was the selling off of the council houses,the continuation is the reduction in the number of homes built.

Most people in the real world don't really give that much of a stuff. They decide whether they want to rent or buy a place, based on a number of factors, and then get on with their lives on the clear understanding that it isn't really all that important which path you choose.

Sefrdom and servitude? What on earth are you talking about?

ninky_2

Cleaver wrote: »

Most people in the real world don't really give that much of a stuff. They decide whether they want to rent or buy a place, based on a number of factors, and then get on with their lives on the clear understanding that it isn't really all that important which path you choose.

Sefrdom and servitude? What on earth are you talking about?

the unconsidered life is not worth living........but it often gets more done.

Cleaver

debtistheft wrote: »

Charging compound interest on money lent is different than sharing in profits. When a person takes out a mortgage to buy a £l00,000 home; by the time the loan is paid off thirty years later he or she has given the holder of the mortgage approximately £300,000. This is compound interest in action and is usury by definition because the homeowner is paying an extra 200,000 pounds for what?

They are paying the extra £200,000 for the privilege for the loan on the house.

But this £200,000 isn't generally linked to inflation, so whilst it's £200,000 at the start it stays at £200,000 for the life of the mortgage.

This has been done to death on here, but let's say there is a house for sale at £200,000 or can be rented for £800 a month. Let's say you want to live in this house for the next forty years. The average rate of inflation over the next forty years is 2% a year, let's say house prices rises with inflation, and the average mortgage rate is 6% over the term. Let's say you pay the mortgage off over 30 years. What will each cost?

Buying = £1210 a month for forty years, so a total cost of £435,600. You won't have a mortgage for the last ten years, and you'll have an asset at the end of the forty year period worth £450,000.

Renting = Assuming our 2% rental inflation you'll spend £587,000 in rent over the forty year period and have no asset at the end.

So it's obvious what the £200,000 is for. It's the interest you pay on a loan which you took out because you believed that it was better to buy an asset than it was to rent an asset. Before anyone jumps on me, I know there's a lot of ifs, buts, maybes and 'yeah, but what about...?' factors with the above example, but it's just a financial example and it's not designed to show that buying is better than renting or vice-versa, as the decision to buy or rent is often not a financial one. But surely it's obvious why people are happy to pay so much interest on a mortgage when you look over the long term.

Anyway Nearlynew, what's with all the new usernames recently?

Cleaver

ninky wrote: »

the unconsidered life is not worth living........but it often gets more done.

I think I'm a bit too thick to understand that point. I was just saying that most people I know either buy or rent a house then not really give it much thought after that. There's loads of exciting and important things going on in life, so why spend much time worrying about how you're paying for a roof over your head?

worried_jim

Cleaver wrote: »

I think I'm a bit too thick to understand that point. I was just saying that most people I know either buy or rent a house then not really give it much thought after that. There's loads of exciting and important things going on in life, so why spend much time worrying about how you're paying for a roof over your head?

Because when you retire if you haven't bought a house you may not be able to afford that roof over your head.

Cleaver

worried_jim wrote: »

Because when you retire if you haven't bought a house you may not be able to afford that roof over your head.

Why do you assume that people who rent won't be able to afford a roof over their head in retirement?

HAMISH_MCTAVISH

Cleaver wrote: »

Why do you assume that people who rent won't be able to afford a roof over their head in retirement?

Pretty sure you already answered that one.....

Buying = £1210 a month for forty years, so a total cost of £435,600. You won't have a mortgage for the last ten years, and you'll have an asset at the end of the forty year period worth £450,000.

Renting = Assuming our 2% rental inflation you'll spend £587,000 in rent over the forty year period and have no asset at the end.

Cleaver

HAMISH_MCTAVISH wrote: »

Pretty sure you already answered that one.....

My personal choice is to buy a house so that I don't have to pay for it in later life. But this doesn't mean that someone who rents all of their life doesn't plan their retirement accordingly.

chucky

Cleaver wrote: »

My personal choice is to buy a house so that I don't have to pay for it in later life. But this doesn't mean that someone who rents all of their life doesn't plan their retirement accordingly.

well if you buy a house you generally have a mortgage for 25 years or even less and have 15+years where you could plan most for retirement.

if you rent for 40 years not only are you dealing with inflation but you don't have that 15+ year window where you can plan adequately for retirement.

if you rent long term you generally have less scope to plan for retirement.

Cleaver

chucky wrote: »

well if you buy a house you generally have a mortgage for 25 years or even less and have 15+years where you could plan most for retirement.

if you rent for 40 years not only are you dealing with inflation but you don't have that 15+ year window where you can plan adequately for retirement.

if you rent long term you generally have less scope to plan for retirement.

Can't disagree with that.