House ownership - Selling yourself into a lifetime of servitude

robmatic

debtistheft wrote: »

The last time I looked I didn't have to involve a solicitor, estate agent, pay stamp duty and all the other stuff on that Abbey survey. Where does this board get these morons? What a waste of time trying to discuss anything with these idiots.

Look chuckey, a butterfly!!!

I love the way that you can't maintain a coherent argument and have to resort to insults.

Is your position too weak to take into account the fact that renting incurs costs as well?

IveSeenTheLight

debtistheft wrote: »

I see your calculations quickly broke down when it came to how you funded your deposit. According to the people on here, if you rent then you are unable to actually save a deposit. The story ends here for the housing bears apparently.

Firstly, I don't subscribe to categorising people as bulls or bears.

I never mentioned anything about funding a deposit.
I merely made the below three points and backed it up

Originally Posted by IveSeenTheLight
First point: -
The interest part of many mortgages is a fraction of the equivalent rent.

Second Point and more pertanent: -
Each month on the repayment mortgage, the interest reduces and more capital is paid off.

Third point: -
Compare point two two rent and over time, the rent increases, meaning less invested compared to the mortgage capital. Indeed, if the mortgage capital was increased in line with rents, then the amortization period would reduce.

Regardless, if you work out for a 100% of the mortgage, the interest is still below the rent in my examples

debtistheft wrote: »

However, if you are willing to continue.

You have fallen into the deliberate Bull trap where everyone moves into a house and stays there for 25 years and keeps the same mortgage provider, so there are no estate agency costs, mortgagge arrangement fees, redemption fees, solicitors costs, land registry searches, etc. etc.

It's not a trap, it's a direct comparison.
I concede that people do likely move and indeed, many reset their amortization period.
I first bought a flat in 2000 and then moved into what was my family lifetime hoe in 2004.
Two purchases, one move.

I think renters fair far higher in the movement stakes thatn owners

Indeed, if the renter upsizes as well, they pay even more rent

debtistheft wrote: »

I'm sure if your chap did the usual move up a ladder he would soon be looking at £5k to £10k in just stamp duty alone, let along the 1.5% to 3% estate agency fees he would have to pay. Naturally he would be looking at changing his mortgage every 2 to 5 years and would have arrangement fees of zero to £2k to contend with and he would probably pay a few redemption fees on those house sales or remortgages if he didn't time it right. Plus the usual 'admin' charges that can be anything from £10 to £200.

Of course, in Bull Land, everyone just buys a single house with a single mortgage and thats that. :rotfl:

Stamp duty - is reflective of the property value.
Many people can pay much lowe than £5k

Estate Agency / solicitors Fee's - Only applicable to those selling. Of course it can apply, but it's a small percentage of the sell price

Arrangement Fee's - Sure, if re-arranging a mortgage you can be charged a fee, however usually this is as a result of getting a better mortgage deal and actually saves you more in interest. If like at present the deals are not better than the SVR's, then many are not re-mortgaging and there are no fees. So either fee's to reduce the interest or no fees at all win/win

Redemption fee's - this is actually a misonception that it costs you. I actually voluntarily overpaid my maximum incurring a redemption fee. The thing is, the fee was recouped after 4 months because of the lower interest payments because of the reduced capital

Admin Charges - again included in calculation if worth transferring or not.

You seem to be forgetting that most mortgages can be ported, saving on some of the above.

You seem to also be forgetting HPI, which owners are safegaurded against.

getting back to my original points though. I believe they still apply.

Originally Posted by IveSeenTheLight
First point: -
The interest part of many mortgages is a fraction of the equivalent rent.

Second Point and more pertanent: -
Each month on the repayment mortgage, the interest reduces and more capital is paid off.

Third point: -
Compare point two two rent and over time, the rent increases, meaning less invested compared to the mortgage capital. Indeed, if the mortgage capital was increased in line with rents, then the amortization period would reduce.

nembot

ukcarper wrote: »

I've had a mortgage for 37 years in total but it’s all paid off now and I’m living rent-free in a house that would cost me £1200 a month to rent. That’s £14.4k a year I really feel like I’m in servitude especially since my Mortgage has been less than equivalent rent for at least 30 of those years

Congrats, almost there myself... but it's hardly applicable to the people who've bought in the last 5 years is it?

What about the huge increases in IO mortgages, with buyers who have no repayment plan?

If they can't clear the balance at the end of the mortgage term, their options are pretty limited and negate the reason for buying in the first place...

But hey, at least they grabbed the bull by the horns and bought (read... rented off the bank for 25/35 years).

Pete111

nembot wrote: »

Congrats, almost there myself... but it's hardly applicable to the people who've bought in the last 5 years is it?

What about the huge increases in IO mortgages, with buyers who have no repayment plan?

If they can't clear the balance at the end of the mortgage term, their options are pretty limited and negate the reason for buying in the first place...

But hey, at least they grabbed the bull by the horns and bought (read... rented off the bank for 25/35 years).

How on earth do you know what their circumstances are?

We've bought in the last 4 years and we are on an IO mortgage. Last I checked I didn't detail a specific 'repayment plan' to the bank (yes, even in the dark days of 2009 when we remortgaged)

However, even without such a 'plan' we've somehow paid off 50% of the mortgage in that time and,the remortgage dropped our (fixed) interest rate to 3.8% from the original 5.2%.

Accordingly I now pay approx £600 a month to live in a four bed detached house within a short train ride to London. To rent my house would cost £2k a month minimum. And I know this because we are talking about going travelling and letting it for a year so we got an EA round to have a looksee. (oops forgot I was apparently 'tied' to it there for a mo...)

As such, I'm really struggling with this 'owning a house makes you a slave' cobblers. TBH I've never paid so little to live so comfortably!

robmatic

nembot wrote: »

Congrats, almost there myself... but it's hardly applicable to the people who've bought in the last 5 years is it?

What about the huge increases in IO mortgages, with buyers who have no repayment plan?

If they can't clear the balance at the end of the mortgage term, their options are pretty limited and negate the reason for buying in the first place...

But hey, at least they grabbed the bull by the horns and bought (read... rented off the bank for 25/35 years).

Well, people with IO mortgages are in effect renters and do kind of back up the argument that it's better to aim to be in a position where you don't have to pay either rent or a mortgage.

IveSeenTheLight

robmatic wrote: »

Well, people with IO mortgages are in effect renters and do kind of back up the argument that it's better to aim to be in a position where you don't have to pay either rent or a mortgage.

Arguably, IO buyers are in a stronger position than renters as they are less likely to be moved on, can decorate, have pets etc

chucky

debtistheft wrote: »

I live in Devon

that explains a lot about the population of Devon...

Pimperne1

robmatic wrote: »

Well, people with IO mortgages are in effect renters and do kind of back up the argument that it's better to aim to be in a position where you don't have to pay either rent or a mortgage.

Interest Only mortgages. Agree the price now, pay for it in 25 years.

ess0two

chucky wrote: »

that explains a lot about the population of Devon...

Every county has an idiot or 2.

ukcarper

nembot wrote: »

Congrats, almost there myself... but it's hardly applicable to the people who've bought in the last 5 years is it?

What about the huge increases in IO mortgages, with buyers who have no repayment plan?

If they can't clear the balance at the end of the mortgage term, their options are pretty limited and negate the reason for buying in the first place...

But hey, at least they grabbed the bull by the horns and bought (read... rented off the bank for 25/35 years).

Why you say the last 5 years I’m not sure I would say if you bought in 2007/8 you would have got a better deal waiting. I can see Percy’s argument that there is no rush to buy at the moment and depending on your circumstances it might well be better to wait. But there is no way it will be cheaper to rent in the long term.

If you care to look at house prices in 72/73 you will see that in real terms they were nearly as expensive as they are now.