MW: IS buying cheaper than renting?

RenovationMan

ruggedtoast wrote: »

Looks like about £630 interest only.

Is that on your current mortgage rate with a decent APR or on one of the punative northern rock type 100% mortgage rates?

I guess the only way to look at this is for each potential FTBer to examine their own finances and see if they are better or worse off buying or renting. Someone with zero savings couldn't get a mortgage anyway and so the discussion is moot. Someone with a decent amount of savings that represented 25% of the initial purchase price of a house could get a decent mortgage rate and so would more than likely be better off owning as far as housing costs are concerned (but perhaps not for other reasons such as job mobility, lifestyle etc.)

As I said, it's difficult to compare owning vs renting on a purely theoretical standpoint because there are too many variables and too many unknowns. If the Potential FTBer feels that s/he is better of renting, then rent. If not, then buy.

Conrad

Did anyone ever meet many wealthy retired tenants? Seems to me most well off retirees have a long history of ownership.

Rinoa

geneer wrote: »

Let the adhominem frothing begin!

Hmmm. MSW still slagging off house buying as a bad idea.

Didn't stop her from buying herself last year though. :rotfl:

Andy_L

IveSeenTheLight wrote: »

I'm finding that you can buy in less than 25 years as the mortgage debt is reducing month on month.
If you increase your mortgage payments in line with annual income increases you take years off the amortization period

and if we have a return to the high interest rates my parents had when I was a kid? As I said, a difficult calculation that requires a crystal ball to know the answer (much like pensions)

Andy_L

Conrad wrote: »

Did anyone ever meet many wealthy retired tenants? Seems to me most well off retirees have a long history of ownership.

But then wouldn't most, current, wealthy retirees have bought their 1st house 40 odd years ago when the buying market was very different? (eg 3x income multiples, MIRAS, high interest rates/inflation/wage rises, rationed mortgages etc)

Really2

Andy_L wrote: »

and if we have a return to the high interest rates my parents had when I was a kid? As I said, a difficult calculation that requires a crystal ball to know the answer (much like pensions)

Did they increase due to high inflation and wage inflation?

In the 70's house prices fell in real terms but not nominally it was all through inflation.

I think it was purch who said he purchased before the high inflation, after it all calmed down he was on 3 times the wage.
His outstanding mortgage debt had remained the same.

Also if you had the same scenario you would expect rents to inflate drastically.

In reality high inflation like the 70's would make owning a far better option than renting as debt is inflated away.

Deflation is the killer for owning not inflation.

The only models that make owning not worth while are ones that forecast virtual nominal stagnation or falling for the whole 25 years and that rates would still be at average levels.
Personally that scenario is unlikely as you would have to look at japan, rates would likely to be at lows for the period if that were the case.

Andy_L

Pimperne1 wrote: »

Oh, and did I mention that you will have an asset after 25 years worth, at today's rate £160k?

But since you need somewhere to live how much use is that £160k equity? (or if the council seize it to pay of care costs?) and how much have you spent making sure its still worth that (insurance, repairs, upkeep, re-decoration)

heathcote123

Rinoa wrote: »

Hmmm. MSW still slagging off house buying as a bad idea.

Didn't stop her from buying herself last year though. :rotfl:

No, funny bit was the paddington flat she sold went up by a rather large margin during her STR status.

Rinoa

heathcote123 wrote: »

No, funny bit was the paddington flat she sold went up by a rather large margin during her STR status.

Indeed. Obviously Geneer empathises with anyone who waits years to buy and loses a fortune in the process. :rotfl:

Cleaver

abaxas wrote: »

Your home is only as secure as you job.

My home is more secure than my job. And that's because my job has enabled me to save enough money to cover my mortgage for about a year if I lose my job.