Is this right? I'm only paying £186 off my actual mortgage?

talksalot81

Robert_Sterling wrote:

Renting is DEAD MONEY.

If house prices fall or stagnate, you are very wrong. In fact in some instances you will still be wrong with a growing market.

At this point, I can get a repayment mortgage at 160k. After 2 years I will have paid approximately £15k INTEREST. The same property I can rent for approx £5k per year, 10k total for 2 years. If the house does not grow in value by at least 5k, you have in fact lost money with the mortgage.

In reality it is somewhat worse that that because of the costs associated with selling and the cost of mortgage arrangement. I suspect the real figure could be nearer £10k which means the property needs to grow by at least 6.25% to better the deal I would have got by renting. Absolutely nobody can guarantee that.

regularsaver1

Renting is potential gain for landlords. how is it for tenants?

talksalot81

regularsaver1 wrote:

Renting is potential gain for landlords. how is it for tenants?

I am not entirely sure what you are saying with this but making assumption...

Mortgage is guaranteed gain for mortgage providers. But not so for mortgage holders.

Voyager2002

Robert_Sterling wrote:

Renting is DEAD MONEY.

Just the same as eating!

regularsaver1

Renting is dead money. I don't see how it is a gain for a tenant as someone else is pocketing their money (landlord), and there is no chance of any gain

of course with a mortgage the lender is pocketing interest, but least there is potential to gain equity

The_Bear_6

Renting is not always dead money, it is often wise to rent until you can afford to take on a mortgage that doesn't rape you til the sun sets on your life.

If the amount you spend renting is less than the interest you would have paid then renting is smart money.

talksalot81

regularsaver1 wrote:

of course with a mortgage the lender is pocketing interest, but least there is potential to gain equity

Yes. However you are missing out an important point - with a mortgage your equity is not guaranteed to increase. You could lose out.

In my case having done the full calcs including legal/stamp duty/fees etcs as well as the interest on my savings, the property I would buy needs to increase by >7.5% in order that my total equity is not less than were I renting. In my situation, would you be confident that house prices will increase by that much in 2 years? If yes - how confident? Confident enough to take on the risk of losing out if you are wrong?

tigerminxy

The argument that buying is better than renting assumes the value of your home will increase. This may be the case in the long term but there's all sorts of reasons why renting might be better than taking on a huge debt.

What tends to get missed out in the sums is the costs of maintaining a home as a homeowner. What also gets missed is the non-financial aspects involved, such as the wage-slavery that some people get sucked into because of the burden of debt and how much having a mortgage ties you down.

I say this as someone who got onto the property ladder relatively young and has done well out of it, but I always say people I know that there's a lot to be said for having the flexibility just to up sticks and follow your dreams without having the hassle of thinking about what to do with the burden of a mortgage.

Gorgeous_George

Can we please stop bashing landlords. The returns are not huge after mortgage interest, solicitor's fees, letting agent's fees, insurance, decorating and repair costs are taken out. Any profit left is taxed at the landlord's higher rate.

Edit to add: And voids!

Secondly, rent is not dead money. It pays for a service that the landlord provides. The alternative to renting is paying a mortgage together with solicitor's fees, insurance, decorating and repair costs. Now, add on Stamp Duty, Estate Agent fees.

Mortgage burdens do not suit everybody.



GG

jonewer

Buying a ticket on a train is DEAD MONEY!

We should all borrow huge amounts of cash so we can by our own railways! Plus a second railway. To top up the pension.