lenders warn low-deposit mortgages are over

auroan

How is renting more expensive than buying ? My landlord bought the property I'm in, in July this year for £150K. If I bought it the same time with say a 20% deposit the mortgage would be a good £150 a month more than my rent.

Pimperne1

auroan wrote: »

How is renting more expensive than buying ? My landlord bought the property I'm in, in July this year for £150K. If I bought it the same time with say a 20% deposit the mortgage would be a good £150 a month more than my rent.

Are you thinking that your landlord bought a property and is renting it to you for less than he is paying on his mortgage?

ukcarper

auroan wrote: »

How is renting more expensive than buying ? My landlord bought the property I'm in, in July this year for £150K. If I bought it the same time with say a 20% deposit the mortgage would be a good £150 a month more than my rent.

A couple of examples

http://www.rightmove.co.uk/property-for-sale/property-31680919.html £87.5k
100% mortgage 25 years at 5% £517 per month interest only £365.
http://www.rightmove.co.uk/property-to-rent/property-35383691.html £525 per month


http://www.rightmove.co.uk/property-for-sale/property-34987853.html £159k
100% mortgage 25 years at 5% £940 per month interest only £663
http://www.rightmove.co.uk/property-to-rent/property-20392737.html £850 per month

OptionARMAGEDDON

Our lodger is almost covering the mortgage interest on my 4 bed detached home at the mo. It may not cover the capital, but why should it? With monthly interest under 420 a month, admittedly its not hard, but at the same time, I am pretty sure rates are not going to be up above 2% for the next 5 years....

Thrugelmir

Maybe the whole issue has something to do with refinancing mortgage debt in the wholesale markets.

One analyst estimates that LloydsHbos is currently exposed to around £295 billion of wholesale funding. Of this around 50% is due for renewal within the next 12 months. So no wonder that Horta-Os!rio is suffering from stress and left his post.

So maybe QE3 is a real possibility.

shortchanged_2

Thrugelmir wrote: »

So maybe QE3 is a real possibility.

Has QE2 actually had any effect?

Out,_Vile_Jelly

Pimperne1 wrote: »

Are you thinking that your landlord bought a property and is renting it to you for less than he is paying on his mortgage?

Friends of mine who bought at peak in London are having to rent the property out (without consent to let) at £50 per month less than the mortgage.

Pimperne1

Out,_Vile_Jelly wrote: »

Friends of mine who bought at peak in London are having to rent the property out (without consent to let) at £50 per month less than the mortgage.

There must surely be some who are in this situation but I would anticipate that it would be quite exceptional in relation to the rental market overall. In general terms I would anticipate that if there are any recent BtL purchasers they will have done their homework and the rent will be at least 125% of the mortgage payment (as that is the minimum upon which lenders insist).

If on the other hand they are buying with cash and renting the property out for cheaper than they could otherwise do then that is very public spirited of them.

IveSeenTheLight

Out,_Vile_Jelly wrote: »

Friends of mine who bought at peak in London are having to rent the property out (without consent to let) at £50 per month less than the mortgage.

Key principle

Is it £50 less the the capital repayment mortgage or of the mortgage interest?

Arguably, the £50 loss is lessened by being able to claim it against taxes.

Thrugelmir

IveSeenTheLight wrote: »

Arguably, the £50 loss is lessened by being able to claim it against taxes.

Can only be offset against income from a similar source.