mortgages are dead money!

roger56

If you rent, you'll be paying it for life.
Mortgages come to an end and you'll own the property to live in "rent free".
(well hopefully.....!)

Beate

I think it all depends how much you can afford. If you have enough savings and a well-paid job, by all means invest in a mortgage for a house. The value gain will not be the same everywhere but for example where I live (Docklands area of London), house prices have gone up 233% in the last 20 years, so a house which you could buy back then for under £100k, could now be worth £300k.

On the other hand, if you can't afford to buy your house outright, the mortgage interest will add a hefty sum to the price over the years, not to speak of all the insurances and repairs you have to shell out for. And if you don't keep up your repayments due to unemployment or ill health or whatever, you risk losing the house altogether. A lot of people in this country don't think twice about buying a house even if they can hardly afford the monthly payments, and banks do nothing to discourage them (see 5 times your salary mortgages etc.).

I think everyone has to weigh up the risks for themselves.

ollyshaw

roger56 wrote:

If you rent, you'll be paying it for life.
Mortgages come to an end and you'll own the property to live in "rent free".
(well hopefully.....!)

Yes, but on the assumptions given on the first page at the end of 25 years you can buy the house and have £300k in the bank!

Whether you believe the assumptions or not is another matter. However it certainly is arguable that renting and placing the change from a potential mortgage in savings, stocks, gold, oil etc will leave you with assets greater in value than the property you live in.

I agree with some of the other posters here, rent when the time is right, buy when the time is right!

Olly

BTman

roger56 wrote:

If you rent, you'll be paying it for life.
Mortgages come to an end and you'll own the property to live in "rent free".
(well hopefully.....!)

Yes. Because you really need that house once you are dead!!

saxy1

'You'd be saying that is the average price was a billion quid. Clearly, you don't have an eye for figures.

I am purely commenting from personal experience, not trying to baffle anyone with Bull***t!! :beer:

Thanks

meanmachine_2

roger56 wrote:

If you rent, you'll be paying it for life.
Mortgages come to an end and you'll own the property to live in "rent free".
(well hopefully.....!)

Is this correct?

Doesn't the govt force you to sell to pay for sheltered accomodation, whereas renters get the same provision for free?

If that's true now, lord knows what it'll be like in 25 years.

No doubt homeowners will have to surrender their asset and be forcibly put into a home. It wouldn't surprise me.

They already steal the property off you once you die, thanks to inheritance tax.

Snow_Dog

So, to sum up devils_advocates arguments for renting is better:-

House prices will remain constant for the next 25 years.

Rent will not rise for the next 25 years.

Also manages to studiously ignore what happens at the end of 25 years when the mortgage is paid off and the homeowner is living rent free.

Methinks someone has been to the HPC.co.uk school of skewed argument economics.

seraphina

What happens if you put your savings in the "inflation-busting" NS&I investment vehicles?

I'm not sure if I understand/remember correctly but aren't there NS&I bonds that promise to return more in real terms and account for inflation?

So if you rented and put the money you saved into one of these, then at the end of 25 years or whatever, you wouldn't have lost out to inflation rises?

I could be talking rubbish though and look forward to being corrected by someone more knowledgeable than me:rotfl:

Gorgeous_George

I agree with the OP. Buying that house would be daft when a similar can be rented so much cheaper.

The reason that this situation exists is because house prices are high and rents are relatively low. In 5 years time houses may be cheaper but I doubt rents will fall.

The LL of the rental property is probably covering his costs because he will have bought when houses were cheaper. Selling now would attract a huge CGT bill. The LL may not be looking at his yield against today's property prices but on the price that he paid. When comparing his investment against other investments he will look at the cash the property could give him after CGT etc., and not the market value of the house.

Long term, the LL will be happy but that doesn't mean the renter should not be happy too. By renting, the renter misses out on stamp duty, EA fees and all the other costs associated with home ownership.



GG

devils_advocate

Snow_Dog wrote:

So, to sum up devils_advocates arguments for renting is better:-

House prices will remain constant for the next 25 years.

Rent will not rise for the next 25 years.

Also manages to studiously ignore what happens at the end of 25 years when the mortgage is paid off and the homeowner is living rent free.

Methinks someone has been to the HPC.co.uk school of skewed argument economics.

Snow Dog

I suggest that you re-read my posts. If, at the end of that exercise, you still believe that my arguments are as you summarise, I am afraid that there is nothing I can do to help you understand the point I am making, even if you believe it to be wrong.

And although I am familiar with the HPC site, unfortunately my university qualifications in economics were awarded long before the previous 'crash'. That's the one in which I, as many others did, tried to sell in a falling market. :rolleyes: