Cheaper to buy than to rent

mrginge

HAMISH_MCTAVISH wrote: »

Excellent point.

Especially now you can get a 25 year fix with interest lower than the average rent.

I notice the crashaholics tend to disappear when confronted with that fact though. Does demolish their whole "but but but, interest rates will go up" argument.:)

You make it sound so easy. Of course you've not mentioned any of the restrictons in place for this product. How about you also tell us who provides this offer and what their current share of the uk mortgage lending market is.

The bloke next door is selling his car. It's only £500. With prices like that i think everyone should get one. After all it's definitely the best time ever to buy a car.

I also note you've not backed up your previous vague and misleading statistic yet either.

thelem

I saved for my deposit by living in a shared house, and I've been able get a mortgage for the remainder by moving to a higher paid job. It might not be the easiest job market out there at the moment, but there are jobs around for people with the right skills, although you might need to invest some of your own time and money in developing those skills.

Graham_Devon

Fire_Fox wrote: »

If you have a laptop and mobile phone (as I do) your house DOES contain modern technology, so modern they are from the 21st century. Neither of these are essential, they are convenient tools

I've seen this argument many times.

Last time I saw it, it was followed up by other money saving advice....such as "go online and switch your energy suppliers, use the cashback sites etc" with the usual "but I bet you are too lazy" comment snuck in.

breadlinebetty

demontfort wrote: »

My advice just ignore the charming but deluded Ms Breadline if you look at her comments she cleary isn't very intelligent, and definitely not the type of person you'd take financial advice from.

And my advice to people about you, Demontfort, is for them to check through your 30 posts to see how you're trying to discourage people from buying :money:

Now why would that be I wonder? lol

Let me guess - YOU can't afford to buy a property of your own (despite your silly claims) and you're trying to talk the market down.

Sadly, you're not intelligent enough to bamboozle - you dopey fool.:D

breadlinebetty

InMyDreams wrote: »

I'm not a crashaholic (I have a mortgage) but since breadlinebetty's comment was directed at me, I'll bite.

The figures in the article were not based on the premium rates of 25 year fixes. They were based on getting an interest rate of 3.82%.



25 year rates are much closer to the 5.91% (the one linked to in this thread had an apr of 5.6%). Can you really rent for less than that?

It's the 3.82% that you simply can't guarantee.

And that still doesn't take into account the 20% deposit you need. As a homeowner, who scrimped and saved and did without for several years in my early to mid+ twenties to save up a 20% deposit (even though I could have got away with less deposit back then), it frustrates me that at the time friends ridiculed me (saying I was only young once and should enjoy life...) and now I'm in the fortunate position I made sacrifices for, people tell me how lucky I was and how easy it must have been and how impossible it is today.

Edit: And yes, I know now people will come back and tell me how much cheaper housing was 'back then' even though I haven't stated what year I bought my first place. I'm not trying to suggest that it's by all means any easier today. It's not. At all. I'm just saying that people have a choice to make. It's amazing what you can learn to live without when you have a goal. And the beauty is, you get used to it. So things I have now (that others consider necessary expenses) make me feel flush! And other things I still don't have, but have got used to it and don't miss them.

InMyDreams (great name, by the way! - subliminal......) let's suppose you could only get a fixed rate at 5.6% - that's STILL far far far cheaper long-term than renting for 25 years would be!:money:

Rents INCREASE all the time - and in 25 years from now they'll make today's rent prices look like peanuts! But a FIXED RATE mortgage of even 5.6% will be PEANUTS in 25 years time - AND you'll own your own place outright! You won't have bought it for your landlord!:T

InMyDreams

breadlinebetty wrote: »

InMyDreams (great name, by the way! - subliminal......) let's suppose you could only get a fixed rate at 5.6% - that's STILL far far far cheaper long-term than renting for 25 years would be!:money:

Rents INCREASE all the time - and in 25 years from now they'll make today's rent prices look like peanuts! But a FIXED RATE mortgage of even 5.6% will be PEANUTS in 25 years time - AND you'll own your own place outright! You won't have bought it for your landlord!:T

I'm not suggesting that buying isn't cheaper, long term. As I said, I have bought. But people are saying how impossible it is to save that initial deposit whilst paying rent, so how would paying an inflated mortgage in the first instance solve their problem? They'd still have to find that regular extra cash from somewhere to start them off. And they'd also be opening themselves up to huge financial risk in the short term if they were allowed to do this with no deposit. Back to square one. Surely better to rent somewhere cheaper than ideal to start with and put the extra money in your own savings account rather than paying it all to the bank on inflated interest. I'd rather line a decent landlord's pocket than a bank's whilst I save up to be able to line my own.

aylithuk

me and the OH are 31 and 32 and been together for 7 years but we've only just got into a position with our working lifes we can start saving for a deposit.

Combind income after tax is 2840 ish
Currently renting and after all the bills(inc food and travel costs) have gone out leaves us with 1675.

We live on 700 and to be fair that could be reduced even more but after 2 years of umemployment we want to enjoy some of it until Christmas.

I do think it possible but we need about £25,000 + fees for 20% deposit because after we have our house the OH is going to reduce his hours so we have some quality of life and the spare money will go into penisons and the rainy day account.

Disclaimer - We have no children and no Car.

So in short depending on life style and wage it's possible. I was not even thinking about saving house in my late teens or 20s because I didn't want to buy on my own and gawd knows I was not even settled down with a job to even consider it.

Idiophreak

00ec25 wrote: »

the same way they always did, they live within their means, so: spend much less than they earn, don't take out credit and do without things others "must" have

When you say "the same way they *always* did, is that *always* including the time when people were given 110% mortgages? Because I'm fairly sure it was a lot easier to save a deposit then...

HAMISH_MCTAVISH wrote: »

No they're not.

Houses are currently 4.3 times full time male, mean, average income, compared to the long term average of 4.3 times full time male, mean, average income.

I find this quite a baffling statistic to be honest...and one I struggle to believe. You don't need to look further than these boards to find *hundreds* of examples of people who had houses triple, or quadruple in value in just a decade during the boom...Now, for your assertion to hold up....you're suggesting that people's wages maintained pace with that? I must have missed a number of years where inflation was running at 25%, or something of that magnitude?

breadlinebetty wrote: »

Just wondering how people are managing to save for a deposit while paying rent?:cool:

It's tough, but there *are* other options. We, for instance, bought on shared equity. Whilst I'm aware that the scheme has its share of critics, it means we're able to save for our deposit whilst buying - and paying around £400/month less than the people who rent the flat next door. Even just saving this difference will mean we get a 50k cash deposit on our next place at the end of the 10 year scheme. Of course, that all depends on interest rates (as to how much we can save each month) and property prices (how much equity we end up with in the flat), but at least it gives us a shot...and, in reality, saving rather more than £400 month should be easy enough in our current situation. It's not for everyone, but for the "want it all, want it now" folks, it's definitely an option.

InMyDreams

Idiophreak wrote: »

When you say "the same way they *always* did, is that *always* including the time when people were given 110% mortgages? Because I'm fairly sure it was a lot easier to save a deposit then...

Yeah, it was so easy for people in 2006, 2007, wasn't it? You could get a 110% deposit on a house without any savings behind you at all. What a great plan that turned out to be...

breadlinebetty

InMyDreams wrote: »

I'm not suggesting that buying isn't cheaper, long term. As I said, I have bought. But people are saying how impossible it is to save that initial deposit whilst paying rent, so how would paying an inflated mortgage in the first instance solve their problem? They'd still have to find that regular extra cash from somewhere to start them off. And they'd also be opening themselves up to huge financial risk in the short term if they were allowed to do this with no deposit. Back to square one. Surely better to rent somewhere cheaper than ideal to start with and put the extra money in your own savings account rather than paying it all to the bank on inflated interest. I'd rather line a decent landlord's pocket than a bank's whilst I save up to be able to line my own.

I don't know which part of the planet you reside, but in the UK rents are far more expensive than mortgages. Surely you know that interest rates are at an all time LOW - hence the low repayments!!

So how is a mortgage inflated when interest rates are soooo low??? Hello??? On top of that, people can take out a fixed rate mortgage (which we've gone through before.....) so while rents will continue to rise, rise and rise - your mortgage repayments will stay the same.:money:

Your suggestion about people finding somewhere cheap to live......there aren't many cheap places around. And those that are cheap are dumps! And if they were to pay rent for a slum (more than a mortgage would cost them!) the little they had left over to put in a savings account wouldn't help them much...because interest rates are soooo low!!!!!:money: