Cheaper to buy than to rent

cwcw

InMyDreams wrote: »

BINGO! Thank you! You've explained much better than I seemed to manage. So if you can afford the capital repayments on a repayment mortgage, you should be able to afford to save for that deposit when renting. The true cost comparison is "rent + saving vs repayment" or "rent only vs interest only". But that's not the message that the original article (and breadlinebetty) was trying get across. Both suggest that a repayment mortgage would give you a lower monthly cost than rent alone. I don't believe it except in very rare cases that you certainly can't engineer and even less bank on. (Oh and obviously if you buy outright with cash or put down a large deposit so only have to borrow a smaller percentage of the cost of the house and conveniently ignore the potential returns that money might have got elsewhere.)

I'm sure even you, when you took out your tracker, weren't banking on (or probably even dreaming that) interest rates would be slashed in they way they were towards the end of 2008.

Yes, the comparison is rent Vs the interest element of a mortgage, and in most cases buying is cheaper. Capital repayments are not a cost, the money is going into an asset; a house shaped savings account.

InMyDreams

breadlinebetty wrote: »

You are SO patronising!

Let me tell you - and this has nothing to do with luck or inheritance - but I'd hazard a guess that I'm a darned site more richer than you are. You've revealed a little of your personal finances and I can tell you now.....I've got a lot more equity than you have.

So stop patronising me.......

To be fair, I'm not sure I've been any worse than you. Maybe we'll just have to agree to disagree. Others seem to be doing a better job than me at explaining what I'm trying to get across anyway.

I genuinely don't mean to get your back up... I think healthy debate is good, but I don't want to cause offence so I'll back out now

breadlinebetty

cwcw wrote: »

Yes, the comparison is rent Vs the interest element of a mortgage, and in most cases buying is cheaper. Capital repayments are not a cost, the money is going into an asset; a house shaped savings account.

I wish I could write as succinctly as you - what you just wrote was brilliant.:money:

And I dare say INMYDREAMS bought his house too for that very reason!!

Fire_Fox

InMyDreams wrote: »

BINGO! Thank you! You've explained much better than I seemed to manage. So if you can afford the capital repayments on a repayment mortgage, you should be able to afford to save for that deposit when renting. The true cost comparison is "rent + saving vs repayment" or "rent only vs interest only". But that's not the message that the original article (and breadlinebetty) was trying get across. Both suggest that a repayment mortgage would give you a lower monthly cost than rent alone. I don't believe it except in very rare cases that you certainly can't engineer and even less bank on. (Oh and obviously if you buy outright with cash or put down a large deposit so only have to borrow a smaller percentage of the cost of the house and conveniently ignore the potential returns that money might have got elsewhere.)

I'm sure even you, when you took out your tracker, weren't banking on (or probably even dreaming that) interest rates would be slashed in they way they were towards the end of 2008.

I don't get the impression Breadlinebetty and the article are singing from the same song sheet
"Buying costs’ are mainly the loan repayments, but also include the cost of household repair bills, minor alternations and insurance. This is a difference of £132, or 18 per cent, the widest gap ever recorded by the Halifax since it started to conduct the annual survey in 2008. The report says that buying a house is ‘more affordable’ than renting in all 12 regions of the UK. The biggest gap is in the capital, where a Londoner in a three-bedroom house must spend £1,108 if they own it, but £1,284 if it is rented ...

In 2008 – the year before the Bank slashed the base rate to 0.5 per cent – the situation was completely different. While homeowners were spending £1,048 a month, tenants were paying only £724 per month. Since then, the average interest rate on a loan for a new borrower has fallen from 5.91 per cent to 3.82 per cent. As a result, the average monthly mortgage, including other ‘buying’ costs, has dropped from £1,048 to £600."
http://www.dailymail.co.uk/money/mortgageshome/article-2203559/Why-cheaper-buy-rent-Difference-132-month-bed-house.html

breadlinebetty

Fire_Fox wrote: »

I don't get the impression Breadlinebetty and the article are singing from the same song sheet
"Buying costs’ are mainly the loan repayments, but also include the cost of household repair bills, minor alternations and insurance. This is a difference of £132, or 18 per cent, the widest gap ever recorded by the Halifax since it started to conduct the annual survey in 2008. The report says that buying a house is ‘more affordable’ than renting in all 12 regions of the UK. The biggest gap is in the capital, where a Londoner in a three-bedroom house must spend £1,108 if they own it, but £1,284 if it is rented ...

In 2008 – the year before the Bank slashed the base rate to 0.5 per cent – the situation was completely different. While homeowners were spending £1,048 a month, tenants were paying only £724 per month. Since then, the average interest rate on a loan for a new borrower has fallen from 5.91 per cent to 3.82 per cent. As a result, the average monthly mortgage, including other ‘buying’ costs, has dropped from £1,048 to £600."
http://www.dailymail.co.uk/money/mortgageshome/article-2203559/Why-cheaper-buy-rent-Difference-132-month-bed-house.html

Thank you for explaining it!:)

buglawton

We are back here again. If houses were actually more affordable, why would actual real world property purchases be at an all time low?
http://www.themovechannel.com/news/e9ba09d5-589b/

nollag2006

buglawton wrote: »

We are back here again. If houses were actually more affordable, why would actual real world property purchases be at an all time low?
http://www.themovechannel.com/news/e9ba09d5-589b/

Because banks aren't lending, thereby trapping would-be FTBs in rental and pushing rents up.

Once the lending freeze starts to thaw, then house prices will take off rapidly. Having said that, according to the Land Registry, house prices are already up 5% YOY in London:

http://www.landregistry.gov.uk/__data/assets/pdf_file/0018/23643/hpi-report-august.pdf

breadlinebetty

nollag2006 wrote: »

Because banks aren't lending, thereby trapping would-be FTBs in rental and pushing rents up.

Once the lending freeze starts to thaw, then house prices will take off rapidly. Having said that, according to the Land Registry, house prices are already up 5% YOY in London:

http://www.landregistry.gov.uk/__data/assets/pdf_file/0018/23643/hpi-report-august.pdf

Yes house prices in London are still rising. I sold my house in London in 2007 (right at the peak) and it's now worth £100k more. Of course, I bought again so I haven't reaped the benefits of that rise, but the place I have bought has also risen - though not as much as the one I sold.

Actually, I've noticed how few good properties there are for sale in London. I think people know they're sitting on a goldmine and are staying put if they can....:)

Uplift

It's evened itself out for me.

I was paying £460/month rent. Managed to save up 10k for deposit, fees, solicitors etc.. i'm moved in to my own property and rent is £360/month but added insurances boost it up to £450. my council tax has dropped slightly which takes care of the added water bill i didnt have before. all other bills have remained the same, so i'm not really any better off.. but i'm no worse off either

breadlinebetty

Uplift wrote: »

It's evened itself out for me.

I was paying £460/month rent. Managed to save up 10k for deposit, fees, solicitors etc.. i'm moved in to my own property and rent is £360/month but added insurances boost it up to £450. my council tax has dropped slightly which takes care of the added water bill i didnt have before. all other bills have remained the same, so i'm not really any better off.. but i'm no worse off either

And you'll have something to show for it a few years down the line - or once you've paid your mortgage off :beer: