Actually cheaper to keep renting??!

Tixy

StuC75 wrote: »

Although quite how they have arrived at those figures is a little confusing as no mention of rates used (although better ltv ratio would give better deals)..

OP has looked at the barclays website for the cheapest monthly payment at £200k and the various deposit amounts and then just multiplied that by 300 to give the total mortgage amount.

Tixy

You also haven't factored in to account that you end up with a fully paid up house in 25 years in column B, and then could in theory have 4years to save the £1181 a month (so a pot of £57k in savings), compared to column F where it would take you 29years to end up with a fully paid house.

Reue

Tixy wrote: »

OP has looked at the barclays website for the cheapest monthly payment at £200k and the various deposit amounts and then just multiplied that by 300 to give the total mortgage amount.

Thats correct. i know its crude and doesnt take into account any % changes or remortgages but i thought was a good basis for comparison.

martinsurrey

A simple way to look at it.

Dont worry about the next 25 years, look at the next 1-2 years

with a £20k deposit you are looking at a 90% LTV mortgage, which is around 3.5% (just for ease of calc)

on a £200k home, 180k mortgage interest at inception is £6,300 a year, or £525 a month.

so you are better off by £170 a month buying over renting right now (ignoring fees and other costs), since mortgage interest is akin to rent

but you'll lose around £40-50 a month interest on your £20k cash by buying (asuming 2.5% after tax), so your down to £120 a month better off, less maintanance fees and so on, and you are probably still better off buying now over renting but not by much, in year one, but by year 4-5 when you have reduced your LTV through savings, you will be significantly better off.

But home ownership is about more than money, its about a home, its about being able to paint the walls, and no fear of a S21 dropping through the letter box, and its about never having to speak to a letting agent ever again (wihc is worth more than you think!

Reue

ukcarper wrote: »

You are increasing deposit (saving) by £10k a year so you are paying rent of £695 a month and saving £830 a total of £1525 a month if you paid that off mortgage it would reduce term considerably and therefore overall cost.

In fact at 6% a 15 year mortgage would be about £1520 a month a total cost of £275k + £20k deposit.

I hadnt thought of that at all actually...

So it may afterall be better to buy at a lower % but much shorter mrtgage term?

StuC75

Tixy wrote: »

You also haven't factored in to account that you end up with a fully paid up house in 25 years in column B, and then could in theory have 4years to save the £1181 a month (so a pot of £57k in savings), compared to column F where it would take you 29years to end up with a fully paid house.

This is the key point OP as making a 30year plan (5rent plus 25 mortgage) so these options have 5/4/3/2/1 remaining at the end where is mortgage \ overpayment free for which they could save separate (presently 1,528 per month rent and savings - this put way for 5 years at the end is 90k if buy now)..

Which as a coincidence if applied to all the scenarios can bring the total costs back down to the same figure in net terms..

andy.m_2

You can't come on here and not preach the importance and security of home ownership

Yes you have made some minor flaws in your maths, yes you haven't put your asset in column B.
But you havent included capital maintenance either, you haven't included flexibility and the like.

We are surely at a tipping point whereby it is close to being to cheaper to rent rather than buy when you consider the 25 years of interest paid out to own the asset outright...

Rich__101

I'd say the calculation is more simple than that. The two important figures are:

1. Your monthly Rent at £695.
2. The monthly interest payable on the mortgage (effectively the rent you pay the bank to live in your own home).

At the point where 2 is less then 1 then it is worth buying the house before that you are better of renting.

For example at the moment you'd need to borrow 180k with a 10% deposit and your mortgage rate would be maybe 4.7%ish something like that (I don't know i'm guessing), so monthly interest of perhaps £700 just under. But this will reduce as your equity increases and it would seem you can afford to overpay.

Once you have enough to pay for the stamp duty and fees maybe it would be worth going for it. Factor in the non financial benefits of your own place and probably isn't even a close run thing.

Reue

Thank you for all your comments guys. Some really good points I hadnt considered (Especially the bit about owning a house in 25years + 5 years saving afterwards compared to owning in 30 years with 0 years saving after).

I think most people have agreed that it would be best to go for a 10% deposit rather then wait and get a 25% deposit.

martinsurrey

Reue wrote: »

I think most people have agreed that it would be best to go for a 10% deposit rather then wait and get a 25% deposit.

I wouldnt go that far.

I think the key point is that financially, renting and buying might not be too much different than buying for you (in the very short term).

but home ownership is about more than money, its about lifestyle, and for me and my lifestyle

owning >>>>>> renting

but only you know you well enough to make that call.