Actually cheaper to keep renting??!

qwert_yuiop

sinbad182 wrote: »

Quite bizarre how obsessed you seem to be with convincing someone who seems fairly comfortable with their house purchase, that they made a bad decision.

Yes, intriguing. Entertaining for both of us though.

marathonic

qwert_yuiop wrote: »

marathonic wrote: »

5 year fixes are available today at 2.79%. After 5 years, rates can, and probably will, be higher. Your capital owed will be less which will counteract this to a certain extent.



Okay, as a homeowner, I pay a mortgage of £360 (on a 30-year term). The only way this will go up is if interest rates rise (which they will eventually). My mortgage payment won't go up if the house price increases or go down if it decreases.


Of course it won't, but the fact you paid too much though impacts with an excessive monthly cost for 25 years - every single solitary one of those 300 months. Heart breaking, isn't it?

Anything other that looking at the situation AS IT STANDS is merely predictions.

Based on current rents and my current mortgage, I am paying less money out monthly by buying as opposed to renting.

If house prices were to decrease 5% over the next year and rents were to stay the same (as you probably know, rents don't follow house prices as rents have increased during the period where property prices have more than halved), I will be paying more on a monthly basis than I would have had I waited an extra year before buying.

However, I will still be paying less than what I would be paying had I continued to rent.

By waiting, you are attempting to time the market which is damn near impossible. In my opinion, when it becomes cheaper to buy than rent based on current circumstances, it's foolish to argue that buying is a bad idea.

qwert_yuiop

marathonic wrote: »

Anything other that looking at the situation AS IT STANDS is merely predictions.

Based on current rents and my current mortgage, I am paying less money out monthly by buying as opposed to renting.

If house prices were to decrease 5% over the next year and rents were to stay the same (as you probably know, rents don't follow house prices as rents have increased during the period where property prices have more than halved), I will be paying more on a monthly basis than I would have had I waited an extra year before buying.

However, I will still be paying less than what I would be paying had I continued to rent.

By waiting, you are attempting to time the market which is damn near impossible. In my opinion, when it becomes cheaper to buy than rent based on current circumstances, it's foolish to argue that buying is a bad idea.

Yea, probably. There's a sentence in one of your earlier posts which reads as if you bought a new build in 2007, and that's what I was basing this on. One month ago - it's far too soon to comment.

Anyway, if I saw somewhere we both really wanted, I'd buy it. I just wouldn't try to justify it on economic grounds in today's climate.

marathonic

qwert_yuiop wrote: »

Anyway, if I saw somewhere we both really wanted, I'd buy it.

This is the key. Forget about the balance sheet, i.e. the ups and downs in the market which will be there until the day you die. Concentrate on the cost of renting versus the cost of ownership and, if it's cheaper to own, consider buying.

The cost of ownership includes buying and selling fees and stamp duty. For this reason, do not buy unless the purchase meets your needs for at least 5 years. Otherwise, the fees and moving costs will undoubtedly make renting the cheaper option.

In 2007, how long did purchasers really think that a one-bedroom apartment at The Bakery that was about 600sq ft in size and selling for £250,000 was really going to meet their housing needs? One child and they're stuck for space!

qwert_yuiop

marathonic wrote: »

In 2007, how long did purchasers really think that a one-bedroom apartment at The Bakery that was about 600sq ft in size and selling for £250,000 was really going to meet their housing needs? One child and they're stuck for space!

Well, yes, but what fascinates me is the bankers were happy to lend at this level.

It's all very well saying for instance that Shane from Westlife should have stuck to the singing, but he's only bust because those who were doing their day job, banking, were hopeless enough at their jobs to lend to him. Had it not been for them, Shane would simply have lost his money and be back to zero. Thanks to all the money they lent him he's in the hole for 23 million. And they were supposed to know what they were doing. Crikey.

marathonic

Whilst I agree that the banks shouldn't have lent such amounts, the people who lent such amounts are equally to blame.

If my property drops in price by 50% over the next 3-5 years, there'll be noone to blame but myself for the predicament I'll be in - although, in fairness, the banks loan to me was a more responsible one.

Just as PayDay lenders are lending money at rates of 1000%+ - is it the payday lenders fault or the person lending the moneys fault that people get into difficulty after using their services?

People need to take responsibilities for their own actions.

Going back to the 1-bedroom apartment example, the ONLY people who should be buying these is investors or a miniscule minority of owner occupiers (for example, same sex couples with no intention of children or, if they so desired, a retired couple who want to downsize to somewhere with minimal maintenance required).

With this in mind, I've read a recent article about the Obel apartment block in Belfast which was repossessed last November. The bank are expected to take a £22 million hit on this.

With 233 apartments in total and 1/3rd already sold, this equates to a loss of £140,000+ per apartment. As units are available at £75k at the moment (one bedrooms that cost £215k or so in 2007), I'd expect these to drop to £60k or so in the coming years (and yes, I believe the current trend of apartments underperforming in comparison to houses will continue).

At £60k, I'd be very tempted to purchase as a BTL - especially considering the fact that a parking space in central belfast is included and could be rented separately if desired.

qwert_yuiop

Well, yes, but the way I see it, those outfits are ripping off the vulnerable and the desperate. Or the stupid.Even pawnshops are better.

Joe public works at his job all day and has a limited experience of finance. The bankers who lent him the money were every bit as clueless as evidenced by your obel story and a thousand others.
Even the ratings agencies were giving Iceland aaa status about a month before it went broke.

By the way I'd say those obel flats will be 30000 before too long. Nouveau divis

Also the payday loan outfits are actually good at what they do,
Sleazy though it is. The banks aren't.

FrugalMummy

some great tips on here! alot to think about when getting a mortgage. I thin your calculations seem right and I would def go for it. if you know anyone close who has a mortgage maybe sho them too, they can give you a realistic ideas of what to expect in that area and also point out what you maybe missin?

marathonic

qwert_yuiop wrote: »

By the way I'd say those obel flats will be 30000 before too long.

If they went that low, I'd be buying multiple units if I could source the funding.

They include a parking space in central Belfast. For that alone, I know of work colleagues in our Belfast office spending £60+ per month. That alone would cover in excess of half the monthly interest.

Whilst I do feel these apartments will drop, £30,000 is pretty unrealistic. That would be an 85% drop from peak nominally and more than 90% from peak in real terms. If that happened, there'd be a lot more to worry about than house prices.

qwert_yuiop

marathonic wrote: »

If they went that low, I'd be buying multiple units if I could source the funding.

They include a parking space in central Belfast. For that alone, I know of work colleagues in our Belfast office spending £60+ per month. That alone would cover in excess of half the monthly interest.

Whilst I do feel these apartments will drop, £30,000 is pretty unrealistic. That would be an 85% drop from peak nominally and more than 90% from peak in real terms. If that happened, there'd be a lot more to worry about than house prices.

Let's talk about this again later in the year!