UK Households wealthier than ever before

marathonic

Graham_Devon wrote: »

But you CAN'T do that!

You can' only pay interest and own the house at the end of it!

You can't even get an interest only mortgage anymore.

Use any calculator you like. Reality is somewhat different. I actually feel a little sorry for you now as you seem genuinely convinced by your calculations which cannot exist in the real world.

It's desperation beyond all belief to attempt to "prove" renting is more expensive than buying by using products which don't even exist and pretending you own the house without even paying off the mortgage balance.

Your sums above still ignore the capital. Add 80k to your 55k. Theres your cost.

Pure fantasy.

I've passed the point of anger now.... :mad:

Basically, if buying with an IO mortgage works out cheaper than renting and buying with a 30 year repayment mortgage works out at 55k extra over the IO but sees you owning a 115,000 house outright, which is better?

I have two options here - sit up all night to try to make you understand or leave it a day or two until other posters come along to verify my posts.

Either through them posting it more clearly and you understanding it, which I can't see happening, or through sheer numbers agreeing with me and you just taking our word, it's possible that you might see the light.

I've decided which of the two options to take.........

Percy1983

The problem is for the wealth to realised it involves somebody else taking on more debt.

All it does is shift wealth from the young to the old.

IveSeenTheLight

Graham_Devon wrote: »

Can't quite believe you are backing this up ISTL.

You've not looked at the rent v's buying calculator I linked haven't you.
This compares rent versus capital repayment mortgages.

You can even shorten the period you choose to live in said accommodation.

I even wished you happy playing with the figures

Graham_Devon wrote: »

And I'm muddling things. Rigggghhhht.

It would appear so yet again.
No problem, we are used to it.

HAMISH_MCTAVISH

One last try.....

Here's the numbers for a one bed flat in Aberdeen, with a nice simple 100K price (about right anyway) and 500pm rent (also about right, if a little low) to keep it easy to understand.

Assuming a 25 year fix at 5.29% (available today), a 20% deposit, 2% rent inflation and 2% HPI.

Rent vs. Buy Calculator

Purchase Price = £100000

Interest = 5.29%
Deposit = 20% Term of Loan = 25 years
You expect to live here = 25 years Monthly Rent = £500
Rent Rate Increase = 2.0% Expected House Price Inflation = 2%


Mortgage Info

Deposit: £20,000.00
Mortgage amount after deposit: £80,000.00
Monthly Payment: £481.29 (Capital and Interest)

Over the length of time you indicated (25 years), you would have spent £144,386.38 on mortgage payments. This includes Capital & Interest. You will pay £64,386.38 in total interest over the 25 years that you live here.
Using a 2% average house inflation rate over 25 years, your house will increase in value to £164,060.60.


Rental Info

The monthly rent would start at: £500.00 for the first year. Rate of increase is also a factor commonly used to determine an estimated increase of rent every year. We will use an average of 2.0% yearly increase. Over the length of time you indicated (25 years), you would have spent £199,681.80.


So at the end of 25 years, the renter has spent 199K on rent.

The buyer has spent 144K on mortgage and interest, plus 20K deposit, for 164K in total.

If the buyer then sells that house and rents instead, he has 164K in the bank. He has effectively housed himself for free for 25 years*.

The renter has zero in the bank, and he's had to pay 199K to get there.

Simples.









*Yes I know, a bit of maintenance and insurance needs to be factored in, but it ain't going to be significant by comparison to the 170K better off he is by buying instead of renting.

IveSeenTheLight

HAMISH_MCTAVISH wrote: »

One last try.....

Hamish, you've walked into a muddle trap.

Graham is bound to retort that the renter nor the average buyer will stay in a property for 25 year, hence why I linked a calculator which you can choose the length of stay to prove still the buyer is far better off than the renter, possibly unless the buyer moves every 6 months like the renter may have to

marathonic

Hamish, your signature has somewhat alleviated my anger!

IveSeenTheLight

marathonic wrote: »

Hamish, your signature has somewhat alleviated my anger!

HeHe, my signature was adjusted many moons ago to reflect Graham.

Mr._Pricklepants

marathonic wrote: »

I've passed the point of anger now.... :mad:

Take a deep breath, marathonic. It's not worth it.
Many have tried educating Graham, none have succeeded.

Goodnite.

Graham_Devon

Mr._Pricklepants wrote: »

Take a deep breath, marathonic. It's not worth it.
Many have tried educating Graham, none have succeeded.

Goodnite.

No, and even HAMISH is using my maths. And his sums were absolutely fine. No issue there.

Says it all that you all have to run along to support each others bittnerness. I'm on my own here and doing just fine

Not one of you, it seems will actually back marathonic's calcs up.

HAMISH_MCTAVISH

Graham_Devon wrote: »

No, and even HAMISH is using my maths. And his sums were absolutely fine. No issue there.

Says it all that you all have to run along to support each others bittnerness. I'm on my own here and doing just fine

Not one of you, it seems will actually back marathonic's calcs up.

Marathonic is right though, if you're doing a buy versus rent calculation and trying to establish the cost of both, then it's mortgage interest versus rent.

As the capital contributions convert to equity/an owned asset, so are therefore not truly costs, more like savings.