UK Households wealthier than ever before

marathonic

Graham_Devon wrote: »

On a seperate note, if we allow the renter to save the difference between buying and selling, using the figures laid out and not allowing for rent increase (I think this is fair considering the mortgage isn't allowing for interest rate increases?), the renter has a pot worth £108,800.

This is fair. Allowing for increases in both will likely work out better for the renter in the short term and better for the buyer in the long term but good luck to me if I want to start trying to explain that!!!

Graham_Devon wrote: »

So, you'd need to consider that £108k pot for the saver at the end, if we are going to consider the house value at the end for the buyer.

We ignored inflation for the monthly repayment portion because rent inflation will likely cancel out interest rate rises to a certain extent. To ignore inflation for the house itself would, without any doubt, be completely stupid.

The renter, by saving the £154 per month over 35 years has £111,307. To prove your point more, let's add the initial deposit for the house of £28,750 (no growth included here because it's already included in the cost of buying and we can't 'double count' it). The renter has a pot of £140,000 - worth £59,000 in todays money due to inflation at 2% p/a.

The buyer has a house valued at £115,000, also worth £115,000 in todays money.

Graham_Devon wrote: »

And this is where calculations become a little silly. None of it is ever going to work out in this way, and it's highly unlikely either the renter or the saver is going to stay in the same house for 35 years.

I'm not even going to get started on this one because I'm having a hard enough time with the rest of it and this particular topic has been gone over a thousand times....

marathonic

Graham_Devon wrote: »

Makes a large difference to be fair. Maybe if you are going to insinuate I need pictures to understand the maths, you shouldn't ask what difference adding 10 years makes?

Use a 25 year term if you don't know what difference it will make (not asking you to do this for me, just for your if you are interested). You'll see the difference it makes in your own figures.

It makes a difference to the figures - obviously. But the point you wanted proving was regarding the figures when actually paying down the mortgage. The term doesn't make a difference with regards to proving the point.

Paying down over a shorter term will cost more, on a monthly basis - but it will save the buyer interest in the longer term and result in not having any payments, mortgage OR rent, in a shorter time. If anything, it skews things further towards the buyer.

wotsthat

Were we ever allowed to include housing equity in calculations about household wealth or is it still verboten?

Graham, really really didn't like the OP and has done his very best to talk about anything else but the OP and here we are arguing about ISA rates and mortgage length.

It's not muddle; it's an art - Graham I salute you.

marathonic

wotsthat wrote: »

Were we ever allowed to include housing equity in calculations about household wealth or is it still verboten?

Graham, really really didn't like the OP and has done his very best to talk about anything else but the OP and here we are arguing about ISA rates and mortgage length.

It's not muddle; it's an art - Graham I salute you.

I especially like how he appears to agree that it makes sense to buy as a BTL but not that it makes more sense to buy for yourself.

This is when the buyer of a home for themselves to live in has:

• Much lower, if any, arrangement fees;
• Much lower interest rates;
• No management company to pay;
• No voids to build into their calculations;
• No profit to build into their calculations;
• No tax to pay;

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:

HAMISH_MCTAVISH

Graham_Devon wrote: »

On a seperate note, if we allow the renter to save the difference,

Monthly Rent = £500

Monthly Payment: £481.29 (Capital and Interest)

How do you save a negative?;)

IveSeenTheLight

IveSeenTheLight wrote: »

If you want to calculate roughly the difference between buying and renting go here
http://www.greengem.co.uk/Rent_V_Buy/rent_v_buy.php

Happy figure playing

Graham,
4th or 5th time now I've linked the above.
Have you looked at the calculator?
Have you played with the figures?

wotsthat

IveSeenTheLight wrote: »

Graham,
4th or 5th time now I've linked the above.
Have you looked at the calculator?
Have you played with the figures?

I plugged in a few numbers relevant to me - over a lifetime I'll be up the best part of £1m.

However, the calculator is utterly useless because out of that £1m I'll need to replace the kitchen a couple of times, some roof tiles as well and it's not been taken into account. A lot of that £1m is HPI and so just paper and the rest is imputed rent which I refuse to acknowledge as a concept.

Graham_Devon

Some of you need to do a little growing up

marathonic

Graham_Devon wrote: »

Some of you need to do a little growing up

Some might argue that this is the only valid argument that you've made throughout the entire 9 pages of this thread...

Mr._Pricklepants

IveSeenTheLight wrote: »

Graham,
4th or 5th time now I've linked the above.
Have you looked at the calculator?
Have you played with the figures?

That calculator has a blatant V.I.
It defaults to a yearly 4% HPI
We all know something like -20% is more realistic, which tells me I'd be 546K better off renting.
Time for a panic sell me thinks, I just hope i haven't missed the boat.