How much can I borrow?

BitterAndTwisted

Your comparison to spending disposable income on drinks or shoes is not fair: while spending that amount the OP has had a roof over their head rather than sleeping in a cardboard box or on a park-bench.

Ten grand in rent over three years is CHEAP!

One of the many benefits of renting is flexibility, and that's not something you will ever get by tying yourself down to a mortgage for the next 25 years.

Still, the OP is living in cloud-cuckoo-land with a third of their annual pre-tax salary in debt with no savings. I'd be losing sleep at night rather than fantasising about obtaining a mortgage with debt as a deposit.

ShALLaX

Okay, substitute drinks and shoes for a hotel. Still worth it?

I agree, £10k over three years is good going in terms of rent (I question if it's accurate), but it's still money lost that could have gone towards an investment coupled with a place to live.

Rather than having "flexibility," I'd rather plan my life out (and have the commitment and dedication to stick out an informed decision) so I don't need the fall-back of such ease to run away when something else (better?) comes along.

However, if it was a case of paying £277 a month in rent for the ability to earn £5,000 a month, it'd be a no brainer. Stick that out as long as you can to earn capital to buy a property outright; this doesn't appear to be what the original poster has been doing, though.

SternMusik

ShALLaX wrote: »

Disagree. Imaging spending £10k on drinks, or shoes, or going to the cinema, or gambling. It's great whilst you're doing it, but after the alcohol is processed, the shoes wear out, after the memories of the cinema fade away and after the gambling losses (assuming you don't win big!)... what's left? Nothing but a lingering feeling of "Imagine what I could have done with that money if I'd invested it..."

Maybe it's just me, but I feel much happier knowing my house is mine and nothing (hopefully) can take that away. Renting gets you somewhere to live immediately; owning gets you somewhere to live immediately (maybe at a slightly higher cost) but also gets you equity in a property that you can sell later, or keep for a comfortable retirement.

As another poster said above, one should compare paying mortgage _interest_, not capital repayments, to paying rent. You could rent and at the same time save money in a bank account to build up financial assets.

Renting provides a larger degree of flexibility than owning property: If work takes you elsewhere, moving is a straightforward case of handing in notice to your landlord. Same if a couple split up, or someone's parents fall ill/need care etc. Also there are no maintenance worries (broken boiler, new windows etc all add up).

I believe that the reason for the obsession with home ownership here in Britain lies with terrible protection for tenants. Short term rental contracts offer no security of tenure, a tenant can be evicted through no fault of their own (S21), and landlords don't have to bring their properties up to decent standard (central heating, insulation, decent flooring etc). There are far too many amateur landlords in the rental market. Personally I would like to see the no-fault S21 notice removed from the law, along with the introduction of increased minimum standards for rental properties (*). This would put an end to amateur landlords and leave the market to long-term investors who have the cash to bring their properties up-to-date.

* Like for example a ban on separate hot and cold taps

BitterAndTwisted

Young people, and many older ones these days, are finding they have to move to find work. That's what I mean by "flexibility" and has nothing whatsoever to do with running away. Whatever you meant by that....

One only has to read threads on this part of the forum for a bit to find people who feel they "have to" let their mortgage properties and rent elsewhere when work circumstances change. And sometimes change extremely quickly.

ShALLaX

SternMusik wrote: »

As another poster said above, one should compare paying mortgage _interest_, not capital repayments, to paying rent. You could rent and at the same time save money in a bank account to build up financial assets.

Renting provides a larger degree of flexibility than owning property: If work takes you elsewhere, moving is a straightforward case of handing in notice to your landlord. Same if a couple split up, or someone's parents fall ill/need care etc. Also there are no maintenance worries (broken boiler, new windows etc all add up).

I believe that the reason for the obsession with home ownership here in Britain lies with terrible protection for tenants. Short term rental contracts offer no security of tenure, a tenant can be evicted through no fault of their own (S21), and landlords don't have to bring their properties up to decent standard (central heating, insulation, decent flooring etc). There are far too many amateur landlords in the rental market. Personally I would like to see the no-fault S21 notice removed from the law, along with the introduction of increased minimum standards for rental properties (*). This would put an end to amateur landlords and leave the market to long-term investors who have the cash to bring their properties up-to-date.

* Like for example a ban on separate hot and cold taps

I don't disagree with any of this. Yes, compare to the interest-only rate. Consider the "repayment" portion the premium of ownership. But how does it affect my argument? The ownership premium is smaller than the interest-only portion. Own your own property and have peace of mind... or try changing society and the law? I know which I'd choose. Is it right? Maybe, maybe not. I have a great amount of sympathy for landlords who do things (mostly?) correctly but still get their property trashed. However, I've always experienced other people's lack of respect for other people's belongings. This being said, I do not condone cowboy lenders in any way, shape or form. If you are going to get into this industry, you must obey the rules.

I don't like your example of "ifs". If you break up as a couple, your relationship wasn't strong enough. If you move due to work, then maybe your prior job wasn't good enough. Sorry, a bit judgemental... but I don't do things unless I'm sure I can commit to them.

ShALLaX

BitterAndTwisted wrote: »

Young people, and many older ones these days, are finding they have to move to find work. That's what I mean by "flexibility" and has nothing whatsoever to do with running away. Whatever you meant by that....

One only has to read threads on this part of the forum for a bit to find people who feel they "have to" let their mortgage properties and rent elsewhere when work circumstances change. And sometimes change extremely quickly.

I don't buy this. In my experience, it usually comes down to poor decisions and fickleness. If you make a proper plan as to what you want to do and are willing to sacrifice (stuff like eating soup for months on end and not spend on anything but the essentials), there should be no need for this.

Is this lifestyle fun? No. But, does it last forever? No. It's been worth it in my experience.

BitterAndTwisted

Those "ifs" you were judgemental about are the main reasons why desperately unhappy people seeking solutions post on this forum.

Just because unfavourable and unforeseen things happen to people does not mean they have been deficient or negligent in some way. Any one of us could lose our jobs tomorrow, even the most highly qualified, competent and experienced.

If these things have never happened to you it doesn't mean they never will.

BitterAndTwisted

ShALLaX wrote: »

I don't buy this. In my experience, it usually comes down to poor decisions and fickleness. If you make a proper plan as to what you want to do and are willing to sacrifice (stuff like eating soup for months on end and not spend on anything but the essentials), there should be no need for this.

Is this lifestyle fun? No. But, does it last forever? No. It's been worth it in my experience.

Hmmm. I can't decide whether you're a fool, totally hard-faced or a troll now.

ShALLaX

BitterAndTwisted wrote: »

Those "ifs" you were judgemental about are the main reasons why desperately unhappy people seeking solutions post on this forum.

Just because unfavourable and unforeseen things happen to people does not mean they have been deficient or negligent in some way. Any one of us could lose our jobs tomorrow, even the most highly qualified, competent and experienced.

If these things have never happened to you it doesn't mean they never will.

Agree, I can't argue against things like job loss, medical issues (if genuine) or any other such similar events. However, I see more and more things that older generations would have worked through without help, such as redundancy, unemployment, relationship issues.

I accept that things such as redundancy can hit any of us, even when we least expect it. However, this is why I save up to have at least 12 months of funds to cover me such an event. I hope you acknowledge that most people don't bother to think this far ahead.

Shifting topic a bit, but this is my gripe with the UK. Who needs to save and plan like this when benefits will give you enough to get by? I used to survive on about £10..£15 a week (in terms of food when excluding mortgage, phone, council tax and petrol - the entire total being under £650 a month) when I was saving as much as I could. Why bother trying to save and be responsible when you know the government will provide everything you need?

[To respond to your last post. I'm not a troll. I have done my fair share of sacrificing. I have lost jobs. I have had to survive on £10 a week. I don't see why you need to resort to assuming I'm a troll. I have worked through it all by myself.]

SternMusik

ShALLaX wrote: »

I don't disagree with any of this. Yes, compare to the interest-only rate. Consider the "repayment" portion the premium of ownership. But how does it affect my argument? The ownership premium is smaller than the interest-only portion.

This very much depends where you are in the term of a repayment mortgage. In the first few years of a 25 year mortgage a large part of the monthly payments are interest, and only very little is capital repayment. I wouldn't call it a "premium" either; it is accumulation of equity (unless house prices fall, in which case you don't build up as much equity by paying off your mortgage). A renter can save/invest money and build up assets that way.

ShALLaX wrote: »

Own your own property and have peace of mind... or try changing society and the law?

Not sure I follow. Owning your property gives you peace of mind from eviction as long as you keep up with your mortgage payments. It doesn't give you peace of mind when the neighbours from hell move in next door or when the council decide to approve an A road bypass only metres from your front door.

ShALLaX wrote: »

I don't like your example of "ifs". If you break up as a couple, your relationship wasn't strong enough. If you move due to work, then maybe your prior job wasn't good enough. Sorry, a bit judgemental... but I don't do things unless I'm sure I can commit to them.

No offence, but how old are you? This is a very optimistic point of view Life has the habit of not working out quite how one has planned it, in my experience. I don't know anyone who got married with a view of getting divorced at a later stage (but I do now quite a few people who have been divorced). I still remember the BBC interviewing this French chap who turned up on his first day of work for Lehman Brothers in London to find they had gone into administration. Jobs can disappear without a day's notice.