SOD IT!!! I'm giving up and having a damn good holiday instead!!!

Melissa177

TheAble wrote: »

Anti renters always rattle on about paying rent is like throwing money away. But what's the difference between paying £6K in rent a year or paying £6K a year in mortgage interest on a £100K mortgage @ 6% (if you can get 6% these days). Plus the fact that when you own you have to pay buildings insurance, repairs, mortgage application fee every time you remortgage etc etc.

The money you save on that by renting you can put into some other investment, and by renting you can avoid tying up your capital.

The difference being that rent is often as much as a mortgage, and that at the end of 25 years, homebuyers have an asset to live in, whereas renters won't.

What will all the renters do when they start to approach retirement age?

PosterBoy77

keeperbear wrote: »

How can it feel like a home when your landlord can legally force you to move in six months time? I feel more homely here in my flat than I ever did in the property that my landlord owned.

After years of renting you end up with nothing to show for your money. After years of paying a mortgage (which you can overpay to reduce the payments) you own your property.

I suspect that someone will talk about renting being cheaper blah, blah. However, trying comparing the cost of renting versus buying over 40 to 50 years. A total no brainer decision in favour of buying. Immediately before I bought my flat in 1996, the rent per month on my old flat was £625. The same sized flat now rents out at £850 per month if you can find one available. In that time my mortgage payments have gone from £720 per month to NOTHING. I now now 36 years old, have no rental costs to pay in retirement and have over 200k of equity. If I rented, I would still be paying £10,200 of rent per annum. That is £17,000 of pre-tax income (at 40% tax) that I no longer have to earn to pay my rent. I also have no crappy landlord.

Well what was best for you may not be best now. You obviously bought at a time when houses were relatively speaking, their cheapest for a very long time, and at the time buying was far better than renting, hence why the whole BTL market took off. You have benefited from buying a property just after the last crash and seen both your equity and your pay rise over that time. However, people who are looking to buy the same house your bought then, now, may be better off renting.

Could you afford to buy your house now, if you were doing the same job as you were when you did buy, on the pay that people doing your job then, get now?

House price increases have far exceeded wage increases over the last ten years, so if you had to start now, you would not get the same outcome as you have had.

keeperbear

mikael wrote: »

You obviously bought at a time when houses were relatively speaking, their cheapest for a very long time, and at the time buying was far better than renting. You have benefited from buying a property just after the last crash and seen both your equity and your pay rise over that time.

Could you afford to buy your house now, if you were doing the same job as you were when you did buy, on the pay that people doing your job then, get now?

House price increases have far exceeded wage increases over the last ten years, so if you had to start now, you would not get the same outcome as you have had.

You make alot of assumptions that just weren't the case. In order to afford to buy way back in 1996, I had to JOINTLY buy with a friend, interest rates were at 13.5% and I experienced negative equity until 1999. I started my first teaching job on around 12k, whilst a similarly qualified teacher would now start on a minimum of 25k. So, yes, in 2007, if I jointly bought with a friend (as I orginally did) and had a deposit, I could afford to buy the same property in the same job.

The situation hasn't changed, but most people will not consider buying with a friend. I would have exactly the same outcome today as I had then. My main aim in 1996 was to own and not pay some fascist landlord rent. If I was looking to buy in 2007, my aim would be the same, and I would do whatever it took to buy.

Quite frankly, it does get on my nerves that certain FTBs (such as the OP) whinge on about not being able to afford a 3 bedroom house with a garden. Who the hell can? I never could, and still cannot. They also complain that 30-40 year olds had it easy and could easily afford to buy a property. This was not the case. Housing in London was expensive in the 1990s, with many people had to jointly buy with friends even then. A joint purchase was the only way for me to get a property, and the same is true in 2007.

PosterBoy77

keeperbear wrote: »

You make alot of assumptions that just weren't the case. In order to afford to buy way back in 1996, I had to JOINTLY buy with a friend, interest rates were at 13.5% and I experienced negative equity until 1999. I started my first teaching job on around 12k, whilst a similarly qualified teacher would now start on a minimum of 25k. So, yes, in 2007, if I jointly bought with a friend (as I orginally did) and had a deposit, I could afford to buy the same property in the same job.

The situation hasn't changed, but most people will not consider buying with a friend. I would have exactly the same outcome today as I had then. My main aim in 1996 was to own and not pay some fascist landlord rent. If I was looking to buy in 2007, my aim would be the same, and I would do whatever it took to buy.

Quite frankly, it does get on my nerves that certain FTBs (such as the OP) whinge on about not being able to afford a 3 bedroom house with a garden. Who the hell can? I never could, and still cannot. They also complain that 30-40 year olds had it easy and could easily afford to buy a property. This was not the case. Housing in London was expensive in the 1990s, with many people had to jointly buy with friends even then. A joint purchase was the only way for me to get a property, and the same is true in 2007.

Telling us you had it just as hard does not wash. Firstly negative equity does not effect your payments, but only the ability to move on. If someone had the choice of buying a house for 50k with 16% interst rates or a house for 200k at 4% rates, they would be far better off with the first option as they have the ability to make a much bigger dent in the remaining capital borrowed by overpaying.

You saying housing in London was as expensive in the 1990's - now it is so expensive even three teachers grouping together would not be able to afford a house.

You have to admit that your current large amount of equity has been received through luck rather than judgement. And there is no gaurantee that there will be the same outcome in future, all we can make decisons on is the facts as they stand now.

PosterBoy77

Melissa177 wrote: »

The difference being that rent is often as much as a mortgage, and that at the end of 25 years, homebuyers have an asset to live in, whereas renters won't.

What will all the renters do when they start to approach retirement age?

Depends what kind of mortgage you are comparing with. Most rents these days are about the same or even less than an interest-only mortgage. Paying an interest only mortgage does not buy you anything. After 25 years you will still owe the bank as much as when you first got the keys to your home.

You need to consider the differential between rent + saving and investment, and a repayment mortgage.

Melissa177

mikael wrote: »

Depends what kind of mortgage you are comparing with. Most rents these days are about the same or even less than an interest-only mortgage. Paying an interest only mortgage does not buy you anything. After 25 years you will still owe the bank as much as when you first got the keys to your home.

You need to consider the differential between rent + saving and investment, and a repayment mortgage.

Sure, but I don't understand this "rent + saving" business. My rent in London was around 600+ per month, which gave me little to save in addition to that. I would rather be paying the interest, have a flat I can do up, and enjoy the equity rise in my property (yes yes, prices go up as well as down; I'm happy to take that risk).

Each to their own, I suppose!

PosterBoy77

Melissa177 wrote: »

Sure, but I don't understand this "rent + saving" business. My rent in London was around 600+ per month, which gave me little to save in addition to that. I would rather be paying the interest, have a flat I can do up, and enjoy the equity rise in my property (yes yes, prices go up as well as down; I'm happy to take that risk).

Each to their own, I suppose!

You are not the only one not to understand the rent + saving business, and I'm sure in 20 years time many other people will find out that an interest only mortgage is nothing better than renting money from a bank, but never owning anything!

If you can rent a flat for £600 per month in London, it sounds quite good value. If you wanted to buy a flat for 200k (probably hard to find at that price) you would have to pay at least £1000 per month for an interst only mortgage and around £1250 to £1300 per month for a repayment mortgage.

At the moment you would be able to rent for £400 per month less than buying. Assuming rents will increase slightly over the next 10 years (they have not increased much in the last ten) you would have been able to save about £300 per month for ten years. With compounded interest you could have saved about 50k without any risk of home prices changing.

If a 200k flat bought today with an interest only mortgage is worth 250k in ten years time then the renter would still not have lost out financially.

However there are other costs such as repairs that tenants do not have to pay but homeowners do.

Those people who buy a home with an interest only mortgage are only going to have a home after 25 years if a) they have saved enough to pay off their mortgage, or b) if the amount of equity they have allows them to buy another home outright. Those who have a 5 bed house may well have enough equity to buy a flat, but those who only have a flat are probably not going to be able to buy anything with whatever equity they may or may not have.

Melissa177

I can see the rent+ saving business working if your rent is considerably cheaper. But this is fairly rare in London and the South East.

I know someone who has rented all their life, and they are now about 50. They don't have any equity at all, and wonder where they are going to live in retirement. Contrast that with a friend who bought his house in Surrey in the 80s for 400K, which is now worth $2M. He's downsizing, and the money will provide for a decent retirement fund.


The 600 a month was my bill in a house share, by the way. The repayment mortgage on my property now is about the same as I could rent it for. I've gone for one of those interest-only loans in the first five years, and put away money in a regular saver account as I calculated I could save more money than the amount that I would pay off the property in the first five years.

Mozette

Rent, buy, whatever suits you.

But to the OP: have a BRILLIANT holiday.

Graham_Devon

mikael wrote: »

Telling us you had it just as hard does not wash. Firstly negative equity does not effect your payments, but only the ability to move on. If someone had the choice of buying a house for 50k with 16% interst rates or a house for 200k at 4% rates, they would be far better off with the first option as they have the ability to make a much bigger dent in the remaining capital borrowed by overpaying.

You saying housing in London was as expensive in the 1990's - now it is so expensive even three teachers grouping together would not be able to afford a house.

You have to admit that your current large amount of equity has been received through luck rather than judgement. And there is no gaurantee that there will be the same outcome in future, all we can make decisons on is the facts as they stand now.

Thats rubbish. No one can tell what the property market is going to do.

So this choice and they had it better off is only apprant due to the current climate. In 6 years time, they might not have had it better off, or they might have had it a lot better off.

Key is, he's still got 200k equity under his belt and no longer pays mortgage or rent. So he could have rented, and saved a bit each month. But now he can save a load each month AND have the equity AND have the home.

How a rental place can be home I don't know. You could be forced to move by someone. Thats not a home. You can't do stuff you want to do, like put a new window in, thats not a home.

Investment properties are also not a home either.

Whichever way you look at it, renting is just literally paying someone elses mortgage. There are positives and negatives to every situation, but I do personally think the positives of owning far outweight the positives of renting.

I can also instead of saving, pay more mortgage off, I can log in online and see how much I owe, then do a transfer, and yet another brick (or in my case, stud wall!!!) is actually mine, and interest will be lower.

Theres so many more possibilities with owning than there are with renting. I do however, like the fact with renting that you don't have so much of a commitment.