Buying is £124 a month cheaper than renting

MrRee_2

Pixie5740 wrote: »

Owning your own home doesn't ensure you will have a better retirement. I know a few people who took out interest only mortgages when house prices were at their peak and are now bricking it about how to repay the capital as they approach retirement. It was always going to catch up with the sooner or later.

My mum worked in a mortgage centre for one of the biggest lenders in the UK for years and she processed a lot of applications for people applying for interest only mortgages who were going to put £50 a month away in a cash ISA and somehow this was going to repay all of the capital. :cool:

Those people are/were deluded.

Then there are the people who own their homes outright who sadly need to go into care homes in later life. After decades of stripping and saving, possibly through the days of 15% interest rates their homes must be sold to pay for their care whereas those who rented will have their care paid for by the local council.

You speak of very few people ...... the vast majority are reaping the benefits of home ownership - well into retirement!

ukcarper

Pixie5740 wrote: »

Owning your own home doesn't ensure you will have a better retirement. I know a few people who took out interest only mortgages when house prices were at their peak and are now bricking it about how to repay the capital as they approach retirement. It was always going to catch up with the sooner or later.

My mum worked in a mortgage centre for one of the biggest lenders in the UK for years and she processed a lot of applications for people applying for interest only mortgages who were going to put £50 a month away in a cash ISA and somehow this was going to repay all of the capital. :cool:

Those people are/were deluded.

Then there are the people who own their homes outright who sadly need to go into care homes in later life. After decades of stripping and saving, possibly through the days of 15% interest rates their homes must be sold to pay for their care whereas those who rented will have their care paid for by the local council.

If people do not make effective plans to pay off their mortgage they will not own their property and I don't think anybody is saying that is a good idea.


Not many people go into care homes as soon as they have paid their mortgage and the majority never go into a care home. Also paying for the care home from the value of your home gives you much more choice in the care home you go into.


I can see that renting can be a better option for some people but in the long term buying is the best option for the majority of people. Even if rent and mortgage payments are similar at the beginning rents will increase over time. I am certainly glad I bought my house as although I had a mortgage for over 30 years In the later years my mortgage payments were considerable less than rent and now I am paying nothing and have been for a few years.


It's true that if your income is below a certain level the government will pay your rent but they will only pay the rent for a 1 bedroom flat at the lower end of the scale. You might be lucky and get a council/HA retirement property which will be much better than MrRee says but it is out of your hands. If you have an income you will have to pay your rent yourself which in my case would be in excess of £1200 a month.

Eponym

I am in the process of buying my first home. I'm putting down a 25% deposit and my mortgage payments will be about £400 pm. A similar property in the same road is up for rent for £625 pm, though it does have an upstairs bathroom, which mine doesn't.

Pixie5740

MrRee wrote: »

You speak of very few people ...... the vast majority are reaping the benefits of home ownership - well into retirement!

Some people will benefit, just not everyone.

ukcarper

Pixie5740 wrote: »

Some people will benefit, just not everyone.

I would imagine if you ask people who actually own their home are they glad they bought very few will say they aren't .

Vikaroo

For us this is true we are buying an average sized 3 bed semi in a village location in Stafford and the repayments will be 695 a month initially. Thats with a 5% deposit so the rate we are paying is higher. Flats are 450-500 a month here and 700 plus for a decent house on the rental market. Looking forward to not having to worry in retirement!

MrRee_2

Pixie5740 wrote: »

Some people will benefit, just not everyone.

OK, OK, OK, 1 person out of a group of 1,000 will not benefit .... for whatever reason.

But, the 999 will be sat on the beach in front of their 'House Price Increase' purchased bungalow .......

All the squealing and squirming won't change the fact that, for 99.8% of the population, buying was the very smart choice.

And, going into the future, I see very little sign that home ownership won't still be the golden egg of retirement!

benjus

Even people who got interest only mortgages and didn't save up enough to pay off the mortgage may end up with enough equity to sell up and buy a smaller place outright when the mortgage term ends - depending on what and where the property is and how long they owned it. Quite a gamble though.

If you buy, you might do well out of it or you might not - you have the upside of potentially large capital appreciation, with the downside of having to pay for maintenance of the property, and the possibility of falling into negative equity in the event of a price crash. Renting, on the other hand, is low risk but with no upside - you will never benefit financially from it.

When you consider that landlords can terminate tenancy agreements without any reason and increase rents, renting does not seem very attractive. In fact, the only two arguments for renting I can think of are flexibility and not having enough cash to be able to buy.

BTW, the article doesn't ring true for me - where I live (Blackheath, SE London), I pay £1050 pcm for a decent size 1-bed flat. If I could raise a 27% deposit I would still be paying around £100 more per month on a mortgage - while a more realistic deposit figure would put the monthly payment much higher. I'm in the process of buying somewhere a bit further out in London, so fingers crossed it all goes to plan.

MaxTheCat

MrRee wrote: »

History shows us that 99.8% of people are better off buying - in the long term.

Just 0.2% of people have made a success out of renting.

History is no guide to the future - but I would bet my house on it being repeated again and again ...... oh, hang on a minute, I HAVE!

99.8% of statistics are made up on the spot.

ruggedtoast

Soleil_lune wrote: »

I agree with some people on here; the report in the OP is a load of bolleaux.

When people ramble on about how much better off you are buying if it's eg; £100-£150 a month less than renting, they always totally, totally forget all the maintenance and repairs and upkeep of the property. And there are so many things that you cannot do yourself now, as it often invalidates the insurance if it's not done by a registered professional.

Then there are the additional insurances, and all kinds of hassle that you don't get with renting. You're far more tied down with buying too, and if you have a horrid neighbour all of a sudden you can forget being able to sell! And also if you suddenly become unemployed, you're screwed, because DWP will NOT pay your mortgage, and there's always something in the small print that prevents the insurance company from paying the mortgage, and even when they do pay it, they don't pay it for long.

Buying is not the best option: not these days. I have heard numerous nightmare tales from friends and acquaintances this past few months alone. One friend moved into a house at the age of 52, and took on an extra £150K mortgage just to get a bigger house in a 'better' area, and within weeks, she had to fork out £3K for a new boiler. Another friend of mine has a mortgage and regularly has to pay out a thousand pound a time to have drains underneath the house unblocked and cleaned out, as she is at the bottom of a row of 12 houses and all the houses toilet waste comes to her and stays underneath her house. And the third one this year alone: another friend's husband has lost his job suddenly with no redundancy, and the insurance company have a 90 day waiting time before claiming (I mean !!!!!!?!) So he can't claim til the middle of June! So any savings they had (and there are little,) are going to go to pay the mortgage for the next 3 months. (Unless he suddenly finds a job of course.)

Like I said, buying is NOT the best option these days. I have done both: buying and renting: I choose renting every time. I have seen so many people who are buying, on the verge of a nervous breakdown.

OP, you're living in a different world to many other people. Your situation is NOT typical of the vast majority of people, and I don't know where the hell you live, or what kind of house you live in, but where *I* live, rent is around £500 a month, and that is for a 2 bed in a good area or a 3 bed in an average area. There's no horrible areas where I live, but in a 'rough' area about 10 miles from me, you can get a 3-bed house for £450. And a 4-bed for £500.

As for not having to pay anything when the house is paid for (and that will be when most people are pensioners!) People who rent will get housing benefit anyway at the age of 60 or 65, so it won't cost them anything either. So your 'argument' holds very little water.

Yes. It's a proven fact that house buyers are much more likely to spontaneously combust, be killed horribly by packs of rabid evil little monkeys, or to die in a tragic groin thrusting accident.