Young unable to buy as rents soar

AndyGuil

IronWolf wrote: »

Easy to make assertions without any evidence...

I bought on the same street I was previously renting on.

First example:
Clapham, same street and near the station:
2 bed buy £360,000 http://www.zoopla.co.uk/for-sale/details/33645680
2 bed rent £1387 pcm http://www.zoopla.co.uk/to-rent/details/26744365

Deposit and repayments, (25% deposit is the average FTB amount in London).
15% - 1359 pcm
20% - 1243 pcm
25% - 1110 pcm

IronWolf

AndyGuil wrote: »

I bought on the same street I was previously renting on.

First example:
Clapham, same street and near the station:
2 bed buy £360,000 http://www.zoopla.co.uk/for-sale/details/33645680
2 bed rent £1387 pcm http://www.zoopla.co.uk/to-rent/details/26744365

Deposit and repayments, (25% deposit is the average FTB amount in London).
15% - 1359 pcm
20% - 1243 pcm
25% - 1110 pcm

Your mortgage repayments are way off, best rate on a 15% deposit is 4% - monthly repayment is £1,620 a month plus service charge probably £100 a month, so £1,720 a month - almost £400 a month more than rent.

If rates go to 5% that becomes £1,900 a month.

So clearly you don't save money by buying (unless you have a huge deposit, but then you have opportunity cost)

AndyGuil

IronWolf wrote: »

Your mortgage repayments are way off, best rate on a 15% deposit is 4% - monthly repayment is £1,620 a month plus service charge probably £100 a month, so £1,720 a month - almost £400 a month more than rent.

If rates go to 5% that becomes £1,900 a month.

So clearly you don't save money by buying (unless you have a huge deposit, but then you have opportunity cost)

I used compare the market for fixed rate mortgages. I assure you they are correct.

Let's add a 1 bedroom to this:
Buy - £425,000 http://www.zoopla.co.uk/for-sale/details/29587803
Rent - £1820 pcm http://www.zoopla.co.uk/to-rent/details/33906521

Mortgage:
15% - 1697 pcm
20% - 1519 pcm
25% - 1344 pcm.

(25% is the average deposit for a FTB in London)

Conrad

Masomnia wrote: »

I think most people if asked a few years ago would have said 'Less risk taking by banks, please.'

From 2008 on here I was laughed out of town for suggesting mortgage tightening would lead to many people being frozen out of ownership.


Again UK mortgage market was very well ordered anyway. The vast majority sustain their home. Overly tight regulation is a gift to landlords.


NB: I've mentioned in the past that this freezing out buyers could become a major political issue and perhaps just perhaps this might come to pass.
Still no one recognises that regulation is a major cause of downside for many.

IronWolf

AndyGuil wrote: »

I used compare the market for fixed rate mortgages. I assure you they are correct.

Except they're not, unless you are just using teaser rates

Use a mortgage calculator http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

Conrad

kitty_kins wrote: »

We've just bought (23 and 24). The mortgage on our home is only £25 a month more than our rent was. We have moved from a "2" bedroom coach house (really more of a 1 bed as the 2nd bed is downstairs so we used it as a lounge) to a 3 bedroom 3 storey newbuild town house, which we love!

That being said, we've been saving for years, despite our age, so that we were able to get a deposit together!

I had a call this week from a 30 something childless couple that told me they can easily afford a mortgage as they have demonstrated paying £1000 pm in rent, that they are decent earners pulling in about £4k net pm, bemoaning the fact lenders wont assist them because they have NO deposit.


I relayed the same message, no deposit, no mortgage to which they kept repeating how unfair things are.


They spend all their income and are simply not happy to HAVE to save. They kept saying they want a life, they aren't willing to work hard only to have to settle for a less rewarding leisure time.


I explained if they don't learn the saving habit now, they will soon find themselves aged 40+ still renting, still feeling bitter.


Some people somehow will never except the concept of delayed gratification, setting aside the harvest.

AndyGuil

IronWolf wrote: »

Except they're not, unless you are just using teaser rates

Use a mortgage calculator http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

Not a teaser rate. For example the 25% deposit for the £425k property gets you a FTB mortgage with the Post Office at £1344.76 per month for 24 months.

The extra benefit is your equity builds and your mortgage gets cheaper over its life. The rent will keep on going up.

IronWolf

AndyGuil wrote: »

Not a teaser rate. For example the 25% deposit for the £425k property gets you a mortgage with the Post Office at £1340.13 per month for 24 months.

~teaser rate
A teaser rate is a low, adjustable introductory interest rate advertised for a loan, credit card, or deposit account in order to attract potential customers to obtain the service.

AndyGuil

IronWolf wrote: »

~teaser rate
A teaser rate is a low, adjustable introductory interest rate advertised for a loan, credit card, or deposit account in order to attract potential customers to obtain the service.

Not for the example I just gave unless you mean it is a teaser for 24 months!

IronWolf

AndyGuil wrote: »

Not for the example I just gave unless you mean it is a teaser for 24 months!

Of course it is, teasers on mortgages typically last 1-2 years, after which interest rates frequently double. But I guess that's tomorrows problem right? Or you'll be able to refinance your mortgage at 1.5% interest rates in two years?