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Debate House Prices
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Buying a house vs renting
Comments
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I'm currently mortgage free and if we move in the future I doubt we will need to take out another mortgage. This is our third property, from the day of our first mortgage to being mortgage free was seventeen years. If I were to rent my property looking at others in the estate it would cost between £850-£900 a month, our mortgage was £426 a month. If the value of my property goes up it doesn't effect me, if I was renting I couldn't afford the current rents around here, never mind if they increase in the future.
Maintenance, this will not be more than the cost of renting, it won't even come close.
True but you aren't making a fair comparison. If you were to rent you wouldn't have a house anymore, you'd have a pile of cash. You didn't say what your house was worth but if I guess £180k, and you're the kind of person that gets investment returns of 10% a year, then its not such a clear cut decision.Faith, hope, charity, these three; but the greatest of these is charity.0 -
how do they get that £333k asset for renter £23k compounded at 6% is £103k0
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Well I just put in my real life scenario (just accepted a rental).
I put in buying cost of £700K for a 1 bed flat in zone 1.
10 years (which is best guess at how long we'll be there)
£1500 rent (which is the real rent).
Net gain on the LHS was -85,046
Net gain on the RHS was 931,628
Did you use the American calculator or the British one?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
how do they get that £333k asset for renter
They assume that the renter invests the money they would have used for a deposit, plus the extra monthly money if rent is cheaper than mortgage payment, and get 6% on it.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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On the flip side it doesn't account for the fact over 25 years you can invest that extra money you saved on mortgage vs renting and have a substantially bigger pot that just the sum of the differences.
Yes, that's also true.
Buyers achieve positive cashflow from day one versus renting up here, so that extra few hundred a month could be invested.
But that's why I noted you don't need to enter speculative investment values, as ultimately it doesn't matter.
Renters are so far behind that their 'investment' returns are meaningless.What figures do you use for the £800k?
225K house, £1200 starting rent, 10% deposit, 4% interest, 4% HPI, 4% rent inflation.
I was probably a bit generous to renters there.... that's only a 6.4% yield, I've seen rental yields as high as 8% recently up here, and HPI will likely be FAR more than 4% average over the next 25 years, but hey ho....“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
They assume that the renter invests the money they would have used for a deposit, plus the extra monthly money if rent is cheaper than mortgage payment, and get 6% on it.
Did they do that for buyer when mortgage repayments become less than rent which would happen in about 3 or 4 years..0 -
HAMISH_MCTAVISH wrote: »Yes, that's also true.
Buyers achieve positive cashflow from day one versus renting up here, so that extra few hundred a month could be invested.
But that's why I noted you don't need to enter speculative investment values, as ultimately it doesn't matter.
Renters are so far behind that their 'investment' returns are meaningless.
Wow your part of the world sure is strange where rent is so much more expensive than mortgages!225K house, £1200 starting rent, 10% deposit, 4% interest, 4% HPI, 4% rent inflation.
I was probably a bit generous to renters there.... that's only a 6.4% yield, I've seen rental yields as high as 8% recently up here, and HPI will likely be FAR more than 4% average over the next 25 years, but hey ho....
Yes my calculator shows net gain of £660k for buying and net cost of £507k renting so much bigger difference then £800k because the monthly savings on the mortgage compound over time.
After a bit of playing about I found you would have to have mortgage rates of about 13% before renting was cheaper overall!Faith, hope, charity, these three; but the greatest of these is charity.0 -
PasturesNew wrote: »If people get moved on every 2-3 years, that's a significant cost.... and some would sell their first-born to be settled that long without a LL selling the place after their first 6 months.
And some people who buy need to sell again very rapidly, which even higher costs and potentially a below value sales price. It doesn't mean it is common.
I rented for ~5 years before buying, I was lucky that house prices worked out well for us, but renting was definitely the better option for us during that time.Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...0 -
True but you aren't making a fair comparison. If you were to rent you wouldn't have a house anymore, you'd have a pile of cash. You didn't say what your house was worth but if I guess £180k, and you're the kind of person that gets investment returns of 10% a year, then its not such a clear cut decision.
I would have a pile cash, a large amount however would be used on rent, if I were to continue living here to rent our parking spaces would be £2500 alone. If we were to rent out flat for five years assuming rents don't rise we would pay £51k for our home and around £12k for parking. The same term would cost around £23k if the property was mortgaged.
Now, this is renting v buying, if we hadn't have bought in the first place we wouldn't have any money to invest, we also wouldn't be able to afford rent, even in cheaper areas of the country.
Out of interest, if you had a new car, would you sell it, invest the money and rent a similar vehicle?0 -
Wow your part of the world sure is strange where rent is so much more expensive than mortgages!
I agree the difference is more pronounced in some areas like this one, but it's not at all unusual.
As a national average, rent is now more than a mortgage payment on the same property would be, so the same theory holds true in most parts of the UK.
Albeit, perhaps not to quite the same amount every month.After a bit of playing about I found you would have to have mortgage rates of about 13% before renting was cheaper overall!
Yeah, that sounds about right.
Or as I put it previously, you'd have to be barking mad to rent instead of buying...... Up here anyway.:D“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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