HPC thread of the week

mwpt

cells wrote: »

Going forward, mortgages are still cheaper than rents even if you lock in a more expensive 5 year fix

You need to qualify that statement. I can show you many London house examples where the mortgage would be far higher than rent. It also depends if you mean the traditional 25 year mortgage, 30 year, or the newer 35 year mortgages. Obviously they get "cheaper" (monthly) as you extend the period.

You can however find many areas where the mortgage is lower than the rent. I bought in one of those areas. My mortgage is 3/4 what the rent would be.

thequant

mwpt wrote: »

You need to qualify that statement. I can show you many London house examples where the mortgage would be far higher than rent. It also depends if you mean the traditional 25 year mortgage, 30 year, or the newer 35 year mortgages. Obviously they get "cheaper" (monthly) as you extend the period.

You can however find many areas where the mortgage is lower than the rent. I bought in one of those areas. My mortgage is 3/4 what the rent would be.

We are not talking about total mortgage payments, but the interest component only. The other part of the payment doesn't disappear into the ether but builds up like a regular savings account. So mortgage length is irrelevant..

mwpt

thequant wrote: »

We are not talking about total mortgage payments, but the interest component only. The other part of the payment doesn't disappear into the ether but builds up like a regular savings account. So mortgage length is irrelevant..

If you say so champ.

thequant

mwpt wrote: »

If you say so champ.

Not just me, but my mortgage balance which reduces each month. Even without HPI that is all real cash which would come back to me should I decide to rejoin the rentier classes :j

westernpromise

cells wrote: »

re mortgaging can be expensive especially if you jump lender I cant be bothered to go dig up the file but from memory the last one i did which was from one lender to another

solicitors ~£450
Old mortgage release fee ~£250
valuation and booking fees ~£600
Product fee on mortgage £2000

People can look at the headline interest rate figure on 2 year rates but forget they may need to jump lenders 5 times and those fees are not cheap plus the time and agro.

That does not mean 2 year rates are not worth it, just factor in everything

Clearly so if you have a smallish mortgage. A £2k fee on a £100k 2-year fix is 1% on the interest rate.

When it's over £500k and over 10 years it is less significant but yes, one drawback of a small mortgage is that the interest rate is relatively higher.

wotsthat

mwpt wrote: »

You need to qualify that statement. I can show you many London house examples where the mortgage would be far higher than rent. It also depends if you mean the traditional 25 year mortgage, 30 year, or the newer 35 year mortgages. Obviously they get "cheaper" (monthly) as you extend the period.

You can however find many areas where the mortgage is lower than the rent. I bought in one of those areas. My mortgage is 3/4 what the rent would be.

Of course, there's a danger in comparing a repayment mortgage with a rent. They're buying different things - rent buys you monthly accommodation whereas a repayment mortgage is also buying an asset.

Some can't mentally get the idea that assets can be converted to cash so will over bias decisions by comparing month 1 mortgage with month 1 rent. Rent less than mortgage does not necessarily mean it's cheap.

A different way to look at it (for the asset deniers) if a mortgage payment is more than rent is to realise that a monthly mortgage pays for more than one months accommodation (repayment mortgages end). There's a whole lifetimes accrued accommodation costs on your account - repayment mortgages pays this future liability in advance.

Rent buys you a single months digs.

HPC'ers are running the same calculations I assume but they calculate the predicted crash will reduced the accommodation accrual by more than the rent they invest in project crash.

Crashy_Time

cells wrote: »

i was a member of a different forum credit crunch which discussed housing quite a lot and during 2011-2012 I also said buying makes a lot of sense as mortgages are half the price of rents.

most disagreed and like hpc said london prices were too high already.

3-4 years on and London prices have boomed in some cases nearly double what they were.


Going forward, mortgages are still cheaper than rents even if you lock in a more expensive 5 year fix

Do you think buying in "most of the rest of the country that is cheap", or however you put it, around 2007 made sense?

Crashy_Time

wotsthat wrote: »

Of course, there's a danger in comparing a repayment mortgage with a rent. They're buying different things - rent buys you monthly accommodation whereas a repayment mortgage is also buying an asset.

Some can't mentally get the idea that assets can be converted to cash so will over bias decisions by comparing month 1 mortgage with month 1 rent. Rent less than mortgage does not necessarily mean it's cheap.

A different way to look at it (for the asset deniers) if a mortgage payment is more than rent is to realise that a monthly mortgage pays for more than one months accommodation (repayment mortgages end). There's a whole lifetimes accrued accommodation costs on your account - repayment mortgages pays this future liability in advance.

Rent buys you a single months digs.

HPC'ers are running the same calculations I assume but they calculate the predicted crash will reduced the accommodation accrual by more than the rent they invest in project crash.

Finding yourself in negative equity means you were renting all along.

wotsthat

Crashy_Time wrote: »

Finding yourself in negative equity means you were renting all along.

How many people with paid off mortgages are in negative equity?

Crashy_Time

wotsthat wrote: »

How many people with paid off mortgages are in negative equity?

How many people with paid off mortgages make the mortgage payments you were comparing to rent payments?