Is renting really dead money compared to buying?

Cubanista

Hey,


People often talk about renting being dead money, but is this entirely true? Unless a person can afford to buy outright, how is paying a mortgage much different to paying rent?


Is renting not an asset because a person can move on short notice when and if they decide, not stuck in one place and are not paying out extra fees if that person decides to move or paying out for any repairs and maintenance.


I don't know enough about buying vs renting, but from a little research online it's half a dozen of one and a dozen of the other. Is it just purely down to personal choice?


Thanks,


Cubanista.

emsywoo123

Cubanista wrote: »

Hey,




Thanks,


Cubanista.

Hey,

I was about to reply and then I remembered you are the user that likes to repeatedly ask about London and then not actually respond to all the users who took time to help.

Thanks,

Emsywoo

eddddy

Cubanista wrote: »

Unless a person can afford to buy outright, how is paying a mortgage much different to paying rent?

Because when you decide to move on, you can sell your property and walk away with a chunk of cash in your pocket.

That doesn't happen if you're renting.

And if property prices increase, you might even end up with more cash than you actually paid (to start with and in mortgage payments).

glentoran99

We would be better off if we had of rented, we are in negative equity so are about -10k if we move than if we had rented

Nobbie1967

I think it's fairly evenly balanced, which is more suitable is down to how much you're likely to need to move. If you can plan to stay in the house for a good few years then buying gives you security and you can decorate how you like and invest money in it.

Cubanista

eddddy wrote: »

Because when you decide to move on, you can sell your property and walk away with a chunk of cash in your pocket.

That doesn't happen if you're renting.

And if property prices increase, you might even end up with more cash than you actually paid (to start with and in mortgage payments).

True, but it could be god knows how long before the mortgage is paid off and if someone had to move for whatever reason, they would be stuck.


Would the property price increasing be more dependent on whether you bought in the right area, or the area was sort after after a few years? Some areas will never be sought after.


Thanks,


Cubanista.

Caz3121

having owned and rented in the past...my observations
paying rent is similar to paying the interest part of a mortgage..neither is refundable
With a mortgage you are also paying back part of a loan to purchase the property. If property prices stay the same or increase, you will likely have equity to use if you sell.
If property prices decrease and you end up in a negative equity situation then renting is better than buying but all depends on long term plans for the property (if you do not plan on moving the equity is largely irrelevant)
I have now bought as want to be able to retire in the next 10 years and cannot see how I could afford to rent the type of property on pension income...my view is that once mortgage paid off I can start to plan to slow down from a stressful job. We are currently planning on spending around £25k to get the house the way we want it (new boiler, kitchen etc) then will switch to overpaying mortgage (and join the mortgage free thread)- on paper there is under 17 years to go but would like to reduce than

Cubanista

emsywoo123 wrote: »

Hey,

I was about to reply and then I remembered you are the user that likes to repeatedly ask about London and then not actually respond to all the users who took time to help.

Thanks,

Emsywoo

Yeah, I need to reply to that thread. I can't reply to everyone to be fair.


Thanks,


Cubanista

Pixie5740

Renting is not dead money. I wish people could grasp the concept that rent is not dead money. Rent pays for the roof over your head, a basic human need. Paying £40+ for a mobile phone contract is dead money.

Buying can work out better if you plan on staying in the same property long term. If need more flexibility then renting could be the better option.

Some people will never be able to afford to buy. That's fine but there's no point lamenting over this fact, focus on what you do have. Especially those in lower paid jobs in London.

Some people can afford to buy at the time but circumstances can change. There are no more jobs for life and where the government will give renters LHA I think they are looking to stop the SMI for home owners.

Some people buy but are so bad with money they never budget for routine maintenance or big repairs and their houses are in an awful state because they can't afford to get anything fixed.

It's horses for courses. There is no right or wrong answer as to whether you should rent or buy.

theartfullodger

If property prices drop (they have before, they will again..) renters will be in an enviable position compared to home owners..

Will this happen this year or next?? Dunno: Some time in the next 20 years?? For sure...

PasturesNew

The precise answer can only be discovered after the event, for each individual situation.

There is no "one size fits all".

You can make your choice today, based on what you think/know today, but only hindsight will give real values/events that will show if you did the right thing.