New research on buying versus renting at present

nobblyned

beingjdc wrote: »

No - you misunderstand.

Say at the end of 25 years the buyer has a house worth £300,000, and £10,000 in savings.

What they're saying is that the renter would have no house, but would have £304,000 in savings.

Right now, I'd rather have the cash than a depreciating asset.

No, you misunderstand.

To quote their website:
However, this does not take into account the fact that people who have bought will own a mortgage-free property at the end of their mortgage term.

Link:
http://www.aboutabbey.com/csgs/Satellite?c=GSNoticia&cid=1139302099460&idInfArchive=1077211222403&pagename=AboutAbbey%2FGSNoticia%2FPAAI_newComplet

m00m00

they won't own the house though if they took out an Interest only mortgage, without a suitable repayment vehicle, as many people have done in the past couple of years due to the hyper inflation in london prices (and elsewhere)

beingjdc

nobblyned wrote: »

No, you misunderstand.

To quote their website:
However, this does not take into account the fact that people who have bought will own a mortgage-free property at the end of their mortgage term.

Link:
http://www.aboutabbey.com/csgs/Satellite?c=GSNoticia&cid=1139302099460&idInfArchive=1077211222403&pagename=AboutAbbey%2FGSNoticia%2FPAAI_newComplet

Oh fair enough, sorry.

Then I really can't fathom where they've got their figures from. I can't think of anywhere in the country where the mortgage, plus buildings insurance, plus maintenance costs, plus ground rent, on a 2-bed place is the 20% lower that they claim than the cost of renting. 20% higher, at least!

Ah, I see it!

Rental figures are calculated by assuming a 4.3% per annum inflation rate over 25 years. Buying costs are based on a 90% repayment mortgage at a fixed rate of 5.25% over 25 years

Right. Good luck with either of those unrealistic assumptions, Abbey. Maybe just panicking because of the collapsing number of people taking out mortgages...

Inflation in rent for us this year: 0%
Cheapest mortgage available to me on Moneysupermarket: 6.2%

nobblyned

beingjdc wrote: »

Oh fair enough, sorry.

Then I really can't fathom where they've got their figures from. I can't think of anywhere in the country where the mortgage, plus buildings insurance, plus maintenance costs, plus ground rent, on a 2-bed place is the 20% lower that they claim than the cost of renting. 20% higher, at least!

Ah, I see it!

Rental figures are calculated by assuming a 4.3% per annum inflation rate over 25 years. Buying costs are based on a 90% repayment mortgage at a fixed rate of 5.25% over 25 years

Right. Good luck with either of those unrealistic assumptions, Abbey. Maybe just panicking because of the collapsing number of people taking out mortgages...

Inflation in rent for us this year: 0%
Cheapest mortgage available to me on Moneysupermarket: 6.2%

I think their new assumptions are 6.5% repayment on the mortgage for this years calc at 90% LTV. (from article)

But I agree, the thing with all these calculations is the assumptions. It's the compounding on the rental inflation that really kills the deal. In real life it's never quite going to work out like any study over a 25 year period. Especially in the shorter term.

poppy10_2

sarkin wrote: »

but at the end of 25 years you own the house.

Not necessarily. So many people these days are taking out interest only mortgages and making no attempts to repay the capital, so at the end of 25 years all they are left with is a huge mortgage running into hundreds of thousands of pounds and no way to pay it off.

Plus you've got all the people who have withdrawn the "equity" from their house, who will have to find some way to pay it all back before the end of the term.

Generali

This is just meaningless rubbish designed to fill space in a low quality paper. Why don't they stick to banging on about immigration?

Getting your financial advice from The Daily Mail is like getting your plumber to look at that 'little problem with the waterworks downstairs'. They may dabble in such things but it's not a great idea...