Buy home or wait for a few months

Schwarzwald

MobileSaver said:

Schwarzwald said:

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

let me improve that for you:

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house, but you also spent probably 1-2% pa in maintenance or £100k total over 20 years so the adjusted value is more like £140k, plus if you get unlucky house prices might have dropped in your area, so even less ...

If you pay £1000 rent, you paid  £240K and dont own the property, but you also saved the deposit, say 10% or 24k initially, so if you manage to grow that deposit (opportunity costs) at 8-9% pa you end up also around 135k in value.

So you see ... many people will tell you buying is universally the better option, but it really just depends .....

Oh dear! Where to start with your fundamentally flawed and misguided attempt to deter people from buying...

No attempt in detering people from buying, the opposite, I am generally found of ownership, but smart ownership for the better lack of terminology. And the simplicity that people like to paint that BUYING is ALWAYS better is just that: simplified.
We can go back and forth on numbers, but Id' hope people, esp. boomer and Gen X generations, would stop trying to make others believe it is a simple rule of nature that buying is always better than renting ... it just isnt, it depends. for boomer and Gen X generations it worked out VERY well, out of question, I just doubt history will repeat to the same extent for subsequent generations. That's all

MobileSaver

Schwarzwald said:

MobileSaver said:

Schwarzwald said:

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

let me improve that for you:

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house, but you also spent probably 1-2% pa in maintenance or £100k total over 20 years so the adjusted value is more like £140k, plus if you get unlucky house prices might have dropped in your area, so even less ...

If you pay £1000 rent, you paid  £240K and dont own the property, but you also saved the deposit, say 10% or 24k initially, so if you manage to grow that deposit (opportunity costs) at 8-9% pa you end up also around 135k in value.

So you see ... many people will tell you buying is universally the better option, but it really just depends .....

Oh dear! Where to start with your fundamentally flawed and misguided attempt to deter people from buying...

No attempt in detering people from buying, the opposite, ... We can go back and forth on numbers,

You made the preposterous suggestion that a renter could make 8-9% every year for 20 years and their rent would never increase over those 20 years yet a homeowner's house wouldn't increase a single penny over the same time frame... that's not going back and forth over numbers, that's just making stuff up to support an obviously flawed hypothesis.

Sarah1Mitty2

MobileSaver said:

Schwarzwald said:

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

let me improve that for you:

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house, but you also spent probably 1-2% pa in maintenance or £100k total over 20 years so the adjusted value is more like £140k, plus if you get unlucky house prices might have dropped in your area, so even less ...

If you pay £1000 rent, you paid  £240K and dont own the property, but you also saved the deposit, say 10% or 24k initially, so if you manage to grow that deposit (opportunity costs) at 8-9% pa you end up also around 135k in value.

So you see ... many people will tell you buying is universally the better option, but it really just depends .....

Oh dear! Where to start with your fundamentally flawed and misguided attempt to deter people from buying...

The elephant in the room is that you've paid £240,000 and own the house but twenty years later that house is now worth over £500,000! So even on your skewed figures buying means you would be more than £300,000 better off!

As for suggesting that 20 years on house prices might have dropped... how often in history has that happened?

This is the sort of thing people believed before interest rates started going up, back to historically normal levels last seen 20 years ago, I would expect house prices to start moving back to those levels unless there is serious across the board wage inflation.

Sarah1Mitty2

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

I don`t think interest rates will be coming down, they will eventually stop at a new higher level though, you should investigate house prices when rates were last at this level and think for yourself about what might drive prices higher (or lower) and also look at sales volumes/mortgage approvals, they are down quite sharply recently meaning that more and more people are ignoring the advice to "buy buy, always buy". Couldn`t you get a cheaper rental while you wait for interest rates to bring prices down?

Sarah1Mitty2

CSI_Yorkshire said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

In Grumbler's approach you only compare the 'lost' money - which is either the rent or the interest on the mortgage.

If you're paying £1000pm rent for 5 years, yes, you have paid £60k in rental = this money is lost.  If you are paying £1000pm mortgage for 5 years, you haven't paid off £60k of the loan, but much less - a (possibly large) proportion of it is lost as interest payments.  If this is misunderstood, it makes a mortgage seem much more financially beneficial than it actually is.

Looking at the 'lost' money is a sensible proposition for comparison because it is highlighting exactly that, the 'useless' part of your outgoings.

You are preferring to take the 'cash flow' approach.  Also legitimate.  It isn't the only method though.

£1000 pm mortgaged property at these rates will see similar property rent for less than that a month, maybe a lot less if we hit a recession. In both cases you are paying a "cost", one is a cost for a service (renting) the other is the cost of borrowed money (mortgage) but the main thing to remember is that although you can walk away from a tenancy (rental cost) a mortgage debt follows you, even if you have negative equity, even if you sell the house at a loss etc. you are still liable for the original loan at interest.

Sarah1Mitty2

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

I forgot to ask, do you have a mortgage offer?

MFWannabe

Sarah1Mitty2 said:

CSI_Yorkshire said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

In Grumbler's approach you only compare the 'lost' money - which is either the rent or the interest on the mortgage.

If you're paying £1000pm rent for 5 years, yes, you have paid £60k in rental = this money is lost.  If you are paying £1000pm mortgage for 5 years, you haven't paid off £60k of the loan, but much less - a (possibly large) proportion of it is lost as interest payments.  If this is misunderstood, it makes a mortgage seem much more financially beneficial than it actually is.

Looking at the 'lost' money is a sensible proposition for comparison because it is highlighting exactly that, the 'useless' part of your outgoings.

You are preferring to take the 'cash flow' approach.  Also legitimate.  It isn't the only method though.

£1000 pm mortgaged property at these rates will see similar property rent for less than that a month, maybe a lot less if we hit a recession. In both cases you are paying a "cost", one is a cost for a service (renting) the other is the cost of borrowed money (mortgage) but the main thing to remember is that although you can walk away from a tenancy (rental cost) a mortgage debt follows you, even if you have negative equity, even if you sell the house at a loss etc. you are still liable for the original loan at interest.

How do you arrive at this conclusion when rental costs are massively increasing? Or do you choose to ignore these? 

Also a £1000 mortgage property in our area would be far higher rental costs, usually £1200+
You can walk away from a rental? Where then do you live? 

Sunsaru

MFWannabe said:

Sarah1Mitty2 said:

CSI_Yorkshire said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

In Grumbler's approach you only compare the 'lost' money - which is either the rent or the interest on the mortgage.

If you're paying £1000pm rent for 5 years, yes, you have paid £60k in rental = this money is lost.  If you are paying £1000pm mortgage for 5 years, you haven't paid off £60k of the loan, but much less - a (possibly large) proportion of it is lost as interest payments.  If this is misunderstood, it makes a mortgage seem much more financially beneficial than it actually is.

Looking at the 'lost' money is a sensible proposition for comparison because it is highlighting exactly that, the 'useless' part of your outgoings.

You are preferring to take the 'cash flow' approach.  Also legitimate.  It isn't the only method though.

£1000 pm mortgaged property at these rates will see similar property rent for less than that a month, maybe a lot less if we hit a recession. In both cases you are paying a "cost", one is a cost for a service (renting) the other is the cost of borrowed money (mortgage) but the main thing to remember is that although you can walk away from a tenancy (rental cost) a mortgage debt follows you, even if you have negative equity, even if you sell the house at a loss etc. you are still liable for the original loan at interest.

How do you arrive at this conclusion when rental costs are massively increasing? Or do you choose to ignore these? 

Also a £1000 mortgage property in our area would be far higher rental costs, usually £1200+
You can walk away from a rental? Where then do you live? 

In Delulu Land whilst standing on the banks of Denial River you can always find somewhere cheaper to rent.

Sarah1Mitty2

MFWannabe said:

Sarah1Mitty2 said:

CSI_Yorkshire said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

In Grumbler's approach you only compare the 'lost' money - which is either the rent or the interest on the mortgage.

If you're paying £1000pm rent for 5 years, yes, you have paid £60k in rental = this money is lost.  If you are paying £1000pm mortgage for 5 years, you haven't paid off £60k of the loan, but much less - a (possibly large) proportion of it is lost as interest payments.  If this is misunderstood, it makes a mortgage seem much more financially beneficial than it actually is.

Looking at the 'lost' money is a sensible proposition for comparison because it is highlighting exactly that, the 'useless' part of your outgoings.

You are preferring to take the 'cash flow' approach.  Also legitimate.  It isn't the only method though.

£1000 pm mortgaged property at these rates will see similar property rent for less than that a month, maybe a lot less if we hit a recession. In both cases you are paying a "cost", one is a cost for a service (renting) the other is the cost of borrowed money (mortgage) but the main thing to remember is that although you can walk away from a tenancy (rental cost) a mortgage debt follows you, even if you have negative equity, even if you sell the house at a loss etc. you are still liable for the original loan at interest.

How do you arrive at this conclusion when rental costs are massively increasing? Or do you choose to ignore these? 

Also a £1000 mortgage property in our area would be far higher rental costs, usually £1200+
You can walk away from a rental? Where then do you live? 

Last few people who told me they did it went back to parents. When was the last time you rented?

Martico

It's perhaps worth pointing out that Walter Mitty is a prime literary example of a fantasist who closes their mind to situational realities