To sell or not to sell!

ReadySteadyPop

BarelySentientAI said:

ReadySteadyPop said:

Jemma01 said:

Well the difference is that the rent you'll pay is going to someone else's mortgage, and you'll have no return on that investment. In contrast, the mortgage you're paying (assuming it is a capital payment) puts your money into your house that you can later sell and benefit from (hopefully increased in price).

Also, rent is unstable, the landlord could increase the rent, making this move counterproductive. They could decide they want the property back and want to sell it or gift it to their kids.

I kinda feel you in that, the percentage increase is likely interest, and is it even worth paying a mortgage with such high interest? If I were you, I'd get a calculator out and work out how much money I could save and how much interest I suspect I'd get vs how much equity I could have on my house over the next 5 years. Quite a difficult calculation with the many variables you need like guessing the interest and inflation rates.

If you're only paying interest, there may be more compelling reasons to rent. (though property could increase in value, so far they've been up in my area steadily, nothing seems to affect that, which would be a loss for you if you rent)

It wouldn't affect your ability to get a mortgage at a later point.

The "return" on the rent is a place to live that you presumably like and all repair costs covered, rent is a "cost" where mortgage is a "debt". "Putting money into a house" relies on a future buyer to give you the money back, you might not get all the money back, it isn`t like a savings account. £500 per month invested well would probably give you a better return eventually than property.

Putting money into a house buys you a physical thing.

Putting money into rent buys your landlord a physical thing.

There are valid reasons for both things, but the choice for most people (as in this thread) isn't a direct "buy a house or invest in savings".

 For many people "putting money into a house" means servicing a debt, it will be decades in the future before they actually own "a physical thing", many landlords don`t have a mortgage, they already own "the physical thing" which is why I said that rent is a "cost" and a mortgage is a "debt", I wonder if the OP was influenced by viewpoints like yours two years ago when they made a decision that they now regret?

BarelySentientAI

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

Jemma01 said:

Well the difference is that the rent you'll pay is going to someone else's mortgage, and you'll have no return on that investment. In contrast, the mortgage you're paying (assuming it is a capital payment) puts your money into your house that you can later sell and benefit from (hopefully increased in price).

Also, rent is unstable, the landlord could increase the rent, making this move counterproductive. They could decide they want the property back and want to sell it or gift it to their kids.

I kinda feel you in that, the percentage increase is likely interest, and is it even worth paying a mortgage with such high interest? If I were you, I'd get a calculator out and work out how much money I could save and how much interest I suspect I'd get vs how much equity I could have on my house over the next 5 years. Quite a difficult calculation with the many variables you need like guessing the interest and inflation rates.

If you're only paying interest, there may be more compelling reasons to rent. (though property could increase in value, so far they've been up in my area steadily, nothing seems to affect that, which would be a loss for you if you rent)

It wouldn't affect your ability to get a mortgage at a later point.

The "return" on the rent is a place to live that you presumably like and all repair costs covered, rent is a "cost" where mortgage is a "debt". "Putting money into a house" relies on a future buyer to give you the money back, you might not get all the money back, it isn`t like a savings account. £500 per month invested well would probably give you a better return eventually than property.

Putting money into a house buys you a physical thing.

Putting money into rent buys your landlord a physical thing.

There are valid reasons for both things, but the choice for most people (as in this thread) isn't a direct "buy a house or invest in savings".

 For many people "putting money into a house" means servicing a debt, it will be decades in the future before they actually own "a physical thing", many landlords don`t have a mortgage, they already own "the physical thing" which is why I said that rent is a "cost" and a mortgage is a "debt", I wonder if the OP was influenced by viewpoints like yours two years ago when they made a decision that they now regret?

You spent weeks not that long ago trying to argue that landlords were all going to sell up because they couldn't afford to service their mortgage debt - now your position is that landlords don't have mortgages and have 100% equity in the properties?

Let's not have nonsense attempts at semantics to claim that this is a "cost" vs "debt" thing.  It isn't.

They are two alternatives to obtaining housing. 

If you buy, then if you continue to pay you will have housing throughout and an asset at the end.  If you don't pay you will not have housing and not have an asset.
If you rent, then if you continue to pay you will have housing throughout and no asset at the end (but perhaps alternative investments that could, as you say, perform better).  If you don't pay you will not have housing and not have an asset.

ReadySteadyPop

BarelySentientAI said:

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

Jemma01 said:

Well the difference is that the rent you'll pay is going to someone else's mortgage, and you'll have no return on that investment. In contrast, the mortgage you're paying (assuming it is a capital payment) puts your money into your house that you can later sell and benefit from (hopefully increased in price).

Also, rent is unstable, the landlord could increase the rent, making this move counterproductive. They could decide they want the property back and want to sell it or gift it to their kids.

I kinda feel you in that, the percentage increase is likely interest, and is it even worth paying a mortgage with such high interest? If I were you, I'd get a calculator out and work out how much money I could save and how much interest I suspect I'd get vs how much equity I could have on my house over the next 5 years. Quite a difficult calculation with the many variables you need like guessing the interest and inflation rates.

If you're only paying interest, there may be more compelling reasons to rent. (though property could increase in value, so far they've been up in my area steadily, nothing seems to affect that, which would be a loss for you if you rent)

It wouldn't affect your ability to get a mortgage at a later point.

The "return" on the rent is a place to live that you presumably like and all repair costs covered, rent is a "cost" where mortgage is a "debt". "Putting money into a house" relies on a future buyer to give you the money back, you might not get all the money back, it isn`t like a savings account. £500 per month invested well would probably give you a better return eventually than property.

Putting money into a house buys you a physical thing.

Putting money into rent buys your landlord a physical thing.

There are valid reasons for both things, but the choice for most people (as in this thread) isn't a direct "buy a house or invest in savings".

 For many people "putting money into a house" means servicing a debt, it will be decades in the future before they actually own "a physical thing", many landlords don`t have a mortgage, they already own "the physical thing" which is why I said that rent is a "cost" and a mortgage is a "debt", I wonder if the OP was influenced by viewpoints like yours two years ago when they made a decision that they now regret?

You spent weeks not that long ago trying to argue that landlords were all going to sell up because they couldn't afford to service their mortgage debt - now your position is that landlords don't have mortgages and have 100% equity in the properties?

Let's not have nonsense attempts at semantics to claim that this is a "cost" vs "debt" thing.  It isn't.

They are two alternatives to obtaining housing. 

If you buy, then if you continue to pay you will have housing throughout and an asset at the end.  If you don't pay you will not have housing and not have an asset.
If you rent, then if you continue to pay you will have housing throughout and no asset at the end (but perhaps alternative investments that could, as you say, perform better).  If you don't pay you will not have housing and not have an asset.

Did I? I think most sensible people know that some landlords have mortgages and some landlords don`t have mortgages, it really is very simple.

The thread is about someone who would be £500 per month better off by not having a  mortgage, what are your views on that?

Hoenir

Many people struggle at times in their lives. Recall walking around Sainsburys with a calculator in hand after the mortgage rose by 4% over the course of 4 months. Also catching a bus for a while as didn't have the money to fix a problem with the car. Got through the dark days eventually. Mainly by avoiding going futher into debt and cutting out all non essential expenditure. 

BarelySentientAI

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

Jemma01 said:

Well the difference is that the rent you'll pay is going to someone else's mortgage, and you'll have no return on that investment. In contrast, the mortgage you're paying (assuming it is a capital payment) puts your money into your house that you can later sell and benefit from (hopefully increased in price).

Also, rent is unstable, the landlord could increase the rent, making this move counterproductive. They could decide they want the property back and want to sell it or gift it to their kids.

I kinda feel you in that, the percentage increase is likely interest, and is it even worth paying a mortgage with such high interest? If I were you, I'd get a calculator out and work out how much money I could save and how much interest I suspect I'd get vs how much equity I could have on my house over the next 5 years. Quite a difficult calculation with the many variables you need like guessing the interest and inflation rates.

If you're only paying interest, there may be more compelling reasons to rent. (though property could increase in value, so far they've been up in my area steadily, nothing seems to affect that, which would be a loss for you if you rent)

It wouldn't affect your ability to get a mortgage at a later point.

The "return" on the rent is a place to live that you presumably like and all repair costs covered, rent is a "cost" where mortgage is a "debt". "Putting money into a house" relies on a future buyer to give you the money back, you might not get all the money back, it isn`t like a savings account. £500 per month invested well would probably give you a better return eventually than property.

Putting money into a house buys you a physical thing.

Putting money into rent buys your landlord a physical thing.

There are valid reasons for both things, but the choice for most people (as in this thread) isn't a direct "buy a house or invest in savings".

 For many people "putting money into a house" means servicing a debt, it will be decades in the future before they actually own "a physical thing", many landlords don`t have a mortgage, they already own "the physical thing" which is why I said that rent is a "cost" and a mortgage is a "debt", I wonder if the OP was influenced by viewpoints like yours two years ago when they made a decision that they now regret?

You spent weeks not that long ago trying to argue that landlords were all going to sell up because they couldn't afford to service their mortgage debt - now your position is that landlords don't have mortgages and have 100% equity in the properties?

Let's not have nonsense attempts at semantics to claim that this is a "cost" vs "debt" thing.  It isn't.

They are two alternatives to obtaining housing. 

If you buy, then if you continue to pay you will have housing throughout and an asset at the end.  If you don't pay you will not have housing and not have an asset.
If you rent, then if you continue to pay you will have housing throughout and no asset at the end (but perhaps alternative investments that could, as you say, perform better).  If you don't pay you will not have housing and not have an asset.

Did I? I think most sensible people know that some landlords have mortgages and some landlords don`t have mortgages, it really is very simple.

The thread is about someone who would be £500 per month better off by not having a  mortgage, what are your views on that?

It's about someone who would have £500 better monthly cash flow by not having a mortgage.  Subtle but important distinction.

Selling up with the intent to buy a couple of years later doesn't usually work well as a purely financial decision.

A famous ex-resident of these boards, whose opinion matches yours unusually closely, knows that very well.

If the OP prefers the rental location and would have a better quality of life there, I would suggest that this outweighs a lot of the financial opinion.

My general opinion is that primary residential properties shouldn't be bought or sold as investment vehicles.  I can see the benefit of some property investment to support a sensible rental market, but I don't think starting as single-property landlord works too well nowadays.

Asset/debt discussions can be useful, but they shouldn't be the primary driver.

Martico

Also worth bearing in mind that rent inflation has been running at around 8%, and that mortgage costs are subject to interest rate fluctuations, not inflation. Add that to the not insubstantial costs involved in both selling and buying, I'd lean towards not selling, and tweaking either lifestyle or (if possible and necessary) mortgage term. Things should get easier if your wage increases more or less in line with inflation

HillStreetBlues

Also worth thinking about is the £500 savings. Can you be certain that it would be put aside?

ReadySteadyPop

HillStreetBlues said:

Also worth thinking about is the £500 savings. Can you be certain that it would be put aside?

Having the option to set it aside is always nice.

horsewithnoname

ReadySteadyPop said: lol

HillStreetBlues said:

Also worth thinking about is the £500 savings. Can you be certain that it would be put aside?

Having the option to set it aside is always nice.

I sometimes struggled to buy my home, but if I hadn’t I couldn’t afford to rent it with the amount that rents have gone up, and I’d certainly never be able to afford to retire if I hadn’t bought my home. I’m not saying there aren’t any circumstances where renting is a good idea, but overall, owning your own home is the key to freedom, and the best decision I ever made. 

Schwarzwald

Jemma01 said:

Well the difference is that the rent you'll pay is going to someone else's mortgage, and you'll have no return on that investment. In contrast, the mortgage you're paying (assuming it is a capital payment) puts your money into your house that you can later sell and benefit from (hopefully increased in price).

the common misconception.
You free up your deposit plus you aparrently save on costs so your return is right there in front of you.
if that return is better than owning equity in a UK property is a whole different question.
But above general statement is just plain incorrect and misleading.