£200k inheritance, property ladder or not?

ian1246

Ready steady Pop's advice is truly terrible and fundamentally flawed.

I ll use my house as an example - i brought it for £250,000 December 2023, £25,000 deposit. Monthly mortgage of £842.00.

I ve just checked it's estimated value with my mortgage company - £257,000. Around £221,000 left on the mortgage.

That means for my initial £29,000 "investment" (£25,000 deposit plus £4,000 more capital repayment) I've made a return of 24.13% on my "investment", whilst paying a far lower rate (£842) for my Housing compared to what rent would be. An equivalent rental would be £1100-£1200... so on top of actual capital repayment, I'm £300-£400 better off each month. If you factor in that the capital repayment amounts around £300, then actual "like for like" comparison if my interest payments vs. Rental would be £542 interest payments vs. £1,100-£1,200 rental - so about £550-£600 better off a month, not factoring in capital increases from increased property value.

It's beggars belief that he's been carrying on dispensing terrible advice for the last decade+ (crashy once upon a time!!)

horsewithnoname

Per the Nationwide they reckon average house prices will be up over £10,000 next year. Might need to wait another couple of decades for that crash?

Murphybear

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

newsgroupmonkey_

Murphybear said:

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

That's true if you're on the bottom of the ladder with no private pension, relying entirely on the state pension.

If on the other hand, you've got a private pension, as the OP said they have, you'd not be entitled to any housing benefit.

You'll certainly not be entitled to a 3-4 bedroom detached house in Devon.

Herzlos

Murphybear said:

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.

That relies on a lot of things: That those benefits will still be in place all through retirement, that they cover enough of the rent,that you get a good landlord, that your landlord never has to sell through retirement.

I hated moving flat in my 20's, I can't imagine what it'd be like in my 80's.

Whereas if you buy, you're not dependent on benefits or landlords, and may even be able to downsize at some point and free up a chunk of cash.

I appreciate that for those at the bottom, paying maintenance costs on a house may quite a burden compared to rented/social housing, but there's always the option to sell and move into rented.

jimbog

ReadySteadyPop said:

BikingBud said:

Herzlos said:

It's still there but seems to be mostly people complaining it didn't work for them.

He's gone suspiciously quiet, so I suspect we'll soon see another account posting about how bad an idea investing in property.

There's quite a difference between investing in property and buying somewhere to live!

The former has screwed the pooch and means many people cannot afford the latter.

As much as we want to theorise about why, the fact is, from the linked BBC article, that:

The latest data shows that two in five new mortgages have terms that see homeowners still making payments in retirement.

We are building up a whole world of problems, as a generation massive amounts of cash have been transferred based upon capital appreciation, to banks in excess interest, to the government in increased SDLT and looking forward there will be a claw back of IHT all because of excessive HPI.

And many thought it was all a good thing!

pay for a cheap rental letting you free up salary for more intense saving.

I’m not sure about your part of the city, but having lived in various parts of Edinburgh in my student days ‘cheap rentals’ were of poor quality and/or in dubious neighbourhoods. 

But OP, a good point has been made by Herzlos, if you decide to buy you can always choose to go into rental later if circumstances change. 

ReadySteadyPop

Murphybear said:

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

Very true, people keep trotting out the "moving every six months" mantras though, not sure why?

ReadySteadyPop

newsgroupmonkey_ said:

Murphybear said:

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

That's true if you're on the bottom of the ladder with no private pension, relying entirely on the state pension.

If on the other hand, you've got a private pension, as the OP said they have, you'd not be entitled to any housing benefit.

You'll certainly not be entitled to a 3-4 bedroom detached house in Devon.

If you have been using the 200k to build interest/dividends over a period of time you won`t care about benefits, on the other hand if you take some of the advice earlier in the thread and throw the 200k into property then MEW when things get tight! you will be headed straight for benefit street. I would have thought all the negative press about MEWing would have made most people aware of how bad a plan this is but you never can tell.

ReadySteadyPop

Read the comments here to underline how bad an idea trying to "take cash out of a house" can be, surprised posters have been recommending it, people with 200k in the bank should not be going this route.

https://www.moneysavingexpert.com/mortgages/equity-release/

Herzlos

ReadySteadyPop said:

Murphybear said:

Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

Very true, people keep trotting out the "moving every six months" mantras though, not sure why?

I'm assuming you're talking about me talking about how my experience of renting years ago was that you moved annually?