Rental regrets

RelievedSheff

https://forums.moneysavingexpert.com/discussion/comment/82148408#Comment_82148408

Average mortgage rates for 2 and 5 year fixed deals are at 6% at the moment which is higher than they have been for a while. They have increased quite rapidly in the last couple of weeks.

Depending on the LTV bracket and financial situation lower rates should still be available though.

We were lucky with our timing this time around, which is unusual for us! We managed to get a rate of 4.04% fixed for 5 years which we secured in January before the Iran war broke out. Running the same figures today with the same lender comes up with a rate of 5.36% which adds £217 a month to the repayments!

marlot

https://forums.moneysavingexpert.com/discussion/comment/82160253#Comment_82160253

You're not paying a mortgage in the period (or gaining interest if you're a cash buyer), so the net difference may be rather smaller.

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/82160253#Comment_82160253

The rent is offset by

• saved interest on the mortgage
• earned interest on the sale proceeds (what was the equity)
• repairs, maintenance, service charge done by the LL but your responsibility in an owned property

So the true net cost is far lower if not £0 each month. There is of course an additional move which is just lost.

RelievedSheff

https://forums.moneysavingexpert.com/discussion/comment/82161274#Comment_82161274

There is of course also the flip side. You wont have gained more equity with each repayment. As an example, our mortgage repayment is £2200 a month, of that roughly £900 is interest the remaining £1300 is equity gained every month.

Earned interest depending on the account the funds are held in may not be all that much but there are so may variables that we just don't know to calculate that one.

Repairs, maintenance, etc. is one of those that is really often over exaggerated. In a say 12 month period how much does that really equate too. Not much on average I expect. Cant really do a 12 month summary of our current home as we have not been in it long enough but certainly the last one didnt ever equate to much more than insurance and an annual boiler service. £300 tops.

Moving costs and purchase costs really shouldn't be underestimated. Our move in March cost us in the region of £20k once stamp duty, solicitors, estate agents and removals were totted up.

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/82161317#Comment_82161317

There is of course also the flip side. You wont have gained more equity with each repayment. As an example, our mortgage repayment is £2200 a month, of that roughly £900 is interest the remaining £1300 is equity gained every month.

The repayment portion isn't really relevant as its just £1300 moving from your monthly budget to a savings pot named 'equity'.

I was comparing rent cost vs mortgage interest cost only whereby the £1300 doesn't come into it. Alternatively you could compare rent cost vs entire mortgage payment cost then yes with the mortgage payment you're also increasing equity by £1300. Same result.

Moving costs and purchase costs really shouldn't be underestimated. Our move in March cost us in the region of £20k once stamp duty, solicitors, estate agents and removals were totted up.

Physical moving costs yes (as in removals from sold home → rental → bought home rather than just 1 move). But the rest eg stamp duty, solicitors, estate agents are the same, only incurred once.