House prices continue to fall (Hometrack Report)

GreenB_2

nelly wrote:

Ok I'll do this in big letters for you

M O N E Y S A V I N G E X P E R T

not money wasting

money saving = paying as little as posible

money wasting = paying to much.

People come here for advise and tips on how to save their hard earned, not to be told its ok to pay well over the odds for something.

And the housing thread is the ONLY thread where people even attempt to say paying a lot is a good idea.

I can't help it if people missed out on a "bargain" and didn't buy a house 5+ years ago (thats what you are really complaining about)..... but.......


I agree the purpose of the site.... hence why i have said Buying is often cheaper than renting when compared like for like (I.E. Interest only where at the end you do not own the property like renting

Typical example (picked at random):

Bracknell Area - Typical 3 bed terrace house £160k to buy or £800 PCM to rent

Mortgage at current standard fixed rate of 4.25% (you can get much better deals) for £160k is £567 per month

So what is cheaper and potentially money saving £567 to buy or £800 to rent?

Agreed there are things like maintenance (and one off costs) that you may not have to pay on a rented property,(you have over £200 a month spare to pay for this) but you have many pluses like being able to do what you like to the house (paint, alter etc)..... and long term as said history shows prices increase so you WILL "make" money on your house.

ReportInvestor

Don't forget the £500 average remortgage arrangement fees (and other fees) every two years to get that sort of rate. I'd add £25pm to your mortgage cost calculation over the longer term for those alone.

The mortgage market has partly woken up to the likes of Money Saving Expert and the army of churning mortgage brokers.

GreenB wrote:

Bracknell Area - Typical 3 bed terrace house £160k to buy or £800 PCM to rent.

I'm currenly renting a £350K+ house for £975pm BTW. Please don't let my landlord find this forum :eek:.

Nearby there are two bed newbuild flats to buy at £150K - rent £625Kpm.

spottydog

ReportInvestor wrote:

Don't forget the £500 average remortgage arrangement fees (and other fees) every two years to get that sort of rate. I'd add £25pm to your mortgage cost calculation over the longer term for those alone.

I have remortgaged our place every 2 years (when the discount rate I chose each time runs out). I have never paid any remortgage fees (any type including arrangement, solicitors etc.) and also never paid a mortgage interest rate that is higher than BofE base rate. Every time we remortgage we reduce the mortgage term (since our earnings have increased over the 2 years) which constantly reduces our longer term overall interest amount, this is something you can't do when renting. The most its ever cost me is £100 to exit the existing mortgage which is only the same as a decentish night out in London for 2 and is at most a single figure percentage of what the remortgage has saved us.

When I first bought (and I believe this still to be the case) I noticed other financial benefits in that my insurance costs (car & contents at least) reduced, I guess owners are a safer bet for them, and I seem to get access to more preferential rates and larger credit card limits (very useful for borrowing at 0% and getting 5% before tax interest on the money in a savings account at the same time). This is compared to friends of the same age, area and salary who are renting.

GreenB_2

Like a previous poster said I suppose rent to value varies from region to region and also upon the amount of demand.
If lots of people decide to sell and rent then I expect rental prices to increase as less of them will be vacant and demand increases.

Obviously with mportgages if you fix longer term (10 years or 15 years for insatnce) the arrangement fees don't come into play as much - also you are guaranteeing your payment amount.

Renting in my view is a bit of agamble as you don't know when and by how much your rent will increase by - but typically over a 10 year period expect it to be around 25 to 50%. Also simiilarly you end up paying out money each time you move from one rented place to another so would in my view balance out the arrangement fees of a mortgage.

river_kwai

GreenB wrote:

Typical example (picked at random):

Bracknell Area - Typical 3 bed terrace house £160k to buy or £800 PCM to rent

Mortgage at current standard fixed rate of 4.25% (you can get much better deals) for £160k is £567 per month

£160k at 4.25% gives you a monthly repayment of £867, not £567 as you calculated!!!!

Ember999

river_kwai wrote:

£160k at 4.25% gives you a monthly repayment of £867, not £567 as you calculated!!!!

I thought that figure they quoted sounded bizarre! I borrowed 100K fixed at 2.99% and payment is £530!

ReportInvestor

GreenB wrote:

Obviously with mortgages if you fix longer term (10 years or 15 years for instance) the arrangement fees don't come into play as much.

The best 10 year fixed rate I could find on a quick search was 4.74% - quite a bit higher than your 4.25% for two years, so my argument still stands.

spottydog wrote:

I have remortgaged our place every 2 years (when the discount rate I chose each time runs out). I have never paid any remortgage fees (any type including arrangement, solicitors etc.) and also never paid a mortgage interest rate that is higher than BofE base rate.

Well the base rate at 4.75% is quite a bit higher than 4.25%, and I suggest you may have more difficulty remortgaging without fees next time, sd.

Good points, guys, on rising rent, regular moving costs and other financial benefits from owning a house, :beer: :.

dccarm

river_kwai wrote:

£160k at 4.25% gives you a monthly repayment of £867, not £567 as you calculated!!!!

He was calculating it on an interest only mortgage to get a better comparison with renting.

Ember999

dccarm wrote:

He was calculating it on an interest only mortgage to get a better comparison with renting.

I don't think a lot of us (well..me at least ) realised that. This new information makes the figures make sense now :j

river_kwai

dccarm wrote:

He was calculating it on an interest only mortgage to get a better comparison with renting.

If you have already paid £567 for interest only and not own the house at the end of the mortgage term, another £300 will get you the house at the end, which one would you go for?

I myself will certainly go for the second route, but that's just me. As everyone has said, everyone is entitled to their own opinion.