Is it worth it, buying a house?
Discussion
Just been in a discussion with my dad about the pros and cons of owning a house vs renting etc. etc.
It seems that in today's and tomorrow's UK with the government and people in general becoming more and more greedy for money the question being is buying your own house worth while in the long run?
One point being that if you 'buy' a house you effectively get your bank to buy it and then you are paying your bank interest and the amount of money that the house was agreed at the time of purchase. So in effect your bank owns your house until you have paid back every last penny.
You could be paying back the bank until you are 50 or 60 years old in today's lending/borrowing rates, and not to mention the large deposit you will no doubt have had to pay to get the mortgage in the first place.
When you are old and frail if you own a house then you do not get a free ride into retirement/care homes due to the fact that owning a house counts against you (even though you've paid your way throughout your lifetime etc. but that a different argument).
Mortgage payments per month could be up and over £1000....where as renting can be around half that price.
Germany is more a population of renters than buyers, so are many other countries.
I know there is security knowing that with owning you are more in control over your place of abode, but over the long run, is it more economical to rent throughout your life rather than mortgage?
It seems that in today's and tomorrow's UK with the government and people in general becoming more and more greedy for money the question being is buying your own house worth while in the long run?
One point being that if you 'buy' a house you effectively get your bank to buy it and then you are paying your bank interest and the amount of money that the house was agreed at the time of purchase. So in effect your bank owns your house until you have paid back every last penny.
You could be paying back the bank until you are 50 or 60 years old in today's lending/borrowing rates, and not to mention the large deposit you will no doubt have had to pay to get the mortgage in the first place.
When you are old and frail if you own a house then you do not get a free ride into retirement/care homes due to the fact that owning a house counts against you (even though you've paid your way throughout your lifetime etc. but that a different argument).
Mortgage payments per month could be up and over £1000....where as renting can be around half that price.
Germany is more a population of renters than buyers, so are many other countries.
I know there is security knowing that with owning you are more in control over your place of abode, but over the long run, is it more economical to rent throughout your life rather than mortgage?
At the moment, for me, the rent is about half what the interest part of the mortgage would be. So it's not worth it, but I'm building up savings so I'll have plenty of equity ready should that situation change - I'm not tied-in to renting for any more than the one month notice period.
If it gets as far as having kids then I'll probably buy for the security then regardless of the financial sense.
I suspect we might see changes after the next general election when the government, whoever it is, stops trying to prop everything up.
If it gets as far as having kids then I'll probably buy for the security then regardless of the financial sense.
I suspect we might see changes after the next general election when the government, whoever it is, stops trying to prop everything up.
Edited by cs02rm0 on Saturday 25th July 21:41
You can easily work out the cost of renting vs intrest payments on a morgage (for a similar house) and see which works out cheaper.
With renting you dont have maintanance/improvement costs, but you cant realy change the plece you live in either.
The big black hole of doubt is inflation & capital growth, sure you may owe the bank £190k on a £200k house today, but in 10 years that house may be worth £400k (or £50k..)
With renting you dont have maintanance/improvement costs, but you cant realy change the plece you live in either.
The big black hole of doubt is inflation & capital growth, sure you may owe the bank £190k on a £200k house today, but in 10 years that house may be worth £400k (or £50k..)
AJI said:
Mortgage payments per month could be up and over £1000....where as renting can be around half that price.
I know there is security knowing that with owning you are more in control over your place of abode, but over the long run, is it more economical to rent throughout your life rather than mortgage?
Cheaper to buy than rent around my area I know there is security knowing that with owning you are more in control over your place of abode, but over the long run, is it more economical to rent throughout your life rather than mortgage?
I look on it with a mortgage I know roughly what I will be paying for the next X amount of years ,yes interest rates go up and down but I will always have a rough idea of what it will cost and over the longer term rents will only increase.
Second more important point is I can do what I want to a place I own and I don't have that option if I rented.
I rented a house when i left the army, and to be honest it felt temporary! why cut the grass, it's not my grass!! the walls need painting but they are not my walls so why paint them!!
I have owned a few houses now and have to say i feel more 'settled' in my own home, and yes its not mine for another 6 years! but my mortgage payments are a lot lower than any rent, like for like!
and yes i do cut the grass cus it's 'my' grass!!
Just my 2p worth.
Andy
I have owned a few houses now and have to say i feel more 'settled' in my own home, and yes its not mine for another 6 years! but my mortgage payments are a lot lower than any rent, like for like!
and yes i do cut the grass cus it's 'my' grass!!
Just my 2p worth.
Andy
MrV said:
I look on it with a mortgage I know roughly what I will be paying for the next X amount of years ,yes interest rates go up and down but I will always have a rough idea of what it will cost and over the longer term rents will only increase.
Agreed on that point, but also to consider is that with renting you can eaily move in a short time period to a cheaper place of rent.No waiting for a house buyer or a chain effect to happen, no stamp duty and all the other bolllox charges that creep in when buying or moving mortaged properties etc. just find a new house to rent and sort out with the landlord when to move in and job done.
So a benefit with renting is that you can also manage your monthly costs by seeking out cheaper/dearer landlords.
In the long run, I think it is.
Sure, you pay roughly 3x when you include all the interest, and you have to pay to fix things if they go wrong. But, in the end, you own the house and can sell it.
If you rent, you'll likely pay more, as the owner won't be doing this at a loss (except in the very short term, as now), and at the end you don't own it.
But, if you try to save up to buy it cash while renting, you'll pay twice. You need a roof over your head while you save!
Timing, of course, is everything. And you'll only find out after the fact.
Sure, you pay roughly 3x when you include all the interest, and you have to pay to fix things if they go wrong. But, in the end, you own the house and can sell it.
If you rent, you'll likely pay more, as the owner won't be doing this at a loss (except in the very short term, as now), and at the end you don't own it.
But, if you try to save up to buy it cash while renting, you'll pay twice. You need a roof over your head while you save!
Timing, of course, is everything. And you'll only find out after the fact.
I have rented in the past but now own my own home (bought 5 years ago). It's about £150 pcm cheaper to rent, plus you have insurance and improvement costs to factor in which probably makes it £300 pcm more to own my own home; but it is that - mine, and I can do with as I please. I have done things here that I would never have done to rented homes (i.e. better finish to decoration etc).
The flip side is that my home is now worth the same as I paid for it so I'm at about 5% equity (not in negative thankfully but I have many neighbours that are) which as 'nice' as it is I've basically paid £18,000 over the last 5 years (300pcm x 12 months x 5 years) more than I would have paid by renting to own 5% of my house, which amounts roughly to the bricks that support my kitchen window. Thats about £300 per brick. But they're MY bricks. If I want to move house the 5% equity will be swallowed up by legal fees, I then have to find 30% deposit to buy another whereas if I was renting I could just up and go!
Swings and roundabouts mate....
The flip side is that my home is now worth the same as I paid for it so I'm at about 5% equity (not in negative thankfully but I have many neighbours that are) which as 'nice' as it is I've basically paid £18,000 over the last 5 years (300pcm x 12 months x 5 years) more than I would have paid by renting to own 5% of my house, which amounts roughly to the bricks that support my kitchen window. Thats about £300 per brick. But they're MY bricks. If I want to move house the 5% equity will be swallowed up by legal fees, I then have to find 30% deposit to buy another whereas if I was renting I could just up and go!
Swings and roundabouts mate....
It really depends if you want to tie yourself in to a commitment, if you are willing to live somewhere and stay put for at least 4 years+ then I'd buy, especially with the current market if you can afford it. Put it like this..I still own my last house and now rent it out (and pays for itself) and my new place does cost more than renting but I've got two places which will become mine.
I sort of knew when it was time and for me was the best decision...good luck
I sort of knew when it was time and for me was the best decision...good luck
the way i see it is
you buy a house, you pay your mortgage, in 25 years, it might be worth more, or it might be worth less than you bouhgt it for, but you will have an asset worth £XXXX
you rent a house, you pay someone elses mortgage, in 25 years, you have nothing to show for it
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
you buy a house, you pay your mortgage, in 25 years, it might be worth more, or it might be worth less than you bouhgt it for, but you will have an asset worth £XXXX
you rent a house, you pay someone elses mortgage, in 25 years, you have nothing to show for it
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people.doug
doing it that way round:
1. Instead of paying a fat mortgage every month, your rent gets paid for and you also get some profit left over every month !
2. over 20, 30 years or more you have 5 times the amount of money accruing capital out there in the property market
what would you rather profit from over x number of years, 5% of say 250k or 5% of 1.5 million ?
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people. doug
ts jumping on the BTL bandwagon, buying up 5 or 6 properties and fueling an artificial demand for property, this resulting in falling prices. Dupont666 said:
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people.doug
doing it that way round:
1. Instead of paying a fat mortgage every month, your rent gets paid for and you also get some profit left over every month !
2. over 20, 30 years or more you have 5 times the amount of money accruing capital out there in the property market
what would you rather profit from over x number of years, 5% of say 250k or 5% of 1.5 million ?
On a decent yield property with a healthy deposit the mortgage will be equal to or less than the net profit. So if its untenanted even for months or years on end.. you break even on it every month in any case.
Also, remember you don't pay a mortgage payment and you'll make a net monthly income (even once your rent is paid) so every month you should be squirreling away the amount of the mortgage payment that you'd normally pay as a house owner and possibly some extra on top. So that amounts to a pretty big backup fund after a year or two.
Berger 3rd said:
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people. doug
ts jumping on the BTL bandwagon, buying up 5 or 6 properties and fueling an artificial demand for property, this resulting in falling prices. jackal said:
Berger 3rd said:
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people. doug
ts jumping on the BTL bandwagon, buying up 5 or 6 properties and fueling an artificial demand for property, this resulting in falling prices. Dupont666 said:
jackal said:
Berger 3rd said:
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people. doug
ts jumping on the BTL bandwagon, buying up 5 or 6 properties and fueling an artificial demand for property, this resulting in falling prices. jackal said:
Dupont666 said:
jackal said:
Berger 3rd said:
jackal said:
dugt said:
i dont see how, long term, anyone can justify renting, even if you loose 90% of the value of the house, your still better off
doug
unless you rent and then own 5 or 6 houses and rent them out yourself ... instead of owning just the one that you live in. Its a trick that evades most people. doug
ts jumping on the BTL bandwagon, buying up 5 or 6 properties and fueling an artificial demand for property, this resulting in falling prices. and why wouldnt you just buy 5 houses and live in one? you wouldnt be loosing?
doug
Er I do have my own property thank you very much, and 3 months ago I was a mortgage advisor, until I was made redundant, so I know exactly how to go about it, despite current low rates, they are sky high unless you have a big chunk of deposit, so despite being a homeowner, I don't currently have the means, or the inclination for the risk to buy up 5 or 6 properties and rent them out. If it wasn't so easy to do this a few years ago then we wouldn't be in the mess we are now as I previously said.
The only way you can really benefit at the moment is if you have stacks of cash, and I mean stacks, to buy up property on the cheap, get the rent for now, and cash in later.
I believe the op is saving for a deposit at the moment, and deciding wether to buy one house, not a property empire.
The only way you can really benefit at the moment is if you have stacks of cash, and I mean stacks, to buy up property on the cheap, get the rent for now, and cash in later.
I believe the op is saving for a deposit at the moment, and deciding wether to buy one house, not a property empire.
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