I am after a 95% property mortgage and Post office has just reduced it to 3.98% compare to 5% at other banks.
It will help to people who wants to buy their first home.
Renting is not dead money! Renting allowed me to live in a very nice part of London and have no concerns with all of the palava which comes with owning a property. Any appliance go poof? Fixed immediately. Looking a bit shabby? Request a lick of paint. Leaking windowsill? Fix it please. No buildings insurance, no life insurance, no gas boiler insurance. Mattress lumpy - can I get a new one please?
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)
MassiveBongFace to robertoegg
25 Feb 1523#17
You must have a lovely landlord. I struggled to get mine to repair the smoke alarms, I could only dream of a lump free mattress.
tomdavidrichards to robertoegg
25 Feb 1511#14
Nah
anewman
26 Feb 158#42
Does noone see that this is just a scheme designed to prop up the housing market, and help people overstretch themselves? The Government aren't doing you any favours with this scheme. If they took the action that's really needed, house prices would fall. Once interest rates rise a disproportionate amount of people will be getting reposessed.
The big problem with the housing market is greedy buy to let "investors" are competing against each other, knowing they can financially [email protected] the average working family of at least 50 % of their income, with the right to jack up rents whenever they feel like it - and the ultimate trump card of eviction with more customers/victims wanting to rent property. Plus your B2L investor gets tax breaks, and preferential interest rates because they can use the rest of their "portfolio" as assets to secure against the mortgage, and count income from expected rent. You have to compete against people with these advantages when bidding for property.
I believe changes are needed to make B2L no more of an investment than an ISA. Perhaps a land ownership tax so you're taxed based on the land you own which would make it unsensible to own property you're not using for your own purposes, controls on rent possibly making sure noone would ever pay more rent than they would a mortgage, or a ban on B2L with a right to buy scheme for private rental tenant which takes into account the amount of rent paid over the years against the value of the property.
Please recognise the real enemy that has made the housing market unaffordable. It' just sheer greed taking advantage of people's need to have a roof over their head. Renting isn't a lifestyle choice, it's exploitation.
All comments (104)
leelee6781
25 Feb 15#1
What's their credit scoring like ?
STRBramley
25 Feb 15#2
Is this worth going for or waiting for a 10% mortgage?
RHodgett to STRBramley
25 Feb 15#5
It depends on if you think house prices will increase/decrease, the base rate will increase/decrease and how much interest you are willing to pay over the term.
pwel to STRBramley
25 Feb 151#6
imo if you have found the right property in the right price go for 5% deposit..im in a similar position...the property prices are near the lowest it can be and the only way is up...not very soon but slowly should start picking up
lalit123
25 Feb 15#3
well waiting for 10% is good if you know how much time it will take ...or else 5% is good..:smiley:
Filthypig
25 Feb 15#4
Good deal. Our 95% mortgage is 5.49% fixed for 4 years with Nationwide. Fees were £0 due to being a Nationwide customer. But this deal is good.
g8spur
25 Feb 15#7
Did you miss the 10% price increases last year? Market isn't flat anymore it's been moving upward for a year or so, so I wouldn't say it's "near the lowest it can be".
Villa
25 Feb 15#8
Post Office?
Did they insist on knowing the contents of your house?
matth5182
25 Feb 15#9
if you can afford the repayments and have the deposit i'd say go for the 95%. Renting is dead money, the fixed rate on this mortgage means you can budget at least for the first 3 years. The banks can't be expecting interest rates to rise anytime soon as I've seen several 10 year fixed rate mortgages on this site for 2/3% (65% loan to value). The property market is rising steadily so your property will only increase in value over time, lowering your loan to value and opening up more deals to you.
bargainbinner
25 Feb 153#10
Good luck with this.....I've had 2 houses fall through thanks to the post office messing me around! Cold from me I'm afraid!
robertoegg
25 Feb 1526#11
Renting is not dead money! Renting allowed me to live in a very nice part of London and have no concerns with all of the palava which comes with owning a property. Any appliance go poof? Fixed immediately. Looking a bit shabby? Request a lick of paint. Leaking windowsill? Fix it please. No buildings insurance, no life insurance, no gas boiler insurance. Mattress lumpy - can I get a new one please?
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)
tomdavidrichards to robertoegg
25 Feb 1511#14
Nah
MassiveBongFace to robertoegg
25 Feb 1523#17
You must have a lovely landlord. I struggled to get mine to repair the smoke alarms, I could only dream of a lump free mattress.
mcspence to robertoegg
25 Feb 15#20
Comment
Nah mate
lewwyt to robertoegg
26 Feb 15#33
Comment
You don't have life insurance? I feel sorry for your nearest and dearest...
fredoaf to robertoegg
26 Feb 15#34
My landlord is fixing the broken hot water which is sweet of him, its only been 6 months since it broke... Im sick of not being able to fix stuff myself
reddragon105 to robertoegg
26 Feb 152#49
What you're describing is the absolute best case scenario of renting. I've just moved out of a flat where I'd been living for six years. There were problems identified by the estate agent before we moved in that still weren't fixed, despite regularly chasing the landlord - simple things such as a dripping tap that went from just being annoying to causing an entire section of worktop to rot and the cupboard underneath to fill with mould. Every time it rained, we had water streaming down the walls in two rooms - we would complain, builders would come around and do something to 'fix' it, then the next time it rained it would happen again. At one point the kitchen ceiling started to bulge downwards because of the water - we told the landlord about it, they did nothing. It bulged more, we told them again, still nothing. Finally, the kitchen ceiling collapsed - then they finally did something, but we were left with a hole in our kitchen ceiling for a week that could have been prevented. We had a window frame replaced but the work was left unfinished - with an inch gap underneath it that was just a hole to the outside. I ended up filling it myself because it was winter and you could feel the draft across the room. So there's no way in hell my landlord would have given something a new lick of paint just because it looked shabby.
And those are just a few examples - I could go on. On the plus side, they did only put up our rent by the minimum each year, taking into account the damage we had to live with - except this year they decided to increase it so that it was in line with the average price in the area, which was a huge jump considering it had only gone up by the minimum every other year, and we were effectively priced out of our home. Thanks, landlord!
So that's the flipside to having a landlord. Sure, if your washing machine breaks, you get a new one. That's great - you haven't paid anything for it and it was bought, delivered and probably installed for you without you having to do anything more than e-mail the landlord. But it's probably a crap washing machine - the cheapest money can buy - and it's not yours, you can't take it with you when you move. Similarly with repairs - sure, you don't have to organise or pay for them, but they're done on the cheap - like our leaky roof, where the landlord should have paid more to get it fixed properly the first time, instead of getting quick, cheap work done on it twice a year - meaning that the inconvenience of living with the damage is not worth the amount of money and effort you're saving. If it's your house, you have to sort out and pay for this stuff yourself, but at least you can get it done properly and to your specification and if there's a problem you can chase up the people responsible yourself instead of having to go through a third party (your landlord).
And no matter what - rent is dead money. You will never get that money back. If you've got a mortgage, you could sell your house and, assuming you weren't buying another one, get back all the money you'd put into it (minus fees and taking into account inflation/change in the property's value, etc.). So if you're paying £500 a month and sell your house after a year and break even (after fees and everything) you'll get £6,000 back. If that was rent, you would never see that £6,000 again. That's dead money. The kicker is that a mortgage would probably be cheaper than rent - where I was living and paying £500 per month in rent, a typical mortgage would be £300 per month. But there's no way I would ever get over the hurdle of paying the deposit to get a mortgage because £500 per month in rent was stopping me from saving anything. If someone had given me £20,000 so that I could get a mortgage I could have stayed in the area and been £200 per month better off - which would easily cover new washing machines and kitchen ceiling repairs. Okay, so I would have had to shop around for new washing machines and call the builders myself, but that's a small price to pay for owning your own home where you, or your kids or whoever, are ultimately going to get the value back out of it.
dounavilla
25 Feb 152#12
Cool story bro !
ran123ran
25 Feb 15#13
95% LTV mortgage at 3.79% fix for 5 years is available from National Counties Building Society - comes with £545 fees though
Only available for Purchase - includes first time buyers
bobcoyle77
25 Feb 15#15
Horses for courses, got to weigh up pros and cons with mortgages at this LTV. values can go up or down, so variable rate is very important. Said on here before ask an expert and if Quidco sling you some cash back even better.
Juanjo
25 Feb 151#16
Great deal! Get proper advice from a qualified Adviser though. Advice on here is designed to be helpful but isn't specific to your own needs and circumstances. :sunglasses:
zulu123
25 Feb 15#18
Tsb bank does 5% deposit and fixed for 10 years
nick9
25 Feb 15#19
Sounds dear to me. I've got fixed at 0.45% above Bank of England base rate for 25 years! Although there's only 16 years left now.
konkywonky to nick9
25 Feb 154#24
This is for first time buyers so you're not eligible anyway.
Pretty pointless comparing a mortgage that was removed from the market years ago to what's available now.
decoy7 to nick9
26 Feb 15#32
from where?
frozensun to nick9
26 Feb 15#52
"Fixed" as in fixed spread to a variable rate?
chaymation
25 Feb 152#21
If you think that house prices are as low as they can be and the only way it up, then you might want to pay out for some maths lessons and a history lesson before you jump into a 95% mortgage. There is an election soon. Things can change faster than you can say "negative equity".
golo83 to chaymation
25 Feb 152#23
negative equity
chaymation
25 Feb 153#22
95%, 100%, 125% mortgages were how we got in this mess in the first place.
chaymation
25 Feb 151#25
Oh man, the bottom's dropped out of the market in the last 5 minutes and it's all your fault! :P
robertoegg
25 Feb 151#26
then move! don't play the victim. You hold all the power. Go through a reputable agent and you'll have no problems. Try to save cash and go shady and you get what you pay for. Or maybe you were looking for somewhere bong friendly, in which case, I can't really offer advice cos I left that behind at uni in the 90s :smiley:
robertoegg
25 Feb 153#27
So far, I've had one response saying "nah" one response saying "nah mate" and another from a bloke who puts Bong in his username... I'm not going to bet against another raft of negative equity! lol!
crazyjake
25 Feb 151#28
renting is dead money
crazyjake
25 Feb 15#29
init mush
MassiveBongFace
25 Feb 154#30
Yeah just move! It is that easy, don't worry about the 2 x refrencing fees, finding a new property, deposit and rent and then actually moving.
I resent the implication that I was trying to cheap out. I have since moved from the property but it was actually a city centre apartment in a lovely development that I was paying over £1k a month for. You do not know what the agent will be like until you move in, and in my case it was a different property managment firm that were responsible for maintaining the place anyway.
If you are happy with renting then great but don't pretend to know about the circumstances of others.
matth5182
25 Feb 15#31
I happily rented through uni as it suited the lifestyle being in another city for 4 years. I moved home and saved hard for a further few years for a deposit on a house. I'm not a financial adviser but I would recommend anyone who has the ready cash, commitment and is prepared to cut their cloth accordingly in good times and bad to buy rather than rent. Obviously this is subject to personal circumstances and not suitable for everyone however striving to own your own home, if at all possible has to be a good thing. Take advantage of the poor interest rates whilst you can and get on the ladder. yes the market could drop and yes the interest rates could rise but if you budget accordingly and allow some wiggle room then you can manage. I'm currently overpaying whilst the rates are low, having just come off a 6% fixed deal from 5 years ago.
ChickenDinner2000
26 Feb 151#35
Renting IS dead money, stone cold dead.
It is so obvious.
Nicolas
26 Feb 15#36
[quote=robertoegg]Renting is not dead money! Renting allowed me to live in a very nice part of London and have no concerns with all of the palava which comes with owning a property. Any appliance go poof? Fixed immediately. Looking a bit shabby? Request a lick of paint. Leaking windowsill? Fix it please. No buildings insurance, no life insurance, no gas boiler insurance. Mattress lumpy - can I get a new one please?
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)[/quote
someone who is finally honest and logical. there r parts of London now where the rental is 2% of the value of the property. that's not even including the service charges or maintenance expenses. u can't get that buying
Nicolas
26 Feb 151#37
if you think the two references for renting is hard then u ve not tried applying for a mortgage recently. they want to know the size of your inside leg and how often u get laid and what you spend on that. they put you through hours of application interview and grilling
ChickenDinner2000
26 Feb 152#38
You are exaggerating... it is not that difficult to apply for a mortgage, especially at a time when all banks are competing with each other for new business.
Even if it is as difficult as you are trying to make it sound, you only have to do it for once, then you are set for life.
Where as if you are renting you have to do these referencing, moving in/out, finding etc every 2-3 years.
Oh yea, and not to mention the cheap interest rates and up-going house price.
Seriously, buy if you can afford to, sure winner.
robertoegg to ChickenDinner2000
26 Feb 15#40
#greeneyes
My point made quite nicely for me, thank you. Clearly done a lot of research (read: the headlines say this!)
robertoegg
26 Feb 152#39
Don't get precious about it, toots! Have a toke and a pancake and read the advice for what it is. And learn and apply your rights. And maybe educate yourself on the complete and utter ball-ache of owning your own property or moving when in a chain. Then you'll look at your rental days and realise you were living in a dream scenario.
In Germany for instance, about 50% of people rent. In the UK, I'm not sure what the exact figure is but it's around 10%. Now, I don't need to point out that generally, the Germans tend to do things that are efficient and make sense. Granted, they have more protection for the renters but it's a stigma thing in the UK and this whole "renting is dead money" is just people viewing the issue with one eye closed and re-hashing someone else's opinion. The minute you state that phrase, you highlight yourself as someone who has no idea imo :smiley:
There is also greed. The greed that has come from seeing a boom in property through the 90s, 00s and beyond. Everyone looks back at recent history and says "I want a piece of that!". I will wager you that is the main reason people want a house - not to avoid "dead money" but to MAKE money #greeneyes.
Basic sums to support this next bit, I would hope that anyone wishing to part with the amount of money required to buy a property has done their own detailed sums (lol yeah right). I don't live in London anymore, about 40 miles out. Nice town anyway. I bought my house with my partner, 350k / deposit 60k = mortgage fixed £1500+. Fairly recent, decent rate. Don't forget to add all the associated fees of professionals involved, taking out the correct insurances, Stamp Duty (yeah thanks government) £10kish Upfront costs - . Rental value of this property = £1200. Over the course of the 5 year fixed - I'd have saved £20-25k lets say. That would pay for 1 years travelling!! Or, in a sensible world, give you £85k savings and still living in an decent area. Or save less, and go bigger!
Nicolas
26 Feb 15#41
100% agreed I have also provided a london example. In the old days buying made sense, now ....!
anewman
26 Feb 158#42
Does noone see that this is just a scheme designed to prop up the housing market, and help people overstretch themselves? The Government aren't doing you any favours with this scheme. If they took the action that's really needed, house prices would fall. Once interest rates rise a disproportionate amount of people will be getting reposessed.
The big problem with the housing market is greedy buy to let "investors" are competing against each other, knowing they can financially [email protected] the average working family of at least 50 % of their income, with the right to jack up rents whenever they feel like it - and the ultimate trump card of eviction with more customers/victims wanting to rent property. Plus your B2L investor gets tax breaks, and preferential interest rates because they can use the rest of their "portfolio" as assets to secure against the mortgage, and count income from expected rent. You have to compete against people with these advantages when bidding for property.
I believe changes are needed to make B2L no more of an investment than an ISA. Perhaps a land ownership tax so you're taxed based on the land you own which would make it unsensible to own property you're not using for your own purposes, controls on rent possibly making sure noone would ever pay more rent than they would a mortgage, or a ban on B2L with a right to buy scheme for private rental tenant which takes into account the amount of rent paid over the years against the value of the property.
Please recognise the real enemy that has made the housing market unaffordable. It' just sheer greed taking advantage of people's need to have a roof over their head. Renting isn't a lifestyle choice, it's exploitation.
anewman
26 Feb 15#43
36% and (most likely) increasing so far as some recent Census figures show....
The headlines say this, because very clearly this is what is happening.
Why did you buy recently then if you don't support buying?
Do what I say not do what I do???
newb
26 Feb 152#45
Renting is dead money.
As is leasing a car with no opportunity to purchase the car at the end of the lease.
This is not to say you didn't enjoy the house/car during this time, or that it wasn't a good thing for you to do at the time (I've rented to see if I wanted to move to a particular area, and when at uni), but the money is gone and house/car are never yours.
possibly one of the reasons you have now bought a property?
in your calculations you miss a couple of important points.
assuming you have a repayment mortgage, then you would be paying back some of the principle each month, which should be more than the £300 to £400 difference between your mortgage and rent.
even if house prices do not change in the next 5 years you will be sightly better off (more equity in house than the £85k you would have saved).
in addition, rents will always rise, so it is highly unlikely that you would be paying the same rent in 5 years time.
of course if you move it will cost you a tidy sum as you point out.
property is a long term investment, which will increase in value (not necessarily in the short term).
don't forget, after your 25 year mortgage is paid you get to live rent free and have an asset that can be passed on!
anewman
26 Feb 15#46
Property shouldn't be increasing in value. It's all artificial. If we weren't competing against people aiming to take over 50% of your income in rent, and bidding accordingly, house prices wouldn't be as they are. You're overstretching yourself to compete with other buyers in the market, and wait till interest rates rise. It's a question of when they will rise, not if.
mr.zoli
26 Feb 15#47
This is such a BAD deal as we got a 3.60% fixed Help to buy for 5 years with our broker
lalit123 to mr.zoli
26 Feb 15#48
Can you please tell which bank ? and if possible the broker name.
leebyron to mr.zoli
26 Feb 151#51
I'd be surprised.. I've researched this a lot myself the last few months and there's no 95% product around at 3.6% with any broker which I could find. Would like proof if you have it. Most 95%ers have been around the 4.5% mark or higher.
To me, seems a really good deal. We got the best first time buyer 90% we could find a couple of months back with the Post Office going directly at 2.95%. After going with a broker and getting rejected with Accord (Apparently, very strict with credit scoring) we got accepted and full mortgage offer from Post Office within 3 weeks over Christmas! (Full application sent on the 23/12/14, full mortgage offer back to us by 5/1/15)..
Actually couldn't recommend them enough as someone in this situation myself currently!
Mortgage interest is also dead money. You'll only get that back if your property has increased in value at an equivalent rate - which is by no means guaranteed.
That's very dependent on where you are. My last rental in Blackheath, London was £1050/month. My landlady briefly considered offering to sell to us, and quoted a figure of over £400000 that a local agent had mentioned. With this mortgage, that would have almost doubled my monthly payment, and that's not even considering any money for repairs and maintenance.
Ultimately we did decide to buy a place and we're very happy with it. But it's not as black and white as you make out.
reddragon105
26 Feb 15#54
I haven't had a mortgage before so I'm not totally sure how it works but it's certainly less dead money than rent - I mean that's the whole idea, right? I mean, paying off a mortgage counts towards your net worth - i.e. if you paid off a mortgage on a £250,000 you would have a net worth of £250,000, whereas rent will never count towards your net worth.
I was actually living in Peckham and our rent started at £800 6 years ago, creeping up to £1,000 over the years. Now that we've moved out it's back on the market at £1,300. There was a place that we looked at buying where the mortgage would have worked out to pretty much the same as our rent but raising the deposit for it was an insurmountable obstacle. Although now I'm looking and similar properties are all around £600,000 in Peckham because the area is so trendy these days apparently!
ChickenDinner2000
26 Feb 15#55
You have just given the very reason to buy property, right now.
One day, you will be priced out.
mr.zoli
26 Feb 15#56
I typed up a long reply and its all disappeared when I tried to add a photo ..
I used a broker from the Sequence Mortgage Services, this was our second time we used them and they are very very good.
I got the offer on the 2nd of Feb and completing on the house tomorrow so Im sure this rate is still available. Me and my partner both have very good credit rating so I think maybe some products are not available to certain credit ratings.. But this is just my guess and might be totally wrong.
And also I was wrong about the rate too, its not 3.60% Its actually a little bit higher 3.64%..
Unfortunately I cant add the photo Ive taken of my mortgage papers so you just have to take my word for it or go and see a financial advisor..
andrewfmills
26 Feb 15#57
Although that's half true, a portion of your monthly repayment is interest, so your £250k house will have cost you say £400k once everything is paid off. The way I see it is if you can rent for less than the mortgage interest payment + other expenses that go along with owning a house i.e. insurance, maintenance, your better off renting - financially at least.
PR1
26 Feb 15#58
Well I think sub-4% for a 95LTV is pretty damn good. I actually thought I did well 2 years ago with a 3.99% at 90LTV.
ChickenDinner2000
26 Feb 15#59
Guys,
At the current interest rate, p
oh boy..... this is like watching Titanic about to crash....I can now totally see how a misconception can ruin a person, for life.
Why would you think there could EVER be a day when the rent you pay would be less than the mortgage interest payment?
If you rent, you are paying money to a landlord, who in turns pay interest for a BTL mortgage.
If what you pay the landlord is LESS than what the landlord pays in interest for the BTL mortgage, then theren't wouldn't even be a BTL lanlord.
Not to mention, residential mortgae rates are far lower than BTL mortgage rates.
As such, there could not be a scenario where the amount of rent you pay is LESS than the interest payment required on the property.
Don't fool yourself people.
In the long run: a low rate, forever rising property price, the equity you save when you pay the monthly instalment, will all ensure your financial well being at the end of the day.
For the people who keeps on ignoring the truth and rent rent rent.......they will eventually have no where to go when they retire with no more income.
Rhianne
26 Feb 15#60
My mortgage payment is £297 a month and around two thirds of that payment is interest. However, if I was renting, £297 would be going in the landlord's pocket so at least you are adding a small amount to your equity each time. Rent around my area would be around £400-£500pcm. I'm estimating I'll be mortgage free by the time I'm 50 but renters will still be paying rent at 50.
ChickenDinner2000
26 Feb 15#61
Agree, agree.
Such a simple thing.
I so don't understand how come so many people don't get it.
Nikthomas
26 Feb 151#62
[quote=robertoegg]Renting is not dead money!
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
/quote]
Exactly this! Most of the people in Europe rent all their lives but our stiff upper lip passed down generations makes us think we must buy our own property. It works out about even renting for about 30 years.
anewman
26 Feb 15#63
Not if the Government do the honorable thing and legislate against B2L rentier spivs, or actually build more social housing and free up the housing market by starting a nationalised scheme building houses. Developers know not to build too many houses to keep demand keen and prices high. Problem is most MP's are B2L rentier spivs for whom £67k + generous expenses isn't enough, so given the vote will always vote on issues in favour of greedy landlords.
ChickenDinner2000
26 Feb 15#64
Yes, but you need to distinguish the difference between "an ideal world" and "the reality" right?
Yes in an ideal world housing should be free for everyone (where you don't even have to pay rent), the government is "honourable" and is paying for everything, there is no evil BTL landlords, all over UK blue birds sing and there is always a whisky spring.
But sadly we live in a real world.
I am not saying whether things done are "honourable" or whatever.
I am saying, under this global environment, securing yourself with at least one piece of real estate is absolutely necessary.
ChickenDinner2000
26 Feb 15#65
Also, the Europe QE is starting NEXT MONTH.
The market is going to get washed with an abundant amount of $$$$$
andrewfmills
26 Feb 15#66
That's a very good point Rhianne. My view was probably a little short term, I should add I'm in the home owner camp!
Once its paid off there is no comparison. I can't possibly imagine a time when I'll be mortgage free!
andrewfmills
26 Feb 15#67
I think you meant €€€€€€€ :wink:
ChickenDinner2000
26 Feb 15#68
my bad, I meant money! :0
ChickenDinner2000
26 Feb 151#69
Do the "honourable thing", pay the monthly installment on time.
We will all get there, as pround property owners.
benjus
26 Feb 15#70
The part that you are missing is that many landlords have owned their properties for many years, and bought them when they were worth substantially less than they are. So their BTL mortgage repayments are much, much less than if they were to buy the property now. As long as they can make some profit with the rental income they are not going to raise the rents too much (and there isn't enough demand to allow them to).
I gave a concrete example earlier - I have several friends still renting in London in similar situations, not able to afford a mortgage on the property they rent.
chaymation
26 Feb 151#71
You know that bank stress tests are all now being set at "can the bank survive with a 30% house price fall" levels?
People have such short memories.
When the bubble pops (as has happened several times in the last century) there will be carnage.
Then we'll buy.
From desperate sellers, who thought interest rates will never rise but house prices always would.
You have just reinforced:
(1) the importance of buying a property early in your life,
and
(2) how solidly healthy the market currently is, given the potential equity in properties purchased earlier.
It is true some properties were actually purchased a long time ago, hence the landlords have actually accumulated a healthy amount of equity in their property holding.
Now.......imagine yourself being in 2035 (20 years later):
The property you have purchased in 2015, would have accumulated a healthy amount of equity. And if you are actually buying additional properties as BTL, even not raising rents continuously will net you quite a healthy return.
The truth is, if you don't buy when you are young, you will have no where to live when you are old.
Simple.
benjus
26 Feb 15#74
To be honest, I agree - and I have bought a property.
I was just saying that rent can be lower than mortgage interest, and in some areas people who are currently renting would have to move to a different area to be able to buy. That's what we did last year - moved to a cheaper area to be able to buy.
If rent is lower than the mortgage interest, who would buy the house, pay interest and make a loss renting it out to you???
Rent is always higher than mortgage interest.
chaymation
26 Feb 15#78
Nice graph. It seem to shows prices now as less than they were in 2007
and prices in 1995 less than they were in 1989
Yet you seem so certain that the same thing won't happen again?
chaymation
26 Feb 15#79
Rent is not always higher than mortgage costs.
There are plenty of accidental landlords who can't sell their home (because they think it's worth more than it is) so they are forced to rent it out.
In some cases that works out well for them, but in areas where the local rental market rate is lower than their mortgage rate, they just have to suck it up and get less in for rent than they pay out in mortgage. (or actually cut the price and sell their house). Of course they hope this is a short term situation, but who knows if that gamble will pay off?
If three beds in their areas rent out at 600, and maybe 650 for a nice one, and their mortgage is 750, they can't just put the rental up at 750 can they? nobody will pay it. There is a limit to what the rental market will bear.
ChickenDinner2000
26 Feb 15#80
The landlord would have sold the flat already mate.
Who would be dumb enough to pay, every single month, £750 for something that collects £650??
Would you do that?
niceguyrick
26 Feb 15#81
Is it not possible now to get a 75-80% mortgage on this scheme, with a government loan of around 15-20% and a 5% deposit?
ChickenDinner2000
26 Feb 15#82
oh boy.............
What is the rationale of pin pointing to a peak in reference to the rest of the curve??
Yes yes yes, things will happen again, and if you compare 2007 then we are no where near its peak. But not all home owners bought in 2007 (some could have purchased in 1980, some in 1985, others purchased in 1990 etc).
You can see from the graph, you have actually got a good chance of being "in the money" down the future if you buy at the present.
So if you compare the 1989 "high", with the 2013 "low".........the 2014 "low" is still way way higher than the 1989 "high"
get it?
benjus
26 Feb 151#83
Look. I'm telling you that rent CAN be lower than mortgage interest.
Let's look at the example of the last place I rented. I paid £1050/month for it. The landlady said it had been valued at over £400k (which was believable compared with other properties nearby). Under this Post Office HtB mortgage, assuming a 5% deposit, the monthly mortgage interest payments would be £1260.
She had owned the property for several years; I have no idea how much of a mortgage she still had on the property, but it's quite conceivable that she bought the property when it was worth £250k (maybe even lower), so let's say the mortgage remaining is £200k - which could be about £750 per month in interest, even assuming a higher interest rate for a BTL mortgage. So she's still making a profit because she has far more equity in the property than I would if I bought it now.
ChickenDinner2000
26 Feb 15#84
Would you?
ChickenDinner2000
26 Feb 15#85
Then the property is not worth 400k........ she can get it valued at 4 million but it doesn't mean there is going to be an actual transaction.
You have just proven my point, because otherwise, if mortgage interest is lower than rent, you would have bought the flat right?
chaymation
26 Feb 15#86
Oh yeah, because it's really easy to sell a house at the moment. They sell within seconds.
Maybe in London they do, but elsewhere? there is stuff that has been on the market for months or years.
Those people have to recover what they can each month in the hope that prices go up so they can sell (some of them are still in negative equity because they purchased at peak, using 100% mortgages)
chaymation
26 Feb 15#87
Yes but if I have 200K in cash in the bank right now. I could buy a house now (at what looks very much a peak, given the money pumped in to the system, interest rates almost as low as they can get, russian and chinese money leaving london due to political turmoil and an election in a couple of months all potential indicators of trouble ahead)
or I could wait until it all comes crashing down and get a much better house for the same money in the next few years. If I'm wrong then I've "missed the boat", if I'm right then I get a much better house.
Meanwhile the interest on my savings pays my rent each month anyway.
I'm not saying I'll never buy. Yes, based on that graph it works out long term, but does it make sense to buy now, or bide my time?
get it?
benasipro
26 Feb 15#88
Instead of paying inflate rates, move to :
- Hull, the flats there are 60k, and work in York
-Hereford or Leominster, flats=same, and work in Birmingham
-Crawley, flats=100k and work in South London
-Norwich, flats=85k and work in Cambridge
maaow
26 Feb 15#89
I'm not saying you're 100% wrong, but you shouldn't judge everyone by these standards. I'm lucky enough to own my own home and am relatively young, and am currently looking for a buy to let property. I have a decent job, but I chose to work for a charity (because I genuinely believe in the cause) so understandably get a lower salary than I would in the private sector. This also means I get a very minimal pension, so I'm trying to create my own little safety net by purchasing a buy to let that can 'tick over' whilst I am of working age (I'm unlikely to make much/any money during this time) that I can then sell come retirement age, and have a small lump sum to help me by. I don't plan to "[email protected] the average family" by any means, just trying to get by! Perhaps if the buy to let market opened up to more honest hard working people (less of this 60-75% LTV nonsense) the rental market would be a much nicer place :smiley:
ash riaz
26 Feb 15#90
Thanks
ChickenDinner2000
27 Feb 151#91
I get what you are doing.
However I don't get your rationale.
What you are telling me is you are waiting for market to come down and then you will gracefully enter the market, there are more than one loopholes with this:
1) A day you spend waiting will be a day wasted in terms of mortgage installement (imagine the difference between a person who starts to repay installments at age 28 and a person who starts at age 48).
2) Will there be a downturn in the near future given low rates, high demand/low supply and Eurozone QE?
3) Say it comes down in two years, but then don't forget during the meantime it is still rising eg. today it is 100, two years later it goes to 140, then comes back down to 110, which will still be more expensive than 100.
What you are essentially doing is just pure gambling, betting that the price will head downwards at some unknown horizon in the future. However, you are forgetting the very fundamentals I have mentioned in point (1) , (2) and (3).
The 95% mortgage has been introduced so people without a deposit but can pay the monthly installment can buy a house, ifI am one of those people I would seize the opportunity, instead of aimlessly waiting for something that may or may not happen in the future.
godsakes
27 Feb 15#92
The difference is your landlord may have bought when property prices were lower or simply has a more competitive mortgage deal.
When I last moved house I was able to pay a one off fee so my bank gave me the 'right to let' (effectively convert a residential mortgage to a BTL). My mortgage was BOE base rate +0.49% (so 0.99% currently) - so currently the rent easily covers the interest cost + repairs (profitable in the eyes of HMRC). But after taxes + capital repayment element doesn't leave us any cash to blow away, which is fine as it's our pension plan as I frankly don't trust fund managers to look after my money (call me weird but I've always mistrusted the proposition where someone asks you to give them some money and they'll give you back more).
andrewfmills
27 Feb 15#93
Theres plenty of scenarios where this could true:
Landlord inherited the property.
Landlord bought the property ages for a fraction of what its worth now.
Landlord bought the property in cash without a mortgage.
ChickenDinner2000
27 Feb 15#94
Yes those are some of the cases, but they don't cover the entire BTL market now do they?
What is the point of using some outliers to form the basis of your analysis?
This is from Dec 2014:
"Buy-to-let lending jumped from £5.9bn in the third quarter of 2013 to £8bn in the corresponding period this year - the highest quarterly amount since the crash of 2008, official data from the Bank of England has shown. "
The fact that new lendings are made and people are borrowing from banks to invest into a BTL, is because there is actually money to be made, and there is money to be made because the rental amount received is greater than the actual interest paid to the banks.
That translates into you would be better off just buying outright and just pay the bank interest, NOT paying BOTH the landlord and the banks.
The majority of the population can actually pay the monthly installment, that's why this deal is SUPER HOT because at 95% LTV you only need to put up 5% of the home value upfront------>>> Not to mention you can switch mortgage deals later.
It is so so so simple people please just think.
ChickenDinner2000
27 Feb 15#95
read post above......take a look at the new lending figures, look at the numbers, think.
anewman
27 Feb 15#96
Ah you mean like the proposition where you ask someone to pay rent and you in turn pay a mortgage? Have a social conscience and leave the tenants the property in your will, as you won't have any use for it when dead. I love how the rich always like to present the idea they're hard done by "doesn't leave us any cash to blow away".
godsakes
27 Feb 151#97
I make no more apologies for expecting rent in return for providing a home than you would for expecting a wage in return for your labour.
I'm not rich by any stretch of the imagination (if I was I wouldn't need a mortgage for it) the point is the rent isn't fueling some prostitute & cocaine hedonistic/get rich quick lifestyle it's simply a boring pension plan and there's no point in begrudging someone who hopes not to just subsist on (whatever will remain of) state pension by the time I retire.
ChickenDinner2000
27 Feb 15#98
agree, agree
robertoegg
27 Feb 15#99
there's no real way to discuss any more in this thread with ChickenDinner's overly simplistic view of the housing conundrum.
I wish you luck mate, but you are typical of lot of people who do not educate themselves in how the markets work, how your situation can change and so on and so on... you see things in a very black and white world - buy a house, make some money. That's it.
It actually p!sses me off that people can enter the market with limited understanding. It is these who contribute to the destabilising of the market. When/If you buy a property, there are several risk assessments you should do and you have not mentioned one nor accepted others opinions when they have identified them. I have stress tested myself and know how long I can last if I lose my partner's salary, if I lose my job, if the market crashes 30%, if interest rates jump to 10%, If I can't get a new mortgage after my attractive rate finishes and I drop to the SVR* etc etc
* - this is a massive problem we are going to see soon. Interest rates are at a historical low so lenders have hoiked their rate you go to once you fall out of your introductory rate. Combine that with an interest rate rise to just 2% and people will suddenly be paying 6/7%. If your situation or the market has had a down turn, you are trapped. Do he sums on that difference and suddenly more people default, everyone gets nervous, boom....another bounce.
^^^
Just a scenario but one which I have considered and I'll bet you haven't. When I searched for the mortgage I wanted, I sorted them by the interest rate you drop onto as one of my comparisons.
No way I was taking a chance with my family, my money. Unlike some of the gamblers on here.
OVer and out
godsakes to robertoegg
28 Feb 15#100
The problem is there are risks either way and there's only so far in which people can plan ahead - yes there's plenty of risk in buying (interest rates shooting up and personal circumstances changing) but there's also risks in not buying (will you be priced out later on, mortgage deals getting worse, rents shooting up etc).
ChickenDinner2000 to robertoegg
28 Feb 152#101
"Investing in Simple, but not Easy." ----- there is not much point in trying to complicate a relatively simple thing, as with what Robertoegg is doing, with his "stress test" and "interest rate sorting".
Fact 1) You have got to live somewhere, whether buying or renting
Fact 2) Rent paid to landlord is dead money
Fact 3) If you rent for 30 years, you will end up with nothing. If you buy and pay installments for 30 years, you end up with a property.
Fact 4) There will be no "increase in rent" or "eviction" if you buy your own place, you are your own landlord.
Fact 5) Money depreciates due to inflation, every day, every year. Property, like everything else, will get more and more expensive.
Easy, so easy.
ran123ran
28 Feb 15#102
"Investing in Simple, but not Easy." ----- there is not much point in trying to complicate a relatively simple thing, as with what Robertoegg is doing, with his "stress test" and "interest rate sorting".[/b]Fact 1) You have got to live somewhere, whether buying or rentingFact 2) Rent paid to landlord is dead moneyFact 3) If you rent for 30 years, you will end up with nothing. If you buy and pay installments for 30 years, you end up with a property.Fact 4) There will be no "increase in rent" or "eviction" if you buy your own place, you are your own landlord.Fact 5) Money depreciates due to inflation, every day, every year. Property, like everything else, will get more and more expensive.
Easy, so easy.[/quote]
Simples!
LibertyCap89
5 Apr 15#103
I've never heard such a ridiculous claim...
What 50% of Germans are the smart 'efficient and make sense' renters? The first 50% or the second 50%... Oh wait!? Just realised what 50% is LOL neither a majority nor minority, it is simply half.
What great statistical claims you have sir!
We all know renting is dead money. It is money you do not get back. It is therefore dead, gone, vanished, in some fat wise mans hands who used his brain to invest in property.
habshihalva
6 May 16#104
Also add 331406 as Post Office code or leaflet code
![Fresh Breakfast Meat Box (Using code) @ Campbells Meat [Haggis / Lorne Sausage / Bacon / Black Pudding & More]](/images/topics/208684_1.jpg)
![[Xbox One] Q. u. b. e: Director's Cut on Deals with Gold](/images/topics/208716_1.jpg)
Opening post
It will help to people who wants to buy their first home.
http://www.postoffice.co.uk/mortgages/help-to-buy
Top comments
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)
The big problem with the housing market is greedy buy to let "investors" are competing against each other, knowing they can financially [email protected] the average working family of at least 50 % of their income, with the right to jack up rents whenever they feel like it - and the ultimate trump card of eviction with more customers/victims wanting to rent property. Plus your B2L investor gets tax breaks, and preferential interest rates because they can use the rest of their "portfolio" as assets to secure against the mortgage, and count income from expected rent. You have to compete against people with these advantages when bidding for property.
I believe changes are needed to make B2L no more of an investment than an ISA. Perhaps a land ownership tax so you're taxed based on the land you own which would make it unsensible to own property you're not using for your own purposes, controls on rent possibly making sure noone would ever pay more rent than they would a mortgage, or a ban on B2L with a right to buy scheme for private rental tenant which takes into account the amount of rent paid over the years against the value of the property.
Please recognise the real enemy that has made the housing market unaffordable. It' just sheer greed taking advantage of people's need to have a roof over their head. Renting isn't a lifestyle choice, it's exploitation.
All comments (104)
Did they insist on knowing the contents of your house?
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)
Nah mate
You don't have life insurance? I feel sorry for your nearest and dearest...
And those are just a few examples - I could go on. On the plus side, they did only put up our rent by the minimum each year, taking into account the damage we had to live with - except this year they decided to increase it so that it was in line with the average price in the area, which was a huge jump considering it had only gone up by the minimum every other year, and we were effectively priced out of our home. Thanks, landlord!
So that's the flipside to having a landlord. Sure, if your washing machine breaks, you get a new one. That's great - you haven't paid anything for it and it was bought, delivered and probably installed for you without you having to do anything more than e-mail the landlord. But it's probably a crap washing machine - the cheapest money can buy - and it's not yours, you can't take it with you when you move. Similarly with repairs - sure, you don't have to organise or pay for them, but they're done on the cheap - like our leaky roof, where the landlord should have paid more to get it fixed properly the first time, instead of getting quick, cheap work done on it twice a year - meaning that the inconvenience of living with the damage is not worth the amount of money and effort you're saving. If it's your house, you have to sort out and pay for this stuff yourself, but at least you can get it done properly and to your specification and if there's a problem you can chase up the people responsible yourself instead of having to go through a third party (your landlord).
And no matter what - rent is dead money. You will never get that money back. If you've got a mortgage, you could sell your house and, assuming you weren't buying another one, get back all the money you'd put into it (minus fees and taking into account inflation/change in the property's value, etc.). So if you're paying £500 a month and sell your house after a year and break even (after fees and everything) you'll get £6,000 back. If that was rent, you would never see that £6,000 again. That's dead money. The kicker is that a mortgage would probably be cheaper than rent - where I was living and paying £500 per month in rent, a typical mortgage would be £300 per month. But there's no way I would ever get over the hurdle of paying the deposit to get a mortgage because £500 per month in rent was stopping me from saving anything. If someone had given me £20,000 so that I could get a mortgage I could have stayed in the area and been £200 per month better off - which would easily cover new washing machines and kitchen ceiling repairs. Okay, so I would have had to shop around for new washing machines and call the builders myself, but that's a small price to pay for owning your own home where you, or your kids or whoever, are ultimately going to get the value back out of it.
Only available for Purchase - includes first time buyers
Pretty pointless comparing a mortgage that was removed from the market years ago to what's available now.
I resent the implication that I was trying to cheap out. I have since moved from the property but it was actually a city centre apartment in a lovely development that I was paying over £1k a month for. You do not know what the agent will be like until you move in, and in my case it was a different property managment firm that were responsible for maintaining the place anyway.
If you are happy with renting then great but don't pretend to know about the circumstances of others.
It is so obvious.
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
Don't go jumping in due to peer pressure from "those that know" on the internet. Base it upon your own financial situation, take proper advice, and understand that a mortgage is a 25 year commitment with a lot of associated costs. We work longer, will live longer and be healthy longer. Rent a nice place for a few years :o)[/quote
someone who is finally honest and logical. there r parts of London now where the rental is 2% of the value of the property. that's not even including the service charges or maintenance expenses. u can't get that buying
Even if it is as difficult as you are trying to make it sound, you only have to do it for once, then you are set for life.
Where as if you are renting you have to do these referencing, moving in/out, finding etc every 2-3 years.
Oh yea, and not to mention the cheap interest rates and up-going house price.
Seriously, buy if you can afford to, sure winner.
My point made quite nicely for me, thank you. Clearly done a lot of research (read: the headlines say this!)
In Germany for instance, about 50% of people rent. In the UK, I'm not sure what the exact figure is but it's around 10%. Now, I don't need to point out that generally, the Germans tend to do things that are efficient and make sense. Granted, they have more protection for the renters but it's a stigma thing in the UK and this whole "renting is dead money" is just people viewing the issue with one eye closed and re-hashing someone else's opinion. The minute you state that phrase, you highlight yourself as someone who has no idea imo :smiley:
There is also greed. The greed that has come from seeing a boom in property through the 90s, 00s and beyond. Everyone looks back at recent history and says "I want a piece of that!". I will wager you that is the main reason people want a house - not to avoid "dead money" but to MAKE money #greeneyes.
Basic sums to support this next bit, I would hope that anyone wishing to part with the amount of money required to buy a property has done their own detailed sums (lol yeah right). I don't live in London anymore, about 40 miles out. Nice town anyway. I bought my house with my partner, 350k / deposit 60k = mortgage fixed £1500+. Fairly recent, decent rate. Don't forget to add all the associated fees of professionals involved, taking out the correct insurances, Stamp Duty (yeah thanks government) £10kish Upfront costs - . Rental value of this property = £1200. Over the course of the 5 year fixed - I'd have saved £20-25k lets say. That would pay for 1 years travelling!! Or, in a sensible world, give you £85k savings and still living in an decent area. Or save less, and go bigger!
The big problem with the housing market is greedy buy to let "investors" are competing against each other, knowing they can financially [email protected] the average working family of at least 50 % of their income, with the right to jack up rents whenever they feel like it - and the ultimate trump card of eviction with more customers/victims wanting to rent property. Plus your B2L investor gets tax breaks, and preferential interest rates because they can use the rest of their "portfolio" as assets to secure against the mortgage, and count income from expected rent. You have to compete against people with these advantages when bidding for property.
I believe changes are needed to make B2L no more of an investment than an ISA. Perhaps a land ownership tax so you're taxed based on the land you own which would make it unsensible to own property you're not using for your own purposes, controls on rent possibly making sure noone would ever pay more rent than they would a mortgage, or a ban on B2L with a right to buy scheme for private rental tenant which takes into account the amount of rent paid over the years against the value of the property.
Please recognise the real enemy that has made the housing market unaffordable. It' just sheer greed taking advantage of people's need to have a roof over their head. Renting isn't a lifestyle choice, it's exploitation.
http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/a-century-of-home-ownership-and-renting-in-england-and-wales/sty-home-ownership.html
Why did you buy recently then if you don't support buying?
Do what I say not do what I do???
As is leasing a car with no opportunity to purchase the car at the end of the lease.
This is not to say you didn't enjoy the house/car during this time, or that it wasn't a good thing for you to do at the time (I've rented to see if I wanted to move to a particular area, and when at uni), but the money is gone and house/car are never yours.
possibly one of the reasons you have now bought a property?
in your calculations you miss a couple of important points.
assuming you have a repayment mortgage, then you would be paying back some of the principle each month, which should be more than the £300 to £400 difference between your mortgage and rent.
even if house prices do not change in the next 5 years you will be sightly better off (more equity in house than the £85k you would have saved).
in addition, rents will always rise, so it is highly unlikely that you would be paying the same rent in 5 years time.
of course if you move it will cost you a tidy sum as you point out.
property is a long term investment, which will increase in value (not necessarily in the short term).
don't forget, after your 25 year mortgage is paid you get to live rent free and have an asset that can be passed on!
To me, seems a really good deal. We got the best first time buyer 90% we could find a couple of months back with the Post Office going directly at 2.95%. After going with a broker and getting rejected with Accord (Apparently, very strict with credit scoring) we got accepted and full mortgage offer from Post Office within 3 weeks over Christmas! (Full application sent on the 23/12/14, full mortgage offer back to us by 5/1/15)..
Actually couldn't recommend them enough as someone in this situation myself currently!
That's very dependent on where you are. My last rental in Blackheath, London was £1050/month. My landlady briefly considered offering to sell to us, and quoted a figure of over £400000 that a local agent had mentioned. With this mortgage, that would have almost doubled my monthly payment, and that's not even considering any money for repairs and maintenance.
Ultimately we did decide to buy a place and we're very happy with it. But it's not as black and white as you make out.
I was actually living in Peckham and our rent started at £800 6 years ago, creeping up to £1,000 over the years. Now that we've moved out it's back on the market at £1,300. There was a place that we looked at buying where the mortgage would have worked out to pretty much the same as our rent but raising the deposit for it was an insurmountable obstacle. Although now I'm looking and similar properties are all around £600,000 in Peckham because the area is so trendy these days apparently!
One day, you will be priced out.
I used a broker from the Sequence Mortgage Services, this was our second time we used them and they are very very good.
I got the offer on the 2nd of Feb and completing on the house tomorrow so Im sure this rate is still available. Me and my partner both have very good credit rating so I think maybe some products are not available to certain credit ratings.. But this is just my guess and might be totally wrong.
And also I was wrong about the rate too, its not 3.60% Its actually a little bit higher 3.64%..
Unfortunately I cant add the photo Ive taken of my mortgage papers so you just have to take my word for it or go and see a financial advisor..
At the current interest rate, p
oh boy..... this is like watching Titanic about to crash....I can now totally see how a misconception can ruin a person, for life.
Why would you think there could EVER be a day when the rent you pay would be less than the mortgage interest payment?
If you rent, you are paying money to a landlord, who in turns pay interest for a BTL mortgage.
If what you pay the landlord is LESS than what the landlord pays in interest for the BTL mortgage, then theren't wouldn't even be a BTL lanlord.
Not to mention, residential mortgae rates are far lower than BTL mortgage rates.
As such, there could not be a scenario where the amount of rent you pay is LESS than the interest payment required on the property.
Don't fool yourself people.
In the long run: a low rate, forever rising property price, the equity you save when you pay the monthly instalment, will all ensure your financial well being at the end of the day.
For the people who keeps on ignoring the truth and rent rent rent.......they will eventually have no where to go when they retire with no more income.
Such a simple thing.
I so don't understand how come so many people don't get it.
It's a really good way to live but in this country it's frowned upon. I do now own a property (outside of London!) but have bought it "safely". If 2007 happens again and prices plummet 30% I'll be ok. If interest rates go up to 8,9,10%, I'll be able to survive for a while.
/quote]
Exactly this! Most of the people in Europe rent all their lives but our stiff upper lip passed down generations makes us think we must buy our own property. It works out about even renting for about 30 years.
Yes in an ideal world housing should be free for everyone (where you don't even have to pay rent), the government is "honourable" and is paying for everything, there is no evil BTL landlords, all over UK blue birds sing and there is always a whisky spring.
But sadly we live in a real world.
I am not saying whether things done are "honourable" or whatever.
I am saying, under this global environment, securing yourself with at least one piece of real estate is absolutely necessary.
The market is going to get washed with an abundant amount of $$$$$
Once its paid off there is no comparison. I can't possibly imagine a time when I'll be mortgage free!
We will all get there, as pround property owners.
I gave a concrete example earlier - I have several friends still renting in London in similar situations, not able to afford a mortgage on the property they rent.
People have such short memories.
When the bubble pops (as has happened several times in the last century) there will be carnage.
Then we'll buy.
From desperate sellers, who thought interest rates will never rise but house prices always would.
In cash.
2015? 2020? 2025? .............................. 2115?
(1) the importance of buying a property early in your life,
and
(2) how solidly healthy the market currently is, given the potential equity in properties purchased earlier.
It is true some properties were actually purchased a long time ago, hence the landlords have actually accumulated a healthy amount of equity in their property holding.
Now.......imagine yourself being in 2035 (20 years later):
The property you have purchased in 2015, would have accumulated a healthy amount of equity. And if you are actually buying additional properties as BTL, even not raising rents continuously will net you quite a healthy return.
The truth is, if you don't buy when you are young, you will have no where to live when you are old.
Simple.
I was just saying that rent can be lower than mortgage interest, and in some areas people who are currently renting would have to move to a different area to be able to buy. That's what we did last year - moved to a cheaper area to be able to buy.
up up up mate
If rent is lower than the mortgage interest, who would buy the house, pay interest and make a loss renting it out to you???
Rent is always higher than mortgage interest.
and prices in 1995 less than they were in 1989
Yet you seem so certain that the same thing won't happen again?
There are plenty of accidental landlords who can't sell their home (because they think it's worth more than it is) so they are forced to rent it out.
In some cases that works out well for them, but in areas where the local rental market rate is lower than their mortgage rate, they just have to suck it up and get less in for rent than they pay out in mortgage. (or actually cut the price and sell their house). Of course they hope this is a short term situation, but who knows if that gamble will pay off?
If three beds in their areas rent out at 600, and maybe 650 for a nice one, and their mortgage is 750, they can't just put the rental up at 750 can they? nobody will pay it. There is a limit to what the rental market will bear.
Who would be dumb enough to pay, every single month, £750 for something that collects £650??
Would you do that?
What is the rationale of pin pointing to a peak in reference to the rest of the curve??
Yes yes yes, things will happen again, and if you compare 2007 then we are no where near its peak. But not all home owners bought in 2007 (some could have purchased in 1980, some in 1985, others purchased in 1990 etc).
You can see from the graph, you have actually got a good chance of being "in the money" down the future if you buy at the present.
So if you compare the 1989 "high", with the 2013 "low".........the 2014 "low" is still way way higher than the 1989 "high"
get it?
Let's look at the example of the last place I rented. I paid £1050/month for it. The landlady said it had been valued at over £400k (which was believable compared with other properties nearby). Under this Post Office HtB mortgage, assuming a 5% deposit, the monthly mortgage interest payments would be £1260.
She had owned the property for several years; I have no idea how much of a mortgage she still had on the property, but it's quite conceivable that she bought the property when it was worth £250k (maybe even lower), so let's say the mortgage remaining is £200k - which could be about £750 per month in interest, even assuming a higher interest rate for a BTL mortgage. So she's still making a profit because she has far more equity in the property than I would if I bought it now.
You have just proven my point, because otherwise, if mortgage interest is lower than rent, you would have bought the flat right?
Maybe in London they do, but elsewhere? there is stuff that has been on the market for months or years.
Those people have to recover what they can each month in the hope that prices go up so they can sell (some of them are still in negative equity because they purchased at peak, using 100% mortgages)
or I could wait until it all comes crashing down and get a much better house for the same money in the next few years. If I'm wrong then I've "missed the boat", if I'm right then I get a much better house.
Meanwhile the interest on my savings pays my rent each month anyway.
I'm not saying I'll never buy. Yes, based on that graph it works out long term, but does it make sense to buy now, or bide my time?
get it?
- Hull, the flats there are 60k, and work in York
-Hereford or Leominster, flats=same, and work in Birmingham
-Crawley, flats=100k and work in South London
-Norwich, flats=85k and work in Cambridge
However I don't get your rationale.
What you are telling me is you are waiting for market to come down and then you will gracefully enter the market, there are more than one loopholes with this:
1) A day you spend waiting will be a day wasted in terms of mortgage installement (imagine the difference between a person who starts to repay installments at age 28 and a person who starts at age 48).
2) Will there be a downturn in the near future given low rates, high demand/low supply and Eurozone QE?
3) Say it comes down in two years, but then don't forget during the meantime it is still rising eg. today it is 100, two years later it goes to 140, then comes back down to 110, which will still be more expensive than 100.
What you are essentially doing is just pure gambling, betting that the price will head downwards at some unknown horizon in the future. However, you are forgetting the very fundamentals I have mentioned in point (1) , (2) and (3).
The 95% mortgage has been introduced so people without a deposit but can pay the monthly installment can buy a house, ifI am one of those people I would seize the opportunity, instead of aimlessly waiting for something that may or may not happen in the future.
When I last moved house I was able to pay a one off fee so my bank gave me the 'right to let' (effectively convert a residential mortgage to a BTL). My mortgage was BOE base rate +0.49% (so 0.99% currently) - so currently the rent easily covers the interest cost + repairs (profitable in the eyes of HMRC). But after taxes + capital repayment element doesn't leave us any cash to blow away, which is fine as it's our pension plan as I frankly don't trust fund managers to look after my money (call me weird but I've always mistrusted the proposition where someone asks you to give them some money and they'll give you back more).
Landlord inherited the property.
Landlord bought the property ages for a fraction of what its worth now.
Landlord bought the property in cash without a mortgage.
What is the point of using some outliers to form the basis of your analysis?
This is from Dec 2014:
"Buy-to-let lending jumped from £5.9bn in the third quarter of 2013 to £8bn in the corresponding period this year - the highest quarterly amount since the crash of 2008, official data from the Bank of England has shown. "
The fact that new lendings are made and people are borrowing from banks to invest into a BTL, is because there is actually money to be made, and there is money to be made because the rental amount received is greater than the actual interest paid to the banks.
That translates into you would be better off just buying outright and just pay the bank interest, NOT paying BOTH the landlord and the banks.
The majority of the population can actually pay the monthly installment, that's why this deal is SUPER HOT because at 95% LTV you only need to put up 5% of the home value upfront------>>> Not to mention you can switch mortgage deals later.
It is so so so simple people please just think.
I'm not rich by any stretch of the imagination (if I was I wouldn't need a mortgage for it) the point is the rent isn't fueling some prostitute & cocaine hedonistic/get rich quick lifestyle it's simply a boring pension plan and there's no point in begrudging someone who hopes not to just subsist on (whatever will remain of) state pension by the time I retire.
I wish you luck mate, but you are typical of lot of people who do not educate themselves in how the markets work, how your situation can change and so on and so on... you see things in a very black and white world - buy a house, make some money. That's it.
It actually p!sses me off that people can enter the market with limited understanding. It is these who contribute to the destabilising of the market. When/If you buy a property, there are several risk assessments you should do and you have not mentioned one nor accepted others opinions when they have identified them. I have stress tested myself and know how long I can last if I lose my partner's salary, if I lose my job, if the market crashes 30%, if interest rates jump to 10%, If I can't get a new mortgage after my attractive rate finishes and I drop to the SVR* etc etc
* - this is a massive problem we are going to see soon. Interest rates are at a historical low so lenders have hoiked their rate you go to once you fall out of your introductory rate. Combine that with an interest rate rise to just 2% and people will suddenly be paying 6/7%. If your situation or the market has had a down turn, you are trapped. Do he sums on that difference and suddenly more people default, everyone gets nervous, boom....another bounce.
^^^
Just a scenario but one which I have considered and I'll bet you haven't. When I searched for the mortgage I wanted, I sorted them by the interest rate you drop onto as one of my comparisons.
No way I was taking a chance with my family, my money. Unlike some of the gamblers on here.
OVer and out
Fact 1) You have got to live somewhere, whether buying or renting
Fact 2) Rent paid to landlord is dead money
Fact 3) If you rent for 30 years, you will end up with nothing. If you buy and pay installments for 30 years, you end up with a property.
Fact 4) There will be no "increase in rent" or "eviction" if you buy your own place, you are your own landlord.
Fact 5) Money depreciates due to inflation, every day, every year. Property, like everything else, will get more and more expensive.
Easy, so easy.
Easy, so easy.[/quote]
Simples!
What 50% of Germans are the smart 'efficient and make sense' renters? The first 50% or the second 50%... Oh wait!? Just realised what 50% is LOL neither a majority nor minority, it is simply half.
What great statistical claims you have sir!
We all know renting is dead money. It is money you do not get back. It is therefore dead, gone, vanished, in some fat wise mans hands who used his brain to invest in property.