House prices!!

[eternalnomad]

Asking price is : £642500
An 25 year INTEREST ONLY mortgage (i.e. renting from the bank) @ 5.0% would cost you £2677.08 PCM
A 25 year repayment mortgage for the same amount @5.0% would cost £3798.91 PCM

And here is the very same property available for rent at £2500 PCM
http://www.rightmove.co.uk/viewdetai..._n=3&tr_t=rent

So in the above example you can rent the property and save yourself £177.08 PCM and not have any hassles with property maintenance etc.

I don't think 5% is a fair interest. You should go lower and then you will equalise the 2500 rent. I think the property is overpriced too but again there is a shortage of big houses in London so they can ask for a premium.[/QUOTE]

On the basis that the Halifax standard variable rate is 6.50% I believe that 5.0% is a reasonable figure to use -assuming 5% interest then the property has to dropto 600K to become equivalent cost and that is before adding in the additional costs of property maintenance etc.

[Rebecca Loos]

do you mean you can find mortgage companies offering rates lower than 5%?
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[eternalnomad]

do you mean you can find mortgage companies offering rates lower than 5%?
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Rebecca - I am not sure if you are saying 5% is too high or too low for this rough and ready comparison of renting 'v' buying

In absence of wanting to spend my whole life looking at the various offers and options from dozens of mortgage providers I looked at the Halifax and say they did a few "deals" at around 5% (e.g. 10 year fix at 5.19%)

Many of these deals reverted to SVR at some point in the future

[XLMonkey]

example of a typical 4 bed family house in a "nice" location commutable to london (just happens to be one I have been looking at and not one I specially selected to make my point) :-

http://www.rightmove.co.uk/viewdetai...a_n=1&tr_t=buy

Asking price is : £642500
An 25 year INTEREST ONLY mortgage (i.e. renting from the bank) @ 5.0% would cost you £2677.08 PCM
A 25 year repayment mortgage for the same amount @5.0% would cost £3798.91 PCM

And here is the very same property available for rent at £2500 PCM
http://www.rightmove.co.uk/viewdetai..._n=3&tr_t=rent

Although I agree with the general point about the property market, I don't think that this is a representative example. The rental market is not the same as the purchase market. Typically, rental properties are 1-2 bed flats in the centre of town. It's actually very unusual to make a decent return on the example you quote: a four bedroom family house. The attached link (I know it's 10 years old, but the point is still valid), shows the detail very nicely -- rental yields vary massively by property type.

http://www.jrf.org.uk/knowledge/find...using/H194.asp

The key question is: can you find a nice 1 bed flat in zone 2 where the rent will cover the mortgage and agency fees.

If you can, please feel to pm me with the details....

[Francko]

The key question is: can you find a nice 1 bed flat in zone 2 where the rent will cover the mortgage and agency fees.

If you can, please feel to pm me with the details....

Please, post them here in the group as there are a few people who would be interested to know that.

[sasguru]

Please, post them here in the group as there are a few people who would be interested to know that.

Not now. But I have 3 flats that fulfil that criterion, due to timing.

[Francko]

Not now. But I have 3 flats that fulfil that criterion, due to timing.

I have actually misread. Think you can hardly find a cheaper rent on 1-2 bed flats in zone 2. Even studio-flats now ask for 1 grand a month in decent areas. Well, guess if you look for a 4-5 bedroom flat in zone 2 then you might be better off renting as the demand for those types of houses is low there (who can live in central London with 2-3 kids unless he doesn't have any perception of money spent?).