Reply to: No point waiting for cheap houses....

[tim123]

Whatever, this is in the south east, near London, good transport links, but reasonable house values compared to renting. I can't speak for the whole country but it works for me.

I don't believe you

Please tell me where in the SE the normal range of houses can be bought at a rental yield of more that 5% (for a non-student type lets). I don't believe such a location exists.

Your other point about investing the monthly savings, when inflation returns you will struggle to beat it by much, and when houses start creeping up again and rents rise then renting will be pointless.
But if you can tolerate living in a craphole for 20 years to save for a house outright and that works for you financially then fine.

These factors just don't affect the decision. The equation is: whilst it is chaper to rent than to buy, you rent. When it becomes cheaper to buy than to rent, you buy.

No-one said that you decide today to rent for 20 years.

tim

[bobhope]

I guess the greater fool has arrived.

[AlfredJPruffock]

The last time I asked where this was the case I got the answer "Aberdeen".

Anywhere else, normal houses rent at about 5% of value which is less than the cost of mortgage (at rates obtainable today) plus insurance plus maintenance.

For "executive" houses the equation is even less in favour of owning.

tim

Aberdeen is famous for its Grey Slates.

Thats fair enough if rents are very low in your area, prices are going down, you have brilliant market timing, and great willpower not to spend the savings on fast cars, women and drink.

What else is money for ?

[GreenerGrass]

The last time I asked where this was the case I got the answer "Aberdeen".

Anywhere else, normal houses rent at about 5% of value which is less than the cost of mortgage (at rates obtainable today) plus insurance plus maintenance.

For "executive" houses the equation is even less in favour of owning.

tim

Whatever, this is in the south east, near London, good transport links, but reasonable house values compared to renting. I can't speak for the whole country but it works for me.

Your other point about investing the monthly savings, when inflation returns you will struggle to beat it by much, and when houses start creeping up again and rents rise then renting will be pointless.
But if you can tolerate living in a craphole for 20 years to save for a house outright and that works for you financially then fine.

[tim123]

It all depends how large your deposit is. Obviously if you have a big deposit, it's way cheaper than renting.

Then you are losing the the interest that you could earn on the money (currently 4% for a two year bond).

[tim123]

Thats fair enough if rents are very low in your area, prices are going down, you have brilliant market timing, and great willpower not to spend the savings on fast cars, women and drink.
But in my area to rent a similar house would cost at least double the interest based on a 4% rate mortgage.
A repayment mortgage over 15 years is just a couple or few hundred quid a month more than renting, and paying down the capital at a much quicker rate than you could save by renting.

The last time I asked where this was the case I got the answer "Aberdeen".

Anywhere else, normal houses rent at about 5% of value which is less than the cost of mortgage (at rates obtainable today) plus insurance plus maintenance.

For "executive" houses the equation is even less in favour of owning.

tim

[EternalOptimist]

If you rent a house you can save lots of money and buy a house outright in twenty years. In that time period if you're clever you can jump in and buy when the market is low.

I am about to rent a house. The (likely) rent is cheaper than the interest on a typical mortgage to buy.

absolutely spot on.

Live in a hole, save like mad, bide your time, buy cheap sell dear

[tim123]

If you buy a house you will eventually own it and then have about twenty years rent free and mortgage free in retirement. If you don't buy and you live to 100 it could indeed be very expensive renting !!!!

But as renting *is* cheaper you invest the monthy savings that you have made and after 25 years will have savbed more than the value of the house.

tim

[Bright Spark]

Is you house worth 330K after the rise it has experienced in the last 2 years?

My Garden shed is worth more than that!

Dim

[sasguru]

would need to find a million pounds in cash to buy my house in 20 years time, instead of 330K now. You must be crazy !!

Is you house worth 330K after the rise it has experienced in the last 2 years?

[Cyberman]

If you rent a house you can save lots of money and buy a house outright in twenty years. In that time period if you're clever you can jump in and buy when the market is low.

I am about to rent a house. The (likely) rent is cheaper than the interest on a typical mortgage to buy.

Bearing in mind that my house value is 3 times what I paid 20 years ago, given that scenario you would need to find a million pounds in cash to buy my house in 20 years time, instead of 330K now. You must be crazy !!

[GreenerGrass]

Yeah, you need a 25% deposit minimum obviously.

I could rent a crappy 3 bed terraced house cheaper, but I'm comparing like with like.

[Lockhouse]

It all depends how large your deposit is. Obviously if you have a big deposit, it's way cheaper than renting.

[GreenerGrass]

Yes, about £1300 for a detached or nice decent sized semi with 3 bedrooms and a garage.

[expat]

Thats fair enough if rents are very low in your area, prices are going down, you have brilliant market timing, and great willpower not to spend the savings on fast cars, women and drink.
But in my area to rent a similar house would cost at least double the interest based on a 4% rate mortgage.
A repayment mortgage over 15 years is just a couple or few hundred quid a month more than renting, and paying down the capital at a much quicker rate than you could save by renting.

BBC mortgage calculator says a 200k mortgage over 15 years at 4% costs 1499.01 per month. Interest only is 666.66.

Are you really saying that a 3-bedroom house in your area rents for about £1300 a month?