Could you explain your numbers a bit better please, it does not make sense that if you have a 6% rate on a mortgage that only 22% of what you pay is actually going to the equity of the home and the rest is going to bank interest.
Living costs: Flatshare vs Own flat
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Could you explain your numbers a bit better please, it does not make sense that if you have a 6% rate on a mortgage that only 22% of what you pay is actually going to the equity of the home and the rest is going to bank interest.
£100,000 loan.
6% gives £1,200 annual interest (ignoring the fact that you are paying off a small part of the capital portion of the loan each month, this is basically true for the first few years of a mortgage anyway).
Monthly interest is therefore £500.
Monthly repayment is set at £644 (this is an example figure, will differ from bank to bank, you could have an interest only mortgage for example. Not sure where Duff-Man got this from).
So only £144 is actually paying off any capital on the loan. The majority of your monthly payment is just paying off interest. The portion of the capital you start to pay off will increase slightly each month.
Use these Excel spreadsheets ... http://www.mortgagesexposed.com/Book_Contents/spreadsheet_summary.htm
Specifically you would be using the first one (Buy or Rent), to, shockingly, decide if it is better in purely financial terms to buy or rent the exact same property.
Specifically you would be using the first one (Buy or Rent), to, shockingly, decide if it is better in purely financial terms to buy or rent the exact same property.
I used the mortgage calculator here - run by the FSA, a government organisation. It's true that this will vary slightly from bank to bank, but this represents a typical repayment for a 25 year mortgage.
Good explanation by the way
To schmacks: The point is, unless you pay off your mortgage in a very short period of time (say, 10 years), and/or you already have a very large deposit (say from a previous house sale) then you're going to be paying out far more in interest than you are paying towards the value of the house. But more importantly, the amount you pay in interest to the bank is similar, if not more, than the amount you would pay to a landlord in rent, for the same property (see the link beamer just posted)
The idea that "buying is better because you're paying back to yourself rather than a landlord" is something of a myth, at least for those of us that will need mortgages. The real reason to buy (IMO) is to have complete control over your own home, and no-one else to answer to
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I have my own place and around 35 - 40% goes on my house a month. Renting at the moment and I have been for the last 2 years. Will be looking to mortgage my own place but not too sure when just yet.
To Duff-man - spot on. Unfortunately, this is one thing where I am forced to admit that the Germans do immensely better than us. Their tenancy laws are simply superb, benefiting both the tenants and landlords (at least those who are truely in it for the long term and not just speculating on house price increases, with unsustainable mortgages and levels of leverage).
To schmacks: The point is, unless you pay off your mortgage in a very short period of time (say, 10 years), and/or you already have a very large deposit (say from a previous house sale) then you're going to be paying out far more in interest than you are paying towards the value of the house. But more importantly, the amount you pay in interest to the bank is similar, if not more, than the amount you would pay to a landlord in rent, for the same property (see the link beamer just posted)
The idea that "buying is better because you're paying back to yourself rather than a landlord" is something of a myth, at least for those of us that will need mortgages. The real reason to buy (IMO) is to have complete control over your own home, and no-one else to answer to
Didnt realise how poor mortgages actually were to the customer the banks make an absolute fortune on them! I guess the greed got to them which is why they started giving them to everybody deposit free which eventually caused the economic crash.
Cheers for the heads up definitely need to reconsider buying now as i always assumed buying a house once you had enough for a deposit was a no brainer, when it clearly is not.
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I'd agree with this, same area, same percentage.
I love living alone, but at months it seems crazy. E.g. an electricity bill for two will only marginally be greater than for one....
Well, I'm still trying to save up for a deposit on a house, since I'd really like to have the security of owning my own home. I'm not trying to put anyone off it
Just need to be aware that it might be a little more expensive than renting, at least for the first 10 years or so. As others have pointed out, as you (very slowly) start to pay off the capital of the house, the ratio between interest paid and equity gained starts to improve. It takes a long time though!
I've just bought my own house after being in shared rented houses for the last 8 years of my life. Financially I'm not much worse off.. My mortgage + council tax is about the same as the rent I was paying before then its just elec, gas, water and internet on top of that and those work out at about £30 each a month for my three bedroom semi.
Plus you get the freedom of living on your own! No mess or noise etc..
Plus you get the freedom of living on your own! No mess or noise etc..
Is this an interest only mortgage ?
I've just bought my own house after being in shared rented houses for the last 8 years of my life. Financially I'm not much worse off.. My mortgage + council tax is about the same as the rent I was paying before then its just elec, gas, water and internet on top of that and those work out at about £30 each a month for my three bedroom semi.
Plus you get the freedom of living on your own! No mess or noise etc..
I've just bought my own house after being in shared rented houses for the last 8 years of my life. Financially I'm not much worse off.. My mortgage + council tax is about the same as the rent I was paying before then its just elec, gas, water and internet on top of that and those work out at about £30 each a month for my three bedroom semi.
Plus you get the freedom of living on your own! No mess or noise etc..
Good on you! I'm in a similar situation in where i've been living in uni halls / shared apartments for 6 years and am dieing to get my own place. I find it a bit crap that i can't buy nice stuff like furniture etc. The way i had figured it was that instead of paying 400/500 a month to rent i would pay a couple of hundred more to a mortgage and bills which would go towards an asset i own. This threat kind of dissapointed me to find that the bank would be taking the money and not me but thank you sir your story has restored my faith in humanity
Enjoy the new house
No its not..
The way i had figured it was that instead of paying 400/500 a month to rent i would pay a couple of hundred more to a mortgage and bills which would go towards an asset i own. This threat kind of dissapointed me to find that the bank would be taking the money and not me but thank you sir your story has restored my faith in humanity
Thats what I figured.. I'd rather put that rent money towards a mortgage and get on and get my own place. Ideally I could do with a housemate as it would give me a lot more cash for things, but I'm willing to take the hit for now because its nice living on my own! Its taking me a while to sort it, slowly buying furniture and things as I can afford them. I've only really sorted my living room and bedroom so far. My PC is still set up in the living room until I get the time to build a desk and finish painting the back bedroom which is then going to be my computer room!
Thanks!
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£100 a month for untilities
£12 tv licence
broadband £20
council tax ???
Contents insurance £10
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If you live on your own you will get a 25% discount. I do.
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I live on my own and its not too bad.
I pay £425 p/m rent on a flat that was bought @ £152k a few years ago (obviously not worth that now!)
£90 council tax
£25ish electricity (no gas)
£12 water
£12 BT
£7 Broadband
£13 contents insurance
I pay £425 p/m rent on a flat that was bought @ £152k a few years ago (obviously not worth that now!)
£90 council tax
£25ish electricity (no gas)
£12 water
£12 BT
£7 Broadband
£13 contents insurance
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I currently pay (live on my own), only in the house on a weekend and weekday between 7PM -7AM.
Rent - £360
Council Tax - £65.00 (25% discount)
British Gas - £20
British Gas Electricity - £20
Northumbrian Water - £20
BT Landline - £11.50
o2 Broadband Internet - £00
Sky+ HD - £49
Contents Insurence - £13
TV Licence - £12
Food - £200 (around £50.00 per week)
Rent - £360
Council Tax - £65.00 (25% discount)
British Gas - £20
British Gas Electricity - £20
Northumbrian Water - £20
BT Landline - £11.50
o2 Broadband Internet - £00
Sky+ HD - £49
Contents Insurence - £13
TV Licence - £12
Food - £200 (around £50.00 per week)
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