'Not' buying a property.

As soon as you have a decent stable income, start saving the money for your own property. Get an ISA account and max it out with savings each year, make a 25% deposit out of the savings and look for a house that will be valued at 3-3.5x your salary plus the deposit so effectively 4-4.6x your salary. Much easier to get going if you have a partner.

£160k worth house = £120k mortgage + £40k from the savings. You should be able to save £40k in 7-8 years meaning that it's best to start saving asap if you want to get a decent house and a mortgage on good terms.

12-15 years mortgage at the age of 32-35, you'll be able to get a second and perhaps a third house before your retire. PP Gift one to the kids, rent another one for profit and buy a holiday house in Spain from that income. Live happily ever after.

Earning the average salary of £26k and repaying student loan will leave you almost £1,600 monthly after tax, NIN contributions and student loan repayments. Get a rent for £400 a month and save £400 towards deposit and you're left with £800 for living. Get a partner and cut the costs in half. In 8 years and 4 months you would save a hefty deposit for a £160k house and the money that was being saved and spent on the rent would now go towards your long-term investment. Average salary income increases should cover the difference in mortgage over time and you'll be repaying much less towards the end of mortgage anyway.
 
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daz said:
Most of London and the home counties have rents less than the cost of an interest only mortgages. For instance, where I live now, cost ~380k. The rent is £1350 per month.
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No. With exception of very few areas of London and within M25, where property resell value is guaranteed to go through the roof and few areas where entire streets are kept as pre-area-redevelopment and are rented out by local borough, your scenario would make no sense. Unless you live in Chiswick, Highgate, Richmond or Putney (and we know you're not anywhere within London postcodes, as the monthly rent you are quoting is worth about self contained studio in zone two, why would any landlord keep renting a property to you at £1350 a month if they could get 25 years worth of rent for reinvestment in a one off sale? Just doesn't add up?
 
rG-tom said:
So i'd be saving a total of £25 a month and only investing £270 a montnh, after spending £40k, and it'd take a damn long time to see any return on that. I'm not the most economically minded person, but spending £40k to save £25 a month doesn't sound the best idea!
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You've missed a bit - in the process of saving that £25 a month, you are acquiring a (generally) appreciating asset. Money spent on rent is comparatively burnt. After the 30 year mortgage or whatever is up, you've saved £9,000 and own something worth probably £200k+. With renting you have nada.
 
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I have no intention of buying my own home as my Mum and Dad had assured me the family home will be left to me. I look after them now as best as can but buying a house these days seems mad. It's only bricks and mortar which you can't take with you and it's just got stupid expensive these days :(
 
I guess if you're a family, owning is more secure than renting as there is no risk of being booted out by your landlord if he decides to sell up.

Also as mentioned above, it'd be nice not to have to worry about rent once you reach retirement.
 
In London,

Room is roughly the size of a 3 person couch, barely fits a bed, a tiny bathroom and a sink which is called kitchen.

£750 p/m

Yes I'm not joking.


Damn you 3 bedroom semi detached £500 p/m people :mad:
 
You can always rent out property you've bought should you have to move away for work purposes. Or if you struggle to sell, rent it out, rent somewhere yourself and then save up enough to pop it back on the market whilst you continue to rent until it sells.
 
I hate renting, I can redecorate or build to make the house liveable like want. The rent is as much as a mortgage, so i feel like I'm kissing money. You isn't need 40k to start, people aim to high including me, I've now had a reality check and will be going for a run down house in a not so nice area. For that I need 10k deposit at 10% can I get best value for money for 10% of course not, but it's affordable and I get on the property ladder and can have the house how I want it. I can then do it up how I want, no house will be how I want it, so why pay premium for a house I don't like the decoration for.then sell it when I'm in a better finical situation and probably move to a nicer area, rather than drastically different house.
 
One tricky thing with the mortgages is the true cost of taking one. In the previous example I've taken into account a £120k mortgage for a £160k value house over 15 years period. It's not how much the investment is going to cost though, the total cost would accumulate at £170k in mortgage repayments at 5% (assuming fixed interest rate) plus the initial deposit, making the house cost £210k in reality (over that period). Make the interest rate 10% and you're repaying more than £230k of the mortgage on top of the initial deposit.

You'd have to sell the house for over £272k to make a profit in 15 years. Of course you either get to use the house in the meantime or rent it which is why owning a property is a worthwhile investment.
 
Mr Krugga said:
One tricky thing with the mortgages is the true cost of taking one. In the previous example I've taken into account a £120k mortgage for a £160k value house over 15 years period. It's not how much the investment is going to cost though, the total cost would accumulate at £170k in mortgage repayments at 5% (assuming fixed interest rate) plus the initial deposit, making the house cost £210k in reality (over that period). Make the interest rate 10% and you're repaying more than £230k of the mortgage on top of the initial deposit.

You'd have to sell the house for over £272k to make a profit in 15 years. Of course you either get to use the house in the meantime or rent it which is why owning a property is a worthwhile investment.
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When you look at it Vs rent though, it's either throw all of it away, or have a big lump left at the end, you might not get all of your money back but you do get the vast majority.

cm1179 said:
......eh?
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Throwing it away.
 
cm1179 said:
......eh?
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Auto spell correction, meant to be throwing.

It might be different in other parts of ten pj try but where I am, we pay 725 a month rent and I bet if it went on the Market it would be 120k so we are paying more than the mortgage. Where the sense in that, toto worse parts of Bristol and I would be looking at 80-100k for a run down 2/3bed house. Which would probably be 450 a month rent could afford that on my own and live how I want.
 
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daz said:
People talk about rent as "wasted" money - but what do they think the interest portion of a mortgage repayment is? The amount you're "investing" is only equivalent to the principal you're paying off each month.
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The amount wasted by renting is greater though.
 
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Mr Krugga said:
One tricky thing with the mortgages is the true cost of taking one. In the previous example I've taken into account a £120k mortgage for a £160k value house over 15 years period. It's not how much the investment is going to cost though, the total cost would accumulate at £170k in mortgage repayments at 5% (assuming fixed interest rate) plus the initial deposit, making the house cost £210k in reality (over that period). Make the interest rate 10% and you're repaying more than £230k of the mortgage on top of the initial deposit.

You'd have to sell the house for over £272k to make a profit in 15 years. Of course you either get to use the house in the meantime or rent it which is why owning a property is a worthwhile investment.
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Get a mortgage where you can over pay. Saves you so much.

£150,000 @ 5%/25 years = £263,000 repaid after 25 years. (£877, per month)
£150,000 @ 5%/25 years with £150 overpayment = £231,000 (term finished in 18 years)
£150,000 @ 5%/25 years with £400 overpayment = £206,000 (term finished in 13 years)

Providing you can afford the mortgage and to over pay it.
 
daz said:
People talk about rent as "wasted" money - but what do they think the interest portion of a mortgage repayment is? The amount you're "investing" is only equivalent to the principal you're paying off each month.
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a lot but you have the benefit of owning and customise the house, most of us also can't afford to save reasonable amounts of money whilst renting. So it's either. One or the other, not rent whilst saving up huge deposit or 100% house value. I see interest as the same as rent, with the bonus I have the house at the end and I get to decorate/build.

If you rent at say 700 a month and save money to buy outright on a 120k house, Which is the greater waste interest or rent?
 
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BennyC said:
Get a mortgage where you can over pay. Saves you so much.

£150,000 @ 5%/25 years = £263,000 repaid after 25 years. (£877, per month)
£150,000 @ 5%/25 years with £150 overpayment = £231,000 (term finished in 18 years)
£150,000 @ 5%/25 years with £400 overpayment = £206,000 (term finished in 13 years)

Providing you can afford the mortgage and to over pay it.
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I know, I'm just pointing it out to people who would like to take a 30 years mortgage to have more disposable income - it's not worth it in a long term.

Repay it as quickly as you can and you'll make the best investment out of it. Make sure to know how much you can overpay each year though.
 
Mr Krugga said:
I know, I'm just pointing it out to people who would like to take a 30 years mortgage to have more disposable income - it's not worth it in a long term.

Repay it as quickly as you can and you'll make the best investment out of it. Make sure to know how much you can overpay each year though.
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How many people do it just for investment, no point paying it back as fast as possible and having no disposable income to enjoy your life, house buying is a compromise of a lot of things.
 
I think a lot depends on if you're the type of person who is willing to move around a lot. Rental agreements can be for six months or beyond but you may not settle or the landlord might put the squeeze on you.

Over five years in my mid-20s I saved a large sum whilst living with my parents, through hard work and basically buying no new clothes (!) or holidays with the intention of using it as a deposit for my first house. But during that time the company I worked for went into administration and I was made redundant - typical! I also had pangs about getting a mortgage, not knowing where I wanted to live, the possibility of it lowering my quality of life, and the guarantee of 25 years stuck in the rat race. The following year I was self employed which didn't really lend itself to a mortgage either. At that point I decided to invest a good chunk into the stock market and over 18 months have doubled my investment, and could now realistically buy a house with cash. Or perhaps buy what would have been my second home with a good loan to value ratio. I've gone for neither options and have decided to let my money ride and see where I can get to over the next three years. Like they say, better to reach for the stars and land on a mountain etc :) The point I'd like to make is if you are renting, and saving for a deposit, you can make your money work for you in some form or another, negating the fact you don't 'own' a house.
 
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