Who doesn't own a property?

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Soldato
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That's not always true. My mortgage payments are going up in a few months. I've been on a 2 year fix and during that time I've paid off enough of the capital to move into a lower LTV band but the higher interest rate now means that overall my payments will be going up.

Yes, interest rate fluctuations can mean it goes up, but the overall trend long term will still be downward. Ours was £470 a month when we moved, but overpayments make a difference and you can soon lower your monthly payments.
 
Soldato
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Some of the figures been posted here are crazy, what value is the house if your mortgage is over 1k a month, and above 1k rent as well (affluent area perhaps?).

Shorter term mortgages will have higher payments, so thats a factor as well.

Lets say 30 year mortgage. Value of property 150k. Mortgage under £550 month. This is a full mortgage not interest only.
Average rents in same area for same street are £600-750 a month.

Since debt goes down with inflation. Mortgages taken out in earlier years will effectively get cheaper as time moves on, but rents will only ever go up and can be by large amounts. 10% rent inflation is not that unusual now.

Granted of course there is always exceptions, and if as mentiooned landlords go interest only, its even more of a disparity. If we ever hit high base interest rates again then yes Mortgages can get real crazy but I would expect rents to follow suit, as landlords typically wont let out for a loss.
 
Soldato
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£1700 presumably is a capital repayment though. Most landlords will just be servicing the debt to make a modest return (3-7%) and then taking the equity from house price growth out at some point to finance the BTL deposit on another BTL - rinse and repeat and the model pays for itself.

it is yeah, I wouldn't want interest only for obvious reasons.

Some of the figures been posted here are crazy, what value is the house if your mortgage is over 1k a month, and above 1k rent as well (affluent area perhaps?).

Shorter term mortgages will have higher payments, so thats a factor as well.

Lets say 30 year mortgage. Value of property 150k. Mortgage under £550 month. This is a full mortgage not interest only.
Average rents in same area for same street are £600-750 a month.

Since debt goes down with inflation. Mortgages taken out in earlier years will effectively get cheaper as time moves on, but rents will only ever go up and can be by large amounts. 10% rent inflation is not that unusual now.

Granted of course there is always exceptions, and if as mentiooned landlords go interest only, its even more of a disparity. If we ever hit high base interest rates again then yes Mortgages can get real crazy but I would expect rents to follow suit, as landlords typically wont let out for a loss.

House is valued at 432k in my case. I don't think I'd ever seen a house here for under 300k! never mind 150k, down south prices are insane compared to parts of north or wales.
 
Soldato
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it is yeah, I wouldn't want interest only for obvious reasons.
That's the subtlety though when folk say "my rent is more than the mortgage". The mortgage is just the landlord renting the house from the bank (i.e. paying the finance charge) and taking all of the liability.

The different between the rent and the interest only mortgage is how much the landlord values the risk he is taking on behalf of the tenant (upkeep etc).

People think BTLs are some kind of magic money tree to exploit young people, but they are very long games unless the landlord has other income and pays off capital (unlikely, as they'll want to grow their portfolio).
 
Soldato
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That's the subtlety though when folk say "my rent is more than the mortgage". The mortgage is just the landlord renting the house from the bank (i.e. paying the finance charge) and taking all of the liability.

The different between the rent and the interest only mortgage is how much the landlord values the risk he is taking on behalf of the tenant (upkeep etc).

People think BTLs are some kind of magic money tree to exploit young people, but they are very long games unless the landlord has other income and pays off capital (unlikely, as they'll want to grow their portfolio).
Great so when the morgage is paid off (or they bought cash) the rent should drop by the mortgage amount.

lol

and the landlord gets all the property price gain, which is about the renter's salary, and the renter gets none of it.
 
Soldato
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Great so when the morgage is paid off (or they bought cash) the rent should drop by the mortgage amount.

lol

and the landlord gets all the property price gain, which is about the renter's salary, and the renter gets none of it.
That's the point, the vast majority of BTL's will never pay the mortgage off because it doesn't make economic sense to. They will sell the house, take the equity (the reward for locking away capital for so long) and pay a huge chunk of tax on it.

If someone is renting properties they own outright, they are doing landlord'ing wrong. They should be extracting the capital and buying more properties.
 
Soldato
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If someone is renting properties they own outright, they are doing profiting from renters wrong. They should be extracting the capital and buying more properties.
FTFY. I vote we separate out the concepts of making money from property ownership vs running a business that provides and maintains housing. One is an honest living, a job, the other is an investment practise with added steps.
 
Soldato
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FTFY. I vote we separate out the concepts of making money from property ownership vs running a business that provides and maintains housing. One is an honest living, a job, the other is an investment practise with added steps.
Agreed, but don't hate the players, hate the system. I can be just as mad at residential letting investors as those who got awarded dirt cheap council houses who are now multi-millionaires.

In any scenario I've paid my fair share of rent to the absolute pits of institutional landlords and had to take on massive amounts of debt just to get about level with the highest rung of working class.
 
Soldato
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its crazy how cheap some peoples mortgages are in here.

im looking for a 3 bed place and the cheapest ones are in the 250k range (the absolute crappy areas) any thing in a decent area is 300K-400K (im no where near london either)

im currently renting a 2 bed flat (140k to buy) but my rent is £700 a month (which is cheap as my landlord hasnt put up my rent, looking at other 2 beds in the area now its £800+)
 
Soldato
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@GIBURROWS You're defending renting against a wave of opinion in favour of owning. It's more difficult to get a mortgage than to rent a property, but the benefit is obvious. A mortgage is essentially paying off a loan, and you get a house to live in and own fully once paid off, whereas with renting you won't see any of that back, apart from a deposit.

Regardless of individual circumstances, a homeowner is in a better financial position than someone who rents.
 
Soldato
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@GIBURROWS You're defending renting against a wave of opinion in favour of owning. It's more difficult to get a mortgage than to rent a property, but the benefit is obvious. A mortgage is essentially paying off a loan, and you get a house to live in and own fully once paid off, whereas with renting you won't see any of that back, apart from a deposit.

Regardless of individual circumstances, a homeowner is in a better financial position than someone who rents.

So because owning a home is popular anything else is wrong?
 
Soldato
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If someone is renting properties they own outright, they are doing landlord'ing wrong. They should be extracting the capital and buying more properties.
Not always.
I own outright the property I rent out, and could easily afford to get another mortgage for another, but renting out one property is enough stress for me, let alone another (excuse the pun).
 
Caporegime
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Interesting topic as we have bought our own house and don't have kids or plan to.

Surely there must come a time where it makes financial sense to sell the house and enjoy the cash from the sale? This has bothered me for quite a few years, am I missing something?

Same position.

I will (if all continues as is) be mortgage free before retirement.

When you don't have kids.. You don't really want much left over (ill gift it to charity).

So how do you 'action' this.

I think about it a bit too.
 
Soldato
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Interesting topic as we have bought our own house and don't have kids or plan to.

Surely there must come a time where it makes financial sense to sell the house and enjoy the cash from the sale? This has bothered me for quite a few years, am I missing something?
You can do it if you want. Just need to be aware that if your taken into care then that money will probably be used to pay for it.
My grandparents have decided to take the money of their house now with equity release so they 'can see us enjoy it while they are still here'
 
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