Your chances of owning your own home?

Freefaller · 13 Sep 2011 at 15:23

Best way to do it nowadays is to buy with someone. However, that's quite a step for a lot of people.

platypus · 13 Sep 2011 at 15:26

Marvt74 said:
Same here, whilst i wouldn't say rich she at least had her own house aready

Aye same to be accurate; a very good wage, but not rich, and owned her house. I moved in

.

PiKe · 13 Sep 2011 at 15:28

So you're saying find a wealthy, successful girlfriend? My current one won't think much to that.

Duff-Man · 13 Sep 2011 at 15:29

PiKe said:
My thinking is the money that goes towards rent could go towards mortgage repayments, that way you'd have something to show for it when all is said and done.

Do you consider interest repayments on a mortgage to be "dead money" also? Early on in a mortgage, interest alone can be more than rent for an equivalent property...

As a quick example: Suppose you have a 125k house on a 7% interest mortgage. Interest alone repayments on this would be £729 per month; anything more than this you would pay off the principle value of the house ("paying back to yourself"). Now, if instead you could pay £600 per month in rent and put the rest into a saving account, then in the short term you're a lot better off. Of course, 10 years into the mortgage, when the mortgage-debt has been reduced, you'll be paying less in interest - but that's a long time away, and by then your "savings account" would be quite well stocked...

There are always financial arguments to owning your own home, but seeing renting as being "dead money" is really not the way to look at it. Unless you can drop the full payment for the house, you're always paying out money to a third party, whether it's a landlord or the bank.

Abraham · 13 Sep 2011 at 15:30

you're on a salary of c.£15k and you think buying a house is a real priority :confused:

not everyone can afford to buy a house, on a salary of £15k you realistically can't.

edscdk · 13 Sep 2011 at 15:30

PiKe said:
So you're saying find a wealthy, successful girlfriend? My current one won't think much to that.

become a morman (marry gf 1 first)?

or

forget about buying a house, buy a caravan, park it anywhere you want.

grab a few drunks and keep them as slaves...

Trash the local area and generally cause a nuisance

Good plan if the ***** life appeals to you.

PiKe · 13 Sep 2011 at 15:31

Interest won't be £729 because you wouldn't be mortgaging the full value of the house.

And savings are pathetic at the moment, 2 and 3%, hardly going to get rich quick on those rates are we?

a1ex2001 · 13 Sep 2011 at 15:34

Duff-Man said:
Do you consider interest repayments on a mortgage to be "dead money" also? Early on in a mortgage, interest alone can be more than rent for an equivalent property...

As a quick example: Suppose you have a 125k house on a 7% interest mortgage. Interest alone repayments on this would be £729 per month; anything more than this you would pay off the principle value of the house ("paying back to yourself"). Now, if instead you could pay £600 per month in rent and put the rest into a saving account, then in the short term you're a lot better off. Of course, 10 years into the mortgage, when the mortgage-debt has been reduced, you'll be paying less in interest - but that's a long time away, and by then your "savings account" would be quite well stocked...

There are always financial arguments to owning your own home, but seeing renting as being "dead money" is really not the way to look at it. Unless you can drop the full payment for the house, you're always paying out money to a third party, whether it's a landlord or the bank.

7% mortgage example nice way to tip the balance in favour of your argument.

Abraham · 13 Sep 2011 at 15:35

PiKe said:
Interest won't be £729 because you wouldn't be mortgaging the full value of the house.

And savings are pathetic at the moment, 2 and 3%, hardly going to get rich quick on those rates are we?

But you cannot afford to buy. You'd be borrowing 5x your salary even if you could get a 50% deposit.

UK-AL05 · 13 Sep 2011 at 15:35

Mr^B said:
The attitude that rent is "dead money" is quite strange. Do you consider that paying for food is dead money? How about paying for electricity or water or gas? After all, you don't end up with assets paying for those, yet you need those to live, exactly the same as paying rent.

Stop thinking of somewhere to live as an asset and more like a service, renting soon starts to make a lot more sense.

I only have a mortgage because I bought at a good time (2000) and I am now paying considerably less than I would be if I were renting. If I had to get somewhere to live now, I wouldn't chuck my deposit away on a mortgage, I'd rather rent.

It really depends, if the rent(Money not adding to your net value) is more, then paying interest payments(Money not adding to your net value) and excluding paying the principal. Then its better for mortgage, if its opposite its better to rent. I have a spreadsheet which tells if you if renting or mortgage which help you increase your net value. This is irregardless to if you earn less or whatever, just because your poor does, not mean rent is going to be less than interest payments. Even if your poor, it can be better to mortgage.

Sheff · 13 Sep 2011 at 15:37

Does your girlfriend work? Are you at the stage where you could conceivably save up for a house together?

Gilly · 13 Sep 2011 at 15:38

I've bought my first house this year with our lass. She barely earns anything as a care worker and is on 90% of her normal wage at the moment due to maternity.

If I hadn't bought this year I'm not sure I ever would have. We're absolutely skinted, with a new house and a new baby. Money just evaporates.

My mortgage repayments are £722 a month.

Abraham · 13 Sep 2011 at 15:38

a1ex2001 said:
7% mortgage example nice way to tip the balance in favour of your argument.

a pap example, but the logic is kind of correct.

While the opposite is generally true (my mortgage payments, interest and small repayment are £380, I could rent the house next door for £650), there are situations, especially with more *exclusive* properties when renting could initially be cheaper than buying, but only if the landlord has it on a cheaper mortgage than you can now get or owns it outright, otherwise they'd be losing out.

MacRS4 · 13 Sep 2011 at 15:41

PiKe said:
My thinking is the money that goes towards rent could go towards mortgage repayments, that way you'd have something to show for it when all is said and done.

The maths doesn't stack like that though.

When you pay a mortgage, assuming it's repayment, you'll have a chunk going to interest and then a smaller chunk going to repayment. The rent payments is just as dead as the interest component on a mortgage isn't it?

[TW]Fox · 13 Sep 2011 at 15:42

Not at all concerned, my girlfriend and I should have sufficient deposit for a decent mortgage on a nice enough place in circa 2 years time.

Abraham · 13 Sep 2011 at 15:44

MacRS4 said:
The maths doesn't stack like that though.

When you pay a mortgage, assuming it's repayment, you'll have a chunk going to interest and then a smaller chunk going to repayment. The rent payments is just as dead as the interest component on a mortgage isn't it?

agreed, I made the choice because it was much cheaper to buy than rent the same property, the majority is still dead money though, on my default repayment I think I pay off £20 a month from the actual borrowed amount. Fortunately I can overpay by quite a bit without penalty.

UK-AL05 · 13 Sep 2011 at 15:46

MacRS4 said:
The maths doesn't stack like that though.

When you pay a mortgage, assuming it's repayment, you'll have a chunk going to interest and then a smaller chunk going to repayment. The rent payments is just as dead as the interest component on a mortgage isn't it?

The big difference made is if, houses are going to appreciate, or not. You have to factor that in to. If they are going to appreciate, then a higher then rent interest only mortgage payment can be justified.

Dr House · 13 Sep 2011 at 15:47

when I bought my first place I put a 20% despot down which was not too hard to save as it was not a very expensive flat, the interest on the mortgage was a lot less then the rent I was paying.

PiKe · 13 Sep 2011 at 15:47

MacRS4 said:
The maths doesn't stack like that though.

When you pay a mortgage, assuming it's repayment, you'll have a chunk going to interest and then a smaller chunk going to repayment. The rent payments is just as dead as the interest component on a mortgage isn't it?

But you have the option of selling whilst still repaying the mortgage, if house prices climb again, you could stand to make money?

shoes · 13 Sep 2011 at 15:49

I earn about £25k and there is no way I can afford to buy a house. My g/f is on a little under £20k and between us we could afford to buy a small house.

As some of you on here know my father sadly passed away at the beginning of this year, and left his house to my brother and I. This is currently on the market, the proceeds of which, or at least my half, shall be used for buying a house of my own/possible joint ownership with the g/f. and for replacing the pos focus I clatter about in.

At 25 years old, this windfall is something very very few people (are lucky enough to...?) experience, and I consider it to be the only reason I can afford a house. Without it I would be looking to earn around £45k plus a large deposit before being able to purchase a small house on my own.

It's crap, but it's reality. House prices are grossly inflated anyway, massively so, even at their current 'low'.