Your chances of owning your own home?

[Gilly]

a roof over your head. that's the most important thing in life bar none. it's nice that some people can "refuse" to rent while they stay at home with mummy and daddy. but for many there is no alternative. it's either rent or live on the street. paying someone else's mortgage is the last thing you'd think about in a situation like that.

oh and in before the "work harder...." response....

Well that's fair enough. It isn't dead money if it is a necessity.

It seemed to me that people calling it dead money were doing so whilst either paying or saving up to get their own mortgage.

There were even people saying you have to be dumb to call it dead money. When you could be buying your own for less cash it is dead money. Of course it is.

 

[playworker]

How is it not dead money? You're paying someone else's mortgage.

This is the problem with the UK rental market at the moment, renting isn't "paying someone else's mortgage" it's paying money for a place to live, pretty reasonable trade IMO. Elsewhere in Europe it's more common to rent, but in the UK it's looked down upon for some reason.

The consequence is you get a lot of landlords who don't respect tenants rights, and a lot of tenants who don't respect the property they're renting.

 

[[TW]Fox]

how much are your savings earning you?

Nothing, because the interest rate is being kept artificially low to bail out those people who couldnt afford the mortgage repayments but thought it was a 'right' to own a home anyway

 

[moon man]

bought my 3 bed semi in 2001 and paid off the mortgage in 2010 ,all on a rubbish wage (plus redundancy). if i was starting out i would be looking at something to update then sell on ,then repeat

 

[marc2003]

and how are you going to afford this when you are retired?

the state will have to pay. i have no qualms about that. it's not as if there is 100% home ownership among all retired people at this moment in time.

 

[Zefan]

I have next to no outgoings, so pretty much all my wages are being saved. If I get it all right I'll be buying to let around the end of 2012.

 

[Gilly]

This is the problem with the UK rental market at the moment, renting isn't "paying someone else's mortgage" it's paying money for a place to live, pretty reasonable trade IMO.

The problem with that being the mortgage repayment on a place around here is almost always lower than the rental payment on the same place would be.

Hence, dead money.

I can't grasp the willingness of people to fund someone else's property empire when they could be buying for themselves.

 

[Zefan]

I can't grasp the willingness of people to fund someone else's property empire when they could be buying for themselves.

Me neither.

 

[UK-AL05]

Me neither.

On the other side of the equation, people who own the house there renting, could be getting screwed with terrible mortgage rates and renting is a last resort. You don't know.

 

[j_walsh]

well house prices in tonbridge / tunbridge wells for anything semi decent is around £200 k so i think ill be renting for many years

 

[dowie]

There were even people saying you have to be dumb to call it dead money. When you could be buying your own for less cash it is dead money. Of course it is.

Depends on the scenario - if you've got the option to do either and you chose one of the other then you could simply be taking either a long or short view on the housing market.

Housing market can be up, down or flat...

buying = long position

renting = short position

choosing to rent in a falling market isn't necessarily 'dead money' and can leave you better off than buying

example for you

HSBC - sold london HQ, rented it back from the buyer...... later on bought back london HQ for less than they sold if for.... made £250 million profit

Not always dead money.

 

[adam cool dude]

The problem with that being the mortgage repayment on a place around here is almost always lower than the rental payment on the same place would be.

Hence, dead money.

I can't grasp the willingness of people to fund someone else's property empire when they could be buying for themselves.

Thats all well and good if you have somewhere to live. My parents were divorced when I was 7. My mum is pretty poor and lives with her boyfriend in a 2 bed terrace. My father who I lived with had a 5 bedroom house. My father died of cancer when I was 21. I have 4 half brothers/sisters so the money got split up but because of the will stating I could not have the money till I was 25.(Complications in the will with me getting 40% of the estate led to my family being ******** as they were executors). I had to rent for 3 years which was £15k wasted in rent (I got my money 1 year earlier). I never wanted to do it like that but I had no choice in the end.

 

[Pate]

renting does allow you just to upsticks and leave. You don't have to worry about downturns, opportunities can be seized. Obviously within reason.

 

[daz]

If you don't own your own home by the time you retire, what is the common path at that point? I was wondering this the other day. I guess you have to save enough to cover rent until you die?

Buying a house or not buying a house, you should be putting money in to a pension as early as possible. Pension contributions are made tax free so are a very effective way to save for your retirement. Effectively, for every £100 you put in to your pension, you're actually getting £120. Upon retirement, you purchase an annuity which will pay you £x k per year, which you'll use to live on.

 

[bhavv]

I'll never be able to afford my own home unless they go down to <30k.

 

[Rich_L]

It's pretty comedy here in SB, the median house price is around $1 million yet the median household income is $60k. Haven't quite worked out how that ratio works yet

 

[Glaucus]

Op you do realise you don't need 20% and that you have to sacrifice a lot for a house and that's been true even 40+ years ago. That you are lucky if you get a house you want, rather than a cheap first buyers house at the very bottom end of the Market.

 

[Mercenary Keyboard Warrior]

Renting has some big ups and downs vs owning(mortgage)

Positives for renting
- ability to give notice and move for virtually no cost (small exit fee normally)
- less worry on maintenance (ie landlords cost)
- typically you get a better property vs the mortgage cost
- baring interest rate changes your mortgage cost is fixed for the life of your mortgage, in 10 years time chances are highly likely you will be paying less than it would cost to rent the same property

negatives for renting
- less / no ability to make even simple changes such as painting
- you are not in control when and if some things such as maintenance are done (remember the guy who had speakers trashed by a painter)
- unless you sign fixed terms you may get the dreaded 2 months to get out notice (sounds plenty but often isnt a long time to find new digs, plus you get a load new application fees etc to pay)
- more at risk if you lose your job, its very hard to take out a rent if your unemployed so if you need to move due to maybe point above your in for a world of pain
- no asset, if you rent forever how will you pay once you stop work, if pension you need to pay more pension than someone who will own their own home later in life

So renting suits, people who may want to move around a bit, dont want any ties for now, maybe will inherit large, or for some reason will have a very good pension. maybe people who will find the next 10 years very hard to predict job/lifewise.

Buying suits people thinking long term who are unlikely to want to move often, and who are willing to sacrifice some now to be better off later in life.

 

[cm1179]

the state will have to pay. i have no qualms about that. it's not as if there is 100% home ownership among all retired people at this moment in time.

oh right the state will 'have to pay'. i dread to think what kind of house someone retiring will end up in 40 yrs time (don't know your age, took a punt) if it is provided by the state.

to the poster who used a £700k house as an example with the possibility of knocking £50k off the price, i'd say £50k is a conservative estimate on a £700k house tbh. it will probably go for £595k and i'm betting they will still be making a tidy profit but buying a house should never be on the premise of making a nice profit (unless you're a property developer) you're looking for a place to live, a place to call home at a mortgage repayment you can afford. i would have to pay more for renting the property i am in than what my monthly mortgage costs are, ok maintenance is on me but that's the way things are and atleast i know should any work need doing, it will be done properly and ASAP, not a half arsed job when the landlord feels like it. ok i put nearly £25k down but that £25k would have been earning me next to nothing somewhere else so it may aswell be providing me with a nice first home.
anyone on a tracker mortgage and receiving a cushty rate better be putting the mortgage savings to one side just incase things rocket back up in 2 yrs time, you've cost us £40bn in interest over the past 18 months, then i may start having faith in bank savings again

 

[cm1179]

A 10% drop is massive, imagine if you had saving account that gave you a 10% drop...

not on a house it isn't and it's only in the equation if selling.

''your house has dropped 10% in value of what you purchased it for'' ''so? i'm not selling, the mortgage is comfortable and i like it here'' 2011

''your house has risen 30% in value of what you purchased it for'' ''so? i'm not selling, the mortgage is comfortable and i like it here'' 2014