Our neighbours flat:£140,000 ish, rent £650pcm ~ 4.6%
Our flat:
£150,000 ish, mortgage £850pcm ~ 5.6% repayment only
My last house:
£325,000, our rent £1100 ~ 3.4%
Definately cheeper to be renting
The concept of 'owning' your own house is almost uniquely British it seems. The only way it ever makes sense is if you buy in a market where prices are rising faster than wages, i.e. your income will pay it off eventualy, but seeing as its hit the limit of everyones income I cant see that being repeated ever again.
n.b. my numbers are for SE england, ooop north where prices seem to be 50% or les what they are down here its probably possible to buy a house.
Thats one way to look at it, but the thing to remember is rents will always be rising (assuming inflation), whereas a mortgage wont. if you assume a 4% p/a inflation on rent, in 5 years time they will be paying more. In 25 years time, they'd be paying around 12% of the value today. To offset that, you have to pay property repair costs, but avoid agency fees etc. swings and roundabouts, really.
also, the rent:buy ratio varies hugely. On my street (popular with student lets), houses rent for between £1400-1800 pcm (lets take a middling £1600 figure). Houses cost around £230k - so around 8.5% yeild. However near the seafront, a 2 bed flat would rent for less - maybe £1200 pcm, but sell for £400k - 3.6% yeild. About 1.5 miles from each other
rs interest only mortgage payment is £52.99 per month so quite a bit less than the £550 rent I get per month.
rs interest only mortgage payment is £52.99 per month so quite a bit less than the £550 rent I get per month
understood but your example is based on buying 15 years ago and renting at today's prices, somebody looking to buy now is going to need a good deposit and a higher monthly payment than the rent in most cases. Quite the outlay these days.
Yeh I know that but in 15 years time they could be in the fortunate position I'm in now I was illustrating the point that sometimes having 'debt' isn't a negative position.
Or you could be in the position where you 'own' a city center 'flat'* worth £55k, but owe the bank £155k, like those poor sods who bought into the whole 'city center living experience' advertised in places like Manchester and Cardiff.
*A friend bought one in London and was told by the developers pets were allowed. However the RSPCA wouldn't let them have a cat from their re-homing center (even an indoor one) as the space was considdered too small and therefore cruel!
amt27,
you are wrong we don't all have debt,
it is possible to become totally debt free, don't crash peoples hope by saying otherwise, just by saying this i will no doubt be branded a willy waver but i don't care as at least i'm being honest and truthful.
The level of (especially) unsecured debt that some people have managed to get themselves into in the last 5-10 years is horrifying.
I see some of the fallout in my job and 2-4 times income on credit cards and loans (with no real assets to show for it) is not that unusual.
That's why we have a modest mortgage and zip all else. About the only thing I might borrow for is a replacement main family car in 3-4 years time when the current 7 year old one will probably have got rough round the edges. 2nd household car is always something cheaper for cash.
just the house for me
No debts, mortgage paid off and net saver here.
nice high ceilinged victorian 1-bed ground floor flat overlooking north wales mountains and coast. £80 p/w rent. depends what you want.
Spent about 15 years not worrying about overdrafts and CC's. All came to a head about 3 years ago when I realised i was in the shit and £12k owed, and no way of borrowing my way out of it. Got onto a debit management plan to at least freeze the interest, which helped me to tread water, but not really doing much with the debt other than stop it getting worse. Eventually paid it all off thanks to inheritance.
Never EVER again!
I may live from month to month and struggle after christmas, but at least its all mine now.