“BUT it does involve saving the difference not spending it.”

im not sure saving the -300 quid a month difference between my mortgage and a similar rental of a more dated interior finish will result in a difference.

i guess it depends if you think 15grands an acceptable price for a new kitchen

your paying for all the same things in a rental your just drip feeding it to the land lord over time and sharing the bill with previous/future tennents – while havin t oput up with landlords interior design !

its all a gamble…….that much is certain.

I’m strongly in the mortgage camp.
Your mortgage payment will follow the interest rate and won’t be affected by inflation/house price rises etc.
Rent will always go up, as house prices increase the loan costs to fund them increase, most landlord use high leverage as it removes their cash and leaves the banks money invested in the property.
I have a few rentals and don’t have any of my money invested in them any more, I have equity tied in but no physical money.

The bit you don’t get about mortgage, there are several studies showing that depending on the market renting and buying are break even long term.

Having paid off my mortgage many years ago and effectively living rent free indefinitely now, I’m pretty much a fan of the mortgage route…..

Well done Footflaps I guess you started when house prices were much less that current. The point being that what was good in the past is not necessarily goof for the future, a lot of people have made significant profits in housing, getting on the ladder now is very different. It’s important to asses in the now not the past.

In the now my mortgage is less than any similar rent by at least £350 a month. Thats money in my pocket so its cheaper each month amd I dont get fleeced for a months rent at the end of the lease because I stood on the carpets and my dog is free to dig as many holes in the lawn as she likes and in 17 years I’ll have nowt to pay each month.

In the now my mortgage is less than any similar rent by at least £350 a month.

And for the last 5 years I rented in the UK I had nicer houses than I could have bought, so it really depends on where you live. I’d expect the sway to rent vs mortgage to increase unless banks actually cracked down on lending which they won’t as sending young people into spiralling debt is beneficial to those that have already bought houses.

Well if getting as nice a house as possible in the short term is your priority then good luck to you.

Our Mortgage is pretty high (£1300ish per month) but it still a fair bit less than renting a 3-4 bed house in our village.
We don’t intend on moving anytime soon (or maybe ever) so over time the repayments will drop as a percentage of our income. (yep – I know interest rates will go up – but just tied into a 5-year fixed so safe for the time being)
So I’d say younger people should pay the basic amount into a company pension (I put in 5% and my employer matches it) and try to get into house ownership at some point.

The point being that what was good in the past is not necessarily goof for the future,

True, but unless you plan to only live for 25-30 years you’re going to be renting for much longer than a mortgage if you go down that route….

“getting on the ladder now is very different. It’s important to asses in the now not the past.”

yep i did , i picked an area to live in based on where i work and where likely work in my area of expertise is likely to be….. and where mrs T-R works – where she had a job first infact.

did the renting thing for a few years. Realised its shite after looking for a new rental every year when the land lord decided they wanted a good chunk more cash for the privilege of staying put so for security and piece of mind we bought our own place, it aint fancy and it aint huge but it suits our needs , it has room for family expansion – all for much less than the rental costs of a similar property with none of the uncertainty – how ever that works both ways. If your in academia or another kind of job with regular moving around/temp work or brand new to an area then buying property is probably not your best move.

and also the knowledge that should i pop my clogs my family has a roof over their heads without worry.

Realised its shite after looking for a new rental every year when the land lord decided they wanted a good chunk more cash for the privilege of staying put

This comes up a lot in these discussions but I’ve rented various places over 13 years now and never had a rent increase – is there some regional variation or have I just been lucky?

In 1989 we bought a house for £47500 and then sold it in 1999 for £52500, during this period the mortgage rate varied between 15% and 5%. Add in the costs to buy and sell and 10 years of maintenance and I reckon that renting would’ve been cheaper.

But. The house we bought in 2001 doubled in value in its first 5 years 🙂

Now mortgage free, mainly through the years of a 0.5% rate.

supply and demand lemonysam and then there are others that value a good tennent.

where i am seems to be full of folk that just want to extort as much cash as possible.

when you have a 100folk queuing to view your property you can afford to be picky i guess….

650 for a non dump 1 bed flat in a reasonable area last time i rented in town ! – mrs T-rs sister is paying 800 for her share of a 2 bed in a nice area of town……

650 for a non dump 1 bed flat in a reasonable area last time i rented in town

£625 for an attractive 2 bed cottage with garden and garage in a very popular commuter-village here…

In 1989 we bought a house for £47500 and then sold it in 1999 for £52500, during this period the mortgage rate varied between 15% and 5%. Add in the costs to buy and sell and 10 years of maintenance and I reckon that renting would’ve been cheaper.

But, the if you go down the mortgage route and pay it off (as most do) you end up with no rent and no mortgage for another 20-30 years. So you need to compare rent for 50 years (say) vs mortgage for 25 years as these are the lifetime costs.

Yes but he can get a return on his capital when invested.

The reason property does so well for people is mostly due to the gearing aspect, decent unit trusts can compete without that.

In the short-term gearing like this can wipe you out – negative equity.

The new flexibility of pensions make them even more attractive as a tax wrapper for a long term investment. Start as early as you can, you won’t regret it.

Compound interest really is amazing.

Don’t worry about drops in markets, as long as you are still buying, pound cost averaging will look after you.

In the short-term gearing like this can wipe you out – negative equity.

I never understood why people worried about this, it only matters if you want to sell up and rent, otherwise you just keep making the same mortgage payments and 25-30 years later you own the asset, whose price you agreed on at the start. Once you own the house, you’re rent free from then onwards.

But Phil…. Kirsty…Beeny…

HOMES ARE NOT FOR LIVING IN DAMMIT!

I’ve kind of come from where you’re coming from.

Been on a grad scheme for the last few years and just come off it now. Here’s a few of my thoughts and what I’ve done (not saying it’s right!!)

Get paying into your companies pension scheme straight away. If it never comes into your account in the first place you won’t miss it! On grad schemes pay tends to go up well through the first few years so I upped my contribution by 1% each time I got a pay rise.

We have savings schemes at work (share save where you buy shares at a discounted rate) these can give you good returns if you’re planning on staying there for a bit and once again comes out your pay before going into your bank account.

House wise we rented for the first 2 years whilst there was uncertainty about location. Whilst it’s great to get on the property ladder it’s pointless if you need to move again in a years time! That said we reached a point where we decided it would always be our base so took the plung and bought. This might sound crazy to many people but don’t be too scared if you do but to look to the upper end of what you can afford. Salaries go up well as a graduate and you don’t want to buy then wish you had gone for something else within 2 years or so.

I’m sure lots of people might question that but that’s just my experiences over the last few years!

Pensions are worth it if (a) you’re a higher rate taxpayer (b) you get a donation from your employer. Otherwise you can invest your own money, save on ridiculous fees and have freedom to do what you want.

Crispo – did exactly the same WRT buying, it just didn’t make sense to rent anymore especially with a landlord who fancied selling up. Bought in 2010 and prices haven’t budged since then, put an extension on for OUR needs and may be lucky enough to hit the magic 65% LTV on revaluation but it’s all one as far as we’re concerned.

Captain – thats a gross generalisation of a very complex subject. Even as a lower rate taxpayer my scheme would be a winner but not all schemes are created equal.

I never understood why people worried about this, it only matters if you want to sell up and rent

What about those unsure how safe their employment is?

If once you had paid off your mortgage you sold up then invested in stocks, or whatever, you could find that the growth on those was enough to cover rent with the benefit of someone else dealing with the property maintenance. It’s a risk but if stock market outperforms property price growth, as is not unlikely, then you’d win. I wouldn’t do this but it could work.

Just out of curiosity, what do people recon they spend on maintainance on a house.

Umm, so far…

Beyond the usual magnolia-it-to-death-until-we-decide-what-we-want-to-do-with-the-place when we moved in, £20 to get a tile replaced and a few boiler services. Don’t even get me started on how I afford such frivolities.

Plus <£25k on a new extension, kitchen and central heating. But that was for fun rather than essential.

Sounds about right. Getting a property to how you want it might cost a few £££ but the general maintainance is very little.

My sister bought a house then had to replace the boiler straight away – over £2k she paid. I had £1200 to put in a new connection to the mains a couple of years ago. Not too bad overall but mine’s a solid 50s house, the older the house the more the bills really. Oh the showers leaking somewhere 🙁

I scraped my deposit together for my first house with credit cards, it’s hard to recommend this as a preferred method but I have almost no mortgage at the age of 39 now, so it got me into the market quickly. After that I serviced the debt as cheaply as I could until I was in a position to pay it off. Of course this was a gamble but the world of financial services is just that, a gamble; fixe rate, tracker, offset etc etc. you just have to play the system sometimes!

Between now and me retiring in 50 years theres a chance of;

A) A large thermonuclear war

B) A giant economic collapse

C) A 1918 rivaling influenza outbreak

D) A slow collapse of the UK into economic mediocrity

E) Me dying of a heart attack

F) A combination of the above

I think I will just focus on paying a normal amount into a pension plan but mostly worry about getting stinkingly rich and retiring early to some cheap hot country before I am 50 or some stunning villa in the South of France if I somehow convince a company to pay me that much. If I have to work till I’m 65-70 it was all pointless, it’s mostly pointless anyway…..maybe I’ll do a Frank Gallagher when I get to that age.

anagallis_arvensis – Member
Well if getting as nice a house as possible in the short term is your priority then good luck to you.

It wasn’t just renting was much better value overall, especially when I moved for work frequently. I have also only been asked to move once in 16 years of renting and I have been able to find homes that suit my needs at each stage of life so far.
Not perfect as it would require a crystal ball and it’s based on the Oz market (a lot of similarity to the UK)
http://www.abc.net.au/news/2014-07-14/renting-or-buying-an-even-money-call-says-reserve-bank/5595814
There is a lot of personal circumstance to consider too.

Part of me wishes I have magically been able to find a deposit while earning bugger all in my first job (deposit for anything near work would have been at least my pre tax salary up to double) back in 97 before the boom really kicked off. In some ways I’m also glad to leave the UK housing market behind as it ramps up for another boom, protecting those that got in and punishing those late to the party.

Any thoughts would be much appreciated.

Just start putting into your pension straight away, each employer varies on their contribution. I contribute 10% my employer does 8%. I could put minimum 2% if I wanted too. In fact I did 4% at the beginning as I wasn’t so great at budgeting and that extra say £100 is the difference between a few nights out and Aldi special pizza or papa johns. 😉

My cousin had a different approach. He opted out of a penison and he now is on his second buy to let house which he rents out both about 100K in value and are pretty much now paying for themselves. I would say though at the beginning you got to really be strict and save to get that deposit. Then find a bank to get a mortgage its all now paying off but its swings and roundabouts there is a lot more involved and risk. Its certainly crossed my mind as an option to compliment my pension but fast cars, fancy bikes… yeah never going to happen.

There is some irony that despite the ranting on here about first time buyers being unable to afford a house / inflated prices etc a surprising number seem to have buy-to-let properties and advocate their purchase.

Have a play with an online pension calculator and see the difference starting early makes. I’m lucky, I put in 6% and my employer adds 12%.

I’d also posit that in 40-50 years time the State pension will not exist as we know it today.

“State pension will not exist “

I operate on this statement alone , forget the rest of your sentence 😀 anything extras a bonus.

how ever the uk governments so soft we wont let them starve so you will get meal tickets for soylent green im sure.

i know this was linked to earlier but i thought it was quite pertinant. something thats not emphasised enough in school maths but should be. The importance of compound interest.

The only variable in the study was time. Susan saved for 10 years from ages 25 to 35, Bill saved for 30 years from ages 35 to 65 and Chris saved for 40 years from ages 25 to 65.

At the retirement age of 65, Susan — who saved for only 10 years — had a pension pot of $602,070. Bill who saved for 30 years, but started later in life, ended up with only $540,741 in his pension pot.

Chris, who saved the longest, had a total pension pot of $1,142,811 when he came to retire at age 65.

If company putting money in then pension is good at anytime but if a low rate tax payer might want to wait until a higher rate one – if likely. Anyway, I didn’t bother with a pension until paid off mortgage – except for getting the small amount of pension from my company they offered. I did build up my investment ISAs though which can be viewed as an alternative to a pension but flexible in that you can get at the money if needed. Once mortgage paid off I switched to throwing money into my pension in chunks getting the higher rate tax back.

Even as a basic rate tax payer paying into a pension makes sense. You get an immediate increase on your investment thanks to the tax situation and the investments that you can use are no different to those in an ISA or any other type of investment. The only differences are the availability of funds and the amount that can be invested each year.

FWIW ive invested in tools.

😀

Even as a basic rate tax payer paying into a pension makes sense

Only if not planning to be a higher rate tax payer as would save more tax by waiting – obviously using the money for something else such as ISA or property deposit.

There are only a few rare and very specific circumstances where delaying pension contributions makes sense and they won’t apply to many people at all. Granted everyone has to look at their own priorities and goals but that doesn’t make pensions s bad investment. After all that’s what they are, an investment just with slightly different benefits and restrictions.

Just out of curiosity, what do people recon they spend on maintainance on a house.

Not a lot, probably a few £100 a year if that. Bathroom extractor fan is on the way out after 15 years service, £30 for a new one. Had to fix a leaking gutter a couple of years back – that cost about £1 in waterproof glue and some duct tape. Can’t recall the last time I had anything serious that needed doing.

EDIT, yes I can, bath split in two, so had to fit a new one and shower died. Refitted the entire bathroom for under £2k a few years back.

no you didnt footflaps you must be lying ….. , clearly on here the minimum cost for a bathroom or a kitchen is 15 grand……maybe thats why maintainance costs are assumed so high.

i change things cause i want to change them … its very rarely because they are broken short of the heating – which was 2500 for new boiler/rads and pipes. – and thats in an old house. decorating is not maintainance IMO – although folks lump it in the same catagory as it seems if your anything like people i know you just decorate when fashions change.