Rented accommodation vs mortgage - overpriced and impossible?

[Grandad.Malky 11]

, whereas my mortgage is less than £100 a month.

 

Same here and I have only one more month to pay + we get a lump sum from our endowment.

[Cyclone 10]

In 25 years time when you are still paying rent the person that as “just got a mortgage” will be able to live rent free or sell up and bank the money to provide a pension or spend on whatever.

 

On the other hand, they'll have paid interest on a large loan for 25 years. Mortgages aren't saving schemes, they have an associated cost.

A 100k house will over 20 years cost you 200k (roughly speaking).

 

If the mortgage and rent are equivalent though, then it would appear to be better to own a house after 25 years than to not own anything. If the mortgage costs more than renting the equivalent house (including insuring it, maintaining it and all the other associated costs) then you have to consider the difference and how much that would be if saved over 25 years and invested in a savings account.

[Grandad.Malky 11]

then you have to consider the difference and how much that would be if saved over 25 years and invested in a savings account.

 

That’s a rather big if though isn’t it?

[Cyclone 10]

No, it's just a rather large calculation, the rest of it might be down to whether you are capable of saving rather than spending, but if not then you're probably never going to have a deposit anyway and the question becomes moot.

[andrejuan 10]

At one time it was worth renting because the rent didn't go up over time (or very small amounts) So, after a long period the rent becomes peanuts. Houses can still be seen for sale today with sitting tenants paying £15 a month for a three bed terrace. That would have been expensive when they moved in.

The big bonus is, if you are in this position you can often sell the tenancy back to the landlord for a considerable sum. This is because the property can then be re-let at todays prices on a shorthold lease.

I know someone who did this on a flat in London and got £225,000 after 31 years.

[Cyclone 10]

What kind of contract allows you to stay in the property at a fixed rent forever?

[gabby 10]

You could pack in work, knock a couple of kids out, claim benefits and live rent free for the rest of your life.

 

Quite popular with certain members of this forum, I believe. As a tax-payer, nothing makes me happier for them.

[Ms Macbeth 75]

Same here and I have only one more month to pay + we get a lump sum from our endowment.

 

Ours finishes in a couple of months, but sadly one of our endowments has been pants and the other has met target, but without the expected lump sum. We have had to save to make up the shortfall. Boo, hiss. But at least we won't have to pay any housing costs except council tax in retirement.

Edited February 25, 2010 by Ms Macbeth
typo

[Cyclone 10]

You could pack in work, knock a couple of kids out, claim benefits and live rent free for the rest of your life.

 

Quite popular with certain members of this forum, I believe. As a tax-payer, nothing makes me happier for them.

 

If you can call it living.

[Dave650 10]

So the options are

a) Rent ; throw money at a landlord have nothing to show for your money (propertywise) at the end of it and pay rent through retirement.

b) get a house & mortgage, take on the commitment - risk repossession if you lose your job and can't keep up on payments for a bit

c) dump the mrs get a daft slag, pop out a few kids and smoke sovereign for the rest of your days

d) win the lottery

[chalcedony 10]

On the other hand, they'll have paid interest on a large loan for 25 years. Mortgages aren't saving schemes, they have an associated cost.

A 100k house will over 20 years cost you 200k (roughly speaking).

 

If the mortgage and rent are equivalent though, then it would appear to be better to own a house after 25 years than to not own anything. If the mortgage costs more than renting the equivalent house (including insuring it, maintaining it and all the other associated costs) then you have to consider the difference and how much that would be if saved over 25 years and invested in a savings account.

 

Thats kinda what i was getting at...Equivelant house to mine would be £110..£115k in todays market...dont know what the payments on that would be over 25 yrs but more than £450.. £800??? .and like you say,50% of that mortgage payment would be intrest and insurance...so you only actually get to keep half of what you pay out...which is near enough double anyway.

[Cyclone 10]

So the options are

a) Rent ; throw money at a landlord have nothing to show for your money (propertywise) at the end of it and pay rent through retirement.

b) get a house & mortgage, take on the commitment - risk repossession if you lose your job and can't keep up on payments for a bit

c) dump the mrs get a daft slag, pop out a few kids and smoke sovereign for the rest of your days

d) win the lottery

 

Most people take insurance against loss of income. It normally covers you for 12 months, which is enough time in most cases to find another income. There is always the risk of loosing the house though, but renting would be less safe, no income for rent, no room to stay in.