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Answer To 'should I Buy Now Or Rent' Questions


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#916 Dr Renter

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Posted 18 November 2010 - 09:47 AM

If I were to draw 350K out of the bank and buy the house I'm renting, I'd lose 11,200 per annum in interest after tax (I'm retired and no longer pay 40%), I pay less than that in rent and my money is sitting in the bank rather than being tied up in a depreciating, illiquid, asset.

Of course, if you factor in maintenance, falling house prices etc, I'm substantially better off renting.



So you're renting a 350,000 house for 550pcm? Where is this?

#917 Bruce Banner

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Posted 18 November 2010 - 09:48 AM

Yes, in your personal case you are able to overcome the tax efficiency of owning housing because your landlord has a very low rental yield and your income tax rate is low.

At the moment, rental prices in your area favour the approach you are taking.

In general (especially if houses return to 3x wages and rental yields go back to double digits), the tax system favours owning a house over renting one and investing elsewhere.

Edit: I seem to recall you saying your landlord is getting a 2% yield and you are earning 5%+ on NS&I certificates (which are no longer available of course). You must admit this is a very unusual situation and one which is not available to most of the population. The going rate is about 5% yields on rent and 3% on savings.


There are quite a lot of posters here who are in a similar position to me. If you shop around for good rental deals and interest rates, it can be done.
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Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#918 Bruce Banner

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Posted 18 November 2010 - 09:49 AM

So you're renting a 350,000 house for 550pcm? Where is this?


Wrong, as usual :rolleyes:.
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----------------------------------------------------------------------------------------------------------
Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#919 this_prisoner_is_opting_out

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Posted 18 November 2010 - 09:57 AM

I am currently paying 680 euros a month on a 1-bed rental flat.

I am going to buy at 100% and my fixed 10 year repayment will be approx 320 a month for a 3-bed house.

Utilities coming in at the same due to superior insulation on the house.

I'm prepared for further falls at these kind of prices.



#920 ccc

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Posted 18 November 2010 - 10:00 AM

Same story in the Scotsman today. However the detail is a little more illuminating. :blink:

Scotsman


"IT IS cheaper to buy a property than rent one in 80 per cent of towns in Britain because of falling house prices and rising rents, research suggests. Rents on a two-bedroom flat are now typically 9.9 per cent higher than interest-only mortgage payments, said Zoopla.co.uk."
Well - that rather changes things doesn't it. Did the other article not think this info was important....



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#921 Dr Renter

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Posted 18 November 2010 - 10:13 AM

Sums are not your strong point , are they :rolleyes:.



350,000 x 5% is 17,500 annual savings

Take off the 11,200 you say you'll lose and that's 6,300 or just over 500pcm.

#922 Bruce Banner

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Posted 18 November 2010 - 10:15 AM

350,000 x 5% is 17,500 annual savings

Take off the 11,200 you say you'll lose and that's 6,300 or just over 500pcm.


You post as though stupidity were a virtue :lol:.

When in a hole, stop digging.
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----------------------------------------------------------------------------------------------------------
Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#923 Cinzano Bianco

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Posted 18 November 2010 - 10:21 AM

Nothing is certain in life, but I'm very relaxed. I would certainly be 'shitting myself' if my money was tied up in an, illiquid, depreciating asset though.


Agree entirely (I am in a rented house also)... but if TSHTF, you would still have your house rather than a lot of pretty toilet paper. If I had your cash, I would be seriously think about buying a nice house with a plot of land (and some guns and stuff :)).
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#924 cardiffone

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Posted 18 November 2010 - 10:23 AM

Havent we been through all this before, in the long run it is still cheaper to buy than rent.

end of story.

If you have other needs like flexibility or you have some really good investments, in can be better to rent...

that doesn't apply to most people in most areas

#925 Dr Renter

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Posted 18 November 2010 - 10:24 AM

You post as though stupidity were a virtue :lol:.

When in a hole, stop digging.


Ah yes, the classic HPC response, don't respond with facts, respond with insults. A good tactic I suppose, the less info you give out, the less likely you'll trip yourself up. I would imagine it's difficult for you to remember what is truth and what is BS. This used to be such a lively and informative forum, sadly it's loons like you who have ruined it.

#926 ccc

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Posted 18 November 2010 - 10:25 AM

Does nobody else think it is pretty shocking the original article didn't even mention this was based on interest only mortgages ?

Scandalous IMO. Unless the Scotsman article is wrong of course.
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#927 Bruce Banner

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Posted 18 November 2010 - 10:26 AM

Agree entirely (I am in a rented house also)... but if TSHTF, you would still have your house rather than a lot of pretty toilet paper. If I had your cash, I would be seriously think about buying a nice house with a plot of land (and some guns and stuff :)).


Actually, even that's not a certainty. Governments can kick you out of your house if they want to, they call it compulsory purchase.
.



----------------------------------------------------------------------------------------------------------
Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#928 Bruce Banner

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Posted 18 November 2010 - 10:28 AM

Ah yes, the classic HPC response, don't respond with facts, respond with insults. A good tactic I suppose, the less info you give out, the less likely you'll trip yourself up. I would imagine it's difficult for you to remember what is truth and what is BS. This used to be such a lively and informative forum, sadly it's loons like you who have ruined it.


But your questions are not based on what I have said. Can you not read?
.



----------------------------------------------------------------------------------------------------------
Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#929 ccc

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Posted 18 November 2010 - 10:33 AM

This is the actual Zoopla blog

BLog

"(assuming interest-only mortgage at 5% interest p.a.)"


This article:

"an owner with a mortgage with a pay rate of 5 per cent"

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If anyone can be bothered I think this could be one for the Press complaints Commision. I may send an email later myself. Leaving out the interest only bit and replacing with 'pay rate' is completely misleading IMO.


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#930 Dr Renter

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Posted 18 November 2010 - 10:34 AM

If I were to draw 350K out of the bank and buy the house I'm renting, I'd lose 11,200 per annum.


You didn't write that then?




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