Get A Grip Posted September 25, 2004 Share Posted September 25, 2004 All this talk of renting being so much cheaper than mortgage intrest didn't ring true for me in my area (small town in East Anglia) so I grabbed this week's paper and compared some rents with asking prices on rightmove. Mortgage prices assume 100% LTV (not realistic but allows a direct comparison) at 5.25% int. only I based mortgage on 95% of asking price similar property 2 bed victorian terrace £495pcm rent, £498 mortgage 2 bed modern terrace, garden & parking £510pcm rent, £568 mortgage 4 bed detatched, garage & gardens £695pcm rent, £810 mortgage Comments? Quote Link to comment Share on other sites More sharing options...
Dicky Posted September 25, 2004 Share Posted September 25, 2004 All this talk of renting being so much cheaper than mortgage intrest didn't ring true for me in my area (small town in East Anglia) so I grabbed this week's paper and compared some rents with asking prices on rightmove.Mortgage prices assume 100% LTV (not realistic but allows a direct comparison) at 5.25% int. only I based mortgage on 95% of asking price similar property 2 bed victorian terrace £495pcm rent, £498 mortgage 2 bed modern terrace, garden & parking £510pcm rent, £568 mortgage 4 bed detatched, garage & gardens £695pcm rent, £810 mortgage Comments? <{POST_SNAPBACK}> I'm sure you mean well but where exactly in East Anglia can you buy a 4 bed detached for 140K. Quote Link to comment Share on other sites More sharing options...
Get A Grip Posted September 25, 2004 Author Share Posted September 25, 2004 I'm sure you mean well but where exactly in East Anglia can you buy a 4 bed detached for 140K.<{POST_SNAPBACK}> Err...........get the calculator out Dicky! Quote Link to comment Share on other sites More sharing options...
Dicky Posted September 25, 2004 Share Posted September 25, 2004 Err...........get the calculator out Dicky!<{POST_SNAPBACK}> Errrrr ....I'm still correct and you still have provides the details. Quote Link to comment Share on other sites More sharing options...
Get A Grip Posted September 25, 2004 Author Share Posted September 25, 2004 Errrrr ....I'm still correct and you still have provides the details.<{POST_SNAPBACK}> I think you are pricing a repayment mortgage, which is not a fair comparison to rent because you are repaying capital. My original post stated INTREST ONLY! Quote Link to comment Share on other sites More sharing options...
Dicky Posted September 25, 2004 Share Posted September 25, 2004 I think you are pricing a repayment mortgage, which is not a fair comparison to rent because you are repaying capital.My original post stated INTREST ONLY! <{POST_SNAPBACK}> No such thing as an interest only mortgage in my book, it's all got to be payed back at some point, your comparasion is just another form of renting from the bank and with more risk of a down turn. Quote Link to comment Share on other sites More sharing options...
zzg113 Posted September 25, 2004 Share Posted September 25, 2004 I think IO's can be a good idea actually. It's better than renting, cos you actually own the place, legally at least, and can knock walls about, decorate it how you like etc. Alright, so you're taking a punt on property prices being equal or higher to your purchase prices in 25 years time, but hey, you've had 25 years use of the property and if the property is worthless and a huge amount of the loan is still outstanding, do a runner and set up somewhere in the sun. Quote Link to comment Share on other sites More sharing options...
Guest Charlie The Tramp Posted September 25, 2004 Share Posted September 25, 2004 No such thing as an interest only mortgage in my book, it's all got to be payed back at some point, your comparasion is just another form of renting from the bank and with more risk of a down turn.<{POST_SNAPBACK}> Amateur BTLetters are blind to that dickie thats why they will get their fingers burnt. All they see is ££££££££££££££££££££££££££££££££££££££££ £Â£Â£ Quote Link to comment Share on other sites More sharing options...
Dicky Posted September 25, 2004 Share Posted September 25, 2004 Amateur BTLetters are blind to that dickie thats why they will get their fingers burnt. All they see is £££££££££££££££££££££££££££££££££££££££££Â£Â£ <{POST_SNAPBACK}> Just to add to that with inflation at 1-2% , the capital to repay doesn't erode either, it's still a real 80 -60% in 25 years time. Quote Link to comment Share on other sites More sharing options...
Sledgehead Posted September 25, 2004 Share Posted September 25, 2004 All this talk of renting being so much cheaper than mortgage intrest didn't ring true for me in my area (small town in East Anglia) so I grabbed this week's paper and compared some rents with asking prices on rightmove.Mortgage prices assume 100% LTV (not realistic but allows a direct comparison) at 5.25% int. only I based mortgage on 95% of asking price similar property 2 bed victorian terrace £495pcm rent, £498 mortgage 2 bed modern terrace, garden & parking £510pcm rent, £568 mortgage 4 bed detatched, garage & gardens £695pcm rent, £810 mortgage Comments? <{POST_SNAPBACK}> Can you please submit the asking prices these figures are based on. Cheers Quote Link to comment Share on other sites More sharing options...
TW11 Posted September 25, 2004 Share Posted September 25, 2004 Hey Get A Grip, from another thread you can see that I just moved into a flat for 750 pcm in SW London. There's an identical flat in the same block up for sale at 225k........ You work it out..... Quote Link to comment Share on other sites More sharing options...
Get A Grip Posted September 26, 2004 Author Share Posted September 26, 2004 Hey Get A Grip, from another thread you can see that I just moved into a flat for 750 pcm in SW London.There's an identical flat in the same block up for sale at 225k........ You work it out..... <{POST_SNAPBACK}> Sounds like you made a wise choice. MY WHOLE POINT was that my area does not seem to have the same low rents relative to buying than many other areas, yet it seems no-one wants to even acknowledge the fact, never mind discuss it! Sledgehead - 120k, 135k, 195k. Quote Link to comment Share on other sites More sharing options...
zzg113 Posted September 26, 2004 Share Posted September 26, 2004 to be fair, I'm not aware that E. anglia has been a BTL hotspot (maybe Ipswich, but presumably you're talking somewhere like Felixstowe, lowestoft?) so yields will not have been as depressed as they have been in the other major cities. Quote Link to comment Share on other sites More sharing options...
EmpiricalBear Posted September 26, 2004 Share Posted September 26, 2004 No such thing as an interest only mortgage in my book, it's all got to be payed back at some point, your comparasion is just another form of renting from the bank and with more risk of a down turn.<{POST_SNAPBACK}> Dicky, you are completely missing the point. The reason you need to compare I/O mortgages with rents rather and by using a repayment mortgage is because this removes the capital repayment element of the mortgage. As has been said before, an I/O mortgage is like renting your property from the bank rather than from a landlord. The difference between the I/O mortgage and a repayment vehicle is the added value which comes from capital repayment. This quantity is irrelevant to a buy/rent comparison. Luckily such sophisticated reasoning does not come easily to Joe or Dicky public which is why we STR's are currently laughing our way to our 30-40% discounted property post crash Quote Link to comment Share on other sites More sharing options...
Dicky Posted September 26, 2004 Share Posted September 26, 2004 Dicky, you are completely missing the point. The reason you need to compare I/O mortgages with rents rather and by using a repayment mortgage is because this removes the capital repayment element of the mortgage. As has been said before, an I/O mortgage is like renting your property from the bank rather than from a landlord. The difference between the I/O mortgage and a repayment vehicle is the added value which comes from capital repayment. This quantity is irrelevant to a buy/rent comparison. Luckily such sophisticated reasoning does not come easily to Joe or Dicky public which is why we STR's are currently laughing our way to our 30-40% discounted property post crash <{POST_SNAPBACK}> Currently renting a 250K property for £600 pcm, IO mortgage would be 1100 pcm, you do the maths ar£ehole. Quote Link to comment Share on other sites More sharing options...
Guest Charlie The Tramp Posted September 26, 2004 Share Posted September 26, 2004 Just to add to that with inflation at 1-2% , the capital to repay doesn't erode either, it's still a real 80 -60% in 25 years time.<{POST_SNAPBACK}> Dicky, you are completely missing the point. The reason you need to compare I/O mortgages with rents rather and by using a repayment mortgage is because this removes the capital repayment element of the mortgage. As has been said before, an I/O mortgage is like renting your property from the bank rather than from a landlord. The difference between the I/O mortgage and a repayment vehicle is the added value which comes from capital repayment. This quantity is irrelevant to a buy/rent comparison. Luckily such sophisticated reasoning does not come easily to Joe or Dicky public which is why we STR's are currently laughing our way to our 30-40% discounted property post crash Dickie is this £££££££££££££££££££££££££££££££££££££££ the same as being blinded by the sun.? Quote Link to comment Share on other sites More sharing options...
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