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Why Buy A House? And For How Much?

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Why do you want to buy a house?

How much would you pay for a house?

Nominal values aside that is. So, how much of a mortgage, proportion of income, or just straight outright?

And why? Renting being dead money, to pass on to son/daughter (or potential child), to accumulate assets that can be sold in retirement etc.

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Buying a house is security against periods of unemployment.

Have savings in the bank or assets in the productive economy? Then you lose them, 'cos you're assessed as too rich to qualify for benefits.

Have the same assets in bricks and mortar, then you get to keep them, with extra state benefits to live on.

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To be able to have somewhere that I can plan changes to the house and land long term (not 6 months at a time!)

I won't buy until I can buy outright. Should be about 10 years based on current saving ability.

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Don't. Buying a house is dead money.

So when you become old and infirm, unable to work to produce an income relying on accumulated savings and the State handouts you don't want the security of having shelter?

Perhaps you can rely upon family to house you?

The downside of property is that it is an illiquid "asset", fixed, highly taxable.

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Firstly to provide a place for shelter of my family that I have control over that forces me to save.

This is best reason for most people to buy a house under normal circumstances. Lets face it most people can't resist the lure of blowing their money on useless tat or forgettable experiences and will never set aside the money when renting that would be equivalent to building equity in a home.

For the more sophisticated, it is a toss up depending on your desire for mobility or to indulge in some DIY.

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.....Renting being dead money, to pass on to son/daughter (or potential child), to accumulate assets that can be sold in retirement etc.

Renting isn't dead money.

You have to pay to put a roof over your head whether you rent or buy.....

1; Renting, you pay rent to a landlord.

2; Buying with a mortgage, you pay interest to a lender.

3; Owning outright no mortgage, you lose the interest on the money you have tied up in a house.

Which of the above is the most cost effective depends on a number of factors, but at the moment, I prefer to rent rather than tie up my money in a depreciating, illiquid, asset.

What's wrong with leaving cash to your children?

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Firstly to provide a place for shelter of my family that I have control over that forces me to save.

Secondly as a passive growth investment for ones that I dont live in.

Market value, not higher than that though.

Maximum possible mortgage always. The only expection being to reduce mortgage on family house and increase mortgage on investment home to maximise tax deductible debt.

To provide security of shelter and to grow equity and income for lifestyle and maybe inheritance.

..you are ten years behind the times...where did you say you live? :P

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Renting isn't dead money.

You have to pay to put a roof over your head whether you rent or buy.....

1; Renting, you pay rent to a landlord.

2; Buying with a mortgage, you pay interest to a lender.

3; Owning outright no mortgage, you lose the interest on the money you have tied up in a house.

Which of the above is the most cost effective depends on a number of factors, but at the moment, I prefer to rent rather than tie up my money in a depreciating, illiquid, asset.

What's wrong with leaving cash to your children?

3 ??? What interest? How is your money from not owning your house going to pay your rent especially after tax? Generally houses go up in value. It would be nice if that was the same as inflation, not 25 percent up every year and then 20 percent down a year for a while. But in general they go up. The money you receive in interest only hedges against the fact your money is now worth less. If you have x amount in the bank and you get three percent interest and pay tax on that, and inflation is 2 percent. You wouldn't be able to spend any of your money, because even though it's gone up, it's still worth as much this year as it is last year.

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Is that actually true though? :unsure:

I ask because I genuinely do not know.

I thought that if we took an individual who for sake of argument, has a place bought and paid for, has less than £6.000 pounds in the banks but who has lost hid job and can't find another one, but is fit to find work, will get nothing from the state as the state will consider he had to sell his house and spend his assets before he'll get any real help from the state.

So if you have a mortgage you dont have to sell but dont have a mortgage you have to sell?

Bullshite.

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3 ??? What interest? How is your money from not owning your house going to pay your rent especially after tax? Generally houses go up in value. It would be nice if that was the same as inflation, not 25 percent up every year and then 20 percent down a year for a while. But in general they go up. The money you receive in interest only hedges against the fact your money is now worth less. If you have x amount in the bank and you get three percent interest and pay tax on that, and inflation is 2 percent. You wouldn't be able to spend any of your money, because even though it's gone up, it's still worth as much this year as it is last year.

Keep clutching at straws :rolleyes:.

House prices are falling. In my case the interest on the money I'd have to draw out of the bank to buy the house I'm renting more than pays my rent. I'd rather lose a few percent of my cash to inflation than a few tens of percent to house price deflation ;).

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Why do you want to buy a house?

For security and control....but only if it is financially beneficial to do so and looking to live there plus say 5 to 10 years.

How much would you pay for a house?

No more than 35 to 40% of net income spent on repayments, that means repaying the loan, also taking into account job security and promotion prospects also possible interest rate rises.

Nominal values aside that is. So, how much of a mortgage, proportion of income, or just straight outright?

As above with 10% deposit min up to outright if able.

And why? Renting being dead money, to pass on to son/daughter (or potential child), to accumulate assets that can be sold in retirement etc.

Nothing wrong will renting, more flexible, can come and go, can negotiate rent to fit pocket, gives you time and space to save a deposit.........if you rent for most of your life, your savings and other investments could buy you a nice retirement home outright when required and if need be. ;)

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Buying a house is security against periods of unemployment.

Have savings in the bank or assets in the productive economy? Then you lose them, 'cos you're assessed as too rich to qualify for benefits.

Have the same assets in bricks and mortar, then you get to keep them, with extra state benefits to live on.

Surely this is only if you own the house outright? If you are renting and lose a job you get housing benefit to pay your rent, if you have a mortgage you get some interest relief? and you lose your house. Of have i got that wrong?

I want to own a house outright but i'm less sure than ever that the difference between owning and renting is ever worth having the insecurity of owing £100000 (count em) or more, under any circumstances let alone current times.

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We bought a house because I think doing so works out a lot cheaper for us. Due to decent savings and a favourable offset arrangement we are currrently paying the bank about £150 PCM in interest vs. £500 PCM in capital repayment. Rental in this area would be about £800 PCM for the same house. Prices here also seem relatively stable, having risen about 30% since 2000 (admittedly based on a sample size of one - next door compared with us).

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Surely this is only if you own the house outright? If you are renting and lose a job you get housing benefit to pay your rent, if you have a mortgage you get some interest relief? and you lose your house. Of have i got that wrong?

I want to own a house outright but i'm less sure than ever that the difference between owning and renting is ever worth having the insecurity of owing £100000 (count em) or more, under any circumstances let alone current times.

If you're renting and lose your job and you have more than 16k in the bank you pay your own rent, food bills and council tax. The same money as equity in a house (owned outright or with a mortgage) but with cash in the bank of less than 16k will give you some means tested benefits. Less than 6k you should get the full amount for everything that's means tested.

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If you're renting and lose your job and you have more than 16k in the bank you pay your own rent, food bills and council tax. The same money as equity in a house (owned outright or with a mortgage) but with cash in the bank of less than 16k will give you some means tested benefits. Less than 6k you should get the full amount for everything that's means tested.

OK but what about your mortgage repayments? Compared to having your rent paid. Assuming both have nothing in the bank but a steaming pile of soon to be cancelled overdraft.

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Why do you want to buy a house?

How much would you pay for a house?

Nominal values aside that is. So, how much of a mortgage, proportion of income, or just straight outright?

And why? Renting being dead money, to pass on to son/daughter (or potential child), to accumulate assets that can be sold in retirement etc.

It all comes down to security and freedom. Until we get better rental conditions in the UK buying will always be attractive so your lifestyle is not dictated to by a LL who does not want their precious investment damaged by the presence of pets/smokers/kids etc. The fact that I can be asked to move at 2 months notice at the whim of the LL does also impact negatively on a lifestyle (it does have of course have the bonus in that I can move out with just one month notice with out having to worry about selling up)

I think the average house should be no higher than 4/5 times the average income. If the average income is the claimed £25K then the average price should be something in the region of £120K (obviously this would be less/more dependent on the part of the country).

If this were the case and houses were viewed as roofs over heads rather than 'investments' making money would not be an issue and it would be a nominal asset to pass on to kids - they would be able to buy without an inheritence if prices were restrained to income multiples.

Security is what I am after, I would like to have some pets and also have the decor and furnishings in the style I would prefer rather than having to put up with the cheap shit the LL left behind when they moved out.

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OK but what about your mortgage repayments? Compared to having your rent paid. Assuming both have nothing in the bank but a steaming pile of soon to be cancelled overdraft.

In that situation rent paid seems best. Mortgage payments are unlikely to match the interest now that it's been cut to ~3% and are time limited to 2 years if claiming Jobseeker's Allowance. Although sending you to a room in cheap shared house if under 35, housing benefit will pay the rent indefinitely.

Edited by rented

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Not dealing with lettings agents or landlords is what drives me to ownership. Being allowed to exist without hassle from idiots is my aim, it's a lot to ask in today's Britain.

I would only buy a house, but typically rent flats. If you rent a flat you can move out fairly quickly if the neighbours turn out to be awful. I can think of nothing worse than being stuck in negative equity in a flat with crap neighbours to deal with. That is the fate of most who bought within the last few years, my lifestyle is not ideal but it would have been worse had I of bought recently.

Price... I wouldn't want to spend more than a grand a month on a repayment mortgage. If i cant get a house for that within the next few years I'm leaving the country.

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So when you become old and infirm, unable to work to produce an income relying on accumulated savings and the State handouts you don't want the security of having shelter?

Perhaps you can rely upon family to house you?

Well if you need to put a roof over your head, perhaps you've never heard of it but there's this thing called renting that works quite well. Much better, house yourself for free by living with your parents, having granny move in with you, make an effort to make your marriage work, etc.

In terms of investing your precious capital into a mildly depreciating asset that provides negative returns after (rising) maintenance costs and inflation (not mentioning falling rents) whilst every thing else is booming, that's what I call 'seriously dead money'. Property investment in the UK will be a mug's game for the next two decades.

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Well if you need to put a roof over your head, perhaps you've never heard of it but there's this thing called renting that works quite well. Much better, house yourself for free by living with your parents, having granny move in with you, make an effort to make your marriage work, etc.

In terms of investing your precious capital into a mildly depreciating asset that provides negative returns after (rising) maintenance costs and inflation (not mentioning falling rents) whilst every thing else is booming, that's what I call 'seriously dead money'. Property investment in the UK will be a mug's game for the next two decades.

Another source of free housing: instead of spending the first ten or twenty years of you life living alone in a soulless 'executive flat', you can get married at twenty and build a home...

It's amazing how much free housing you can find if you look at how we lived before we all started behaving like spoiled brats.

Edited by _w_

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If you're renting and lose your job and you have more than 16k in the bank you pay your own rent, food bills and council tax. The same money as equity in a house (owned outright or with a mortgage) but with cash in the bank of less than 16k will give you some means tested benefits. Less than 6k you should get the full amount for everything that's means tested.

So are you saying that if you bought a house outright for all the cash you own .. you'd then be entitled to benefits or not ?

sry but nobody seems to have a clear answer :unsure:

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So are you saying that if you bought a house outright for all the cash you own .. you'd then be entitled to benefits or not ?

sry but nobody seems to have a clear answer :unsure:

Yes, you would be entitled. Capital deprivation rules might apply and disqualify you from entitlement to benefits , you could treated as though still have all the cash that is now in the house if they believe you to have spent the money so as to gain entitlement to benefits. However, as I understand it, purchasing a house to live in isn't automatically considered capital deprivation provided it is your one and only house and you live there.

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  • 153 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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