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8 Bank-Breaking Money Myths

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2. Renting is like throwing away money

Do you consider the money you spend on food to be thrown away? What about the money you spend on gas? Both of these expenses are for items you purchase regularly that get used up and appear to have no lasting value, but are necessary to carry out daily activities. Rent money falls into the same category.

Even if you own a home, you still have to "throw away" money on expenses like property taxes and mortgage interest (and likely more than you were throwing away in rent). In fact, for the first five years, you are basically paying all interest on your mortgage. For example, on a 25-year, £200,000 mortgage at 6% interest, your first 60 payments would total about £80,000. Of that you "throw away" about £60,000 on interest payments.

http://uk.finance.yahoo.com/news/8-bank-breaking-money-myths-yahoofinanceuk-392631809.html

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Not really a cogent analysis of 'rent', comparing it to consumables such as gas. Maybe if the author had framed her argument in terms of 'opportunity cost' she's have made a bit more sense.

1. Rent the house form a landlord;

2. Rent the captial from a bank

3. Forego the 'rent' on the equity in your house.

The last one being beyond the wit of 99.9% of the population (after 25 years it's yours and you pay zero rent etc.)

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Not really a cogent analysis of 'rent', comparing it to consumables such as gas. Maybe if the author had framed her argument in terms of 'opportunity cost' she's have made a bit more sense.

1. Rent the house form a landlord;

2. Rent the captial from a bank

3. Forego the 'rent' on the equity in your house.

The last one being beyond the wit of 99.9% of the population (after 25 years it's yours and you pay zero rent etc.)

although, many dont pay their house off after 25 years....they had a ladder to climb.

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Man these articles are awesome; great comments, too:

Seems to be some confusion here. The Mortgage payer also has to pay

Mortgage Insurance,

Buildings Insurance,

upkeep of the property

repairs that are wear and tear.

(remember that the Property Owner is also responsible for underground drains from the property to the public owned system. If you have a large garden that's a lot of underground drain).

Add all of that to the cost of the Mortgage every year, then cross reference it with what Social Housing costs in your area and take one from the other. You then find out if Renting or Buying is a better option in your area. It's a Postcode Lottery.

Elderly people who bought their homes many years ago and still live in the same property don't pay Mortgage, agreed.

However, they are still required to keep their home in good condition and an old house can be a money pit. Whereas, the elderly person living in a rental property has none of that worry and their rent is more often than not covered by Housing Benefit.

If you're unlucky enough to have bought Leashold your property devalues every year because at resale there is less of an attraction to buy. It's always best to try and buy the Freehold from the Land Owner but that puts extra cost on the property.

Then, lets say that the elderly person in a Private house has to go into Nursing Care; the home then becomes a Bank Roll to pay for that care. The elderly person in Social or Private Rental will have their costs met by the state. They might have the room next to the Private Payer who gets no better consideration than the State Funded resident.

Accident and illness can also play a big factoring role in the upkeep of the Private Home Owner with a Mortgage and unless you also take out a number of Insurance Policies to cover every evetuality you might have your pride and joy repossessed, even worse be declared Bankrupt. That is also negative costs that the Renter doesn't have to worry about

No Employment is secure these day and that is also a major worry of the Mortgage payer, no income, no Insurance, no monthly payment = repossession. The Renter simply goes to the Local Authority Housing Benefits Office, Claim processed in a week and the rent is back up to date.

Give me rental any day... I'm much better off financially since I sold my home and went Private Rental, maybe when I get old and decrepit (if I'm lucky), I'll be looked after in a Nursing Home and it won't cost me a penny.

Reminds me there's a problem with the central heating boiler, I'd better get the Landlord out to deal with it. Poor you have you not got yours insured? There's a three figure sum you'll have to find... Then again you'll have paid a three figure sum to get the isurance anyway.. How lucky am I... Oh and if you're lucky and get Income Support as a Home Owner you might just get the repair done by EAGA Partnership. That one is worth checking out for the Home Owner, you might just get luck for a change.

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  • 334 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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