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Renting £365K House For £1200 Pcm

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Just about to move to my new rental, house was last sold (to a large long established charity, long irrelevant story) in 2007 for £365,000 and i'll be paying £1,200 a month.

So i divided 365k by 25 years by 12 months = £1,216. Interesting i thought.

According to the BBC basic mortgage calculator if i took a 365k mortgage with a 5% interest rate i would have to repay £2158 a month or £958 more than the rent. Add the taxes, fees and upkeep to that.

So what i want to know is am i missing the boat by not getting on the ladder? At least should i BTL?

:lol: This situation can't last and i don't think rents can go up much more.

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Just about to move to my new rental, house was last sold (to a large long established charity, long irrelevant story) in 2007 for £365,000 and i'll be paying £1,200 a month.

So i divided 365k by 25 years by 12 months = £1,216. Interesting i thought.

According to the BBC basic mortgage calculator if i took a 365k mortgage with a 5% interest rate i would have to repay £2158 a month or £958 more than the rent. Add the taxes, fees and upkeep to that.

So what i want to know is am i missing the boat by not getting on the ladder? At least should i BTL?

I guess one difference is that when you rent, at the end of 25 years and after paying £365k you own no asset (also note that it's unlikely that the £1200 a month payment will remain the same for the entire 25 years.

However, after paying £2200 a month for 25 years, you own the asset, which may (or may not) be worth more than £365k in 25 years time.

Note though that you can invest the £1k difference a month to purchase another asset over 25 years, which may (or may not) be worth more than the house...

You pays yer money and takes yer choice.

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I guess one difference is that when you rent, at the end of 25 years and after paying £365k you own no asset (also note that it's unlikely that the £1200 a month payment will remain the same for the entire 25 years.

However, after paying £2200 a month for 25 years, you own the asset, which may (or may not) be worth more than £365k in 25 years time.

Note though that you can invest the £1k difference a month to purchase another asset over 25 years, which may (or may not) be worth more than the house...

You pays yer money and takes yer choice.

it would have to be worth much more than £365K in 25 years if you covered the interest, maintenance, insurance and other costs of carry.

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It depends what your views are on general inflation over the next 25 years, if you believe in 25 years of zero inflation or deflation your doing the right thing. But at the Start of the 1970s you would have been in a similar situation but it turned out buying would have been a good move.

Don't erode your cash, and pick your moment.

Edited by AteMoose

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I'm paying a little less than that, £900pcm on a £350K house, but it depends on area, of course.

As a potential cash buyer my calculation is slightly different but the £350K that we'd have to draw out of the bank to buy the house we're renting is returning £13,650pa gross interest.

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I've seen one house in Northampton up for sale at £700K....rental....£1400 !!!!!!!!!!!

You'd need to be mad to buy it.

You also get plenty stuf like this:

http://www.rightmove.co.uk/property-to-rent/property-34026350.html

asking price for that would be £400K.

No point in buying it at that price, in fact if I'd seen that up for rent at that price I might have moved :rolleyes:

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I suppose it depends on how your rent moves in relation to that mortgage and where you want to live in 25 years time. Personally I think the numbers below stack up from an investor viewpoint because government bonds pay 3.4% over a long period and they are as secure as a bananaskin

Just about to move to my new rental, house was last sold (to a large long established charity, long irrelevant story) in 2007 for £365,000 and i'll be paying £1,200 a month.

So i divided 365k by 25 years by 12 months = £1,216. Interesting i thought.

According to the BBC basic mortgage calculator if i took a 365k mortgage with a 5% interest rate i would have to repay £2158 a month or £958 more than the rent. Add the taxes, fees and upkeep to that.

So what i want to know is am i missing the boat by not getting on the ladder? At least should i BTL?

:lol: This situation can't last and i don't think rents can go up much more.

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Nothing wrong with the sums but money isnt everything.

In 25 years you may be retired or close to it. Being mortgage free means that you only have to cover bills. Still being in rented means that you arent retiring.

Also, you cant leave it forever as getting a mortgage wont be so easy when you pass the point that the 25 year term ends after retirement age.

It makes sense to rent now but some of the other factors and realities must play in all of our minds.

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We have just moved from a terrace to a semi – top notch area of Harrogate. 3 bed, 3 reception, nicely and individually decorated, garden front and back and off road parking. Worth circa £310k getting it for £825 pm. We were renting a terrace, nice-ish part of same town, 2 bed, street parking and nosey twonks always looking through the lounge window at £765.

Worked out that with a realistic 70k to put down on this property, could probably get at £290k the mortgage would be circa £1150!

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There was a TV show that, for a change debunked this property myth by comparing renting with a mortgage, and investing the difference in equities (I think). Renting still came out top. Of course as others have pointed out if you leave it too late it will be harder to get a mortgage. I am fortunately able to buy outright (ok a cheap house ooop North) before retirement however I've decided to continue renting for the time being.

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The one I'm struggling to contain my laughter about is the person who sits next to me... remarried after divorce, so selling very nice home to move into new blokes castle. Tried to sell at £1.9Mn for a year... nothing doing. Now trying to rent it out at £3,500 pcm... :shock: 2.2% Yield! Funny thing is that it's not shifting for rent either... ;-)

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We have just moved from a terrace to a semi – top notch area of Harrogate. 3 bed, 3 reception, nicely and individually decorated, garden front and back and off road parking. Worth circa £310k getting it for £825 pm. We were renting a terrace, nice-ish part of same town, 2 bed, street parking and nosey twonks always looking through the lounge window at £765.

Worked out that with a realistic 70k to put down on this property, could probably get at £290k the mortgage would be circa £1150!

Best of luck to you but it still sounds madness to me, even for Harrogate. As for tomorrow I'm paying £57 a week for a one bed in Huddersfield courtesy of the council and getting myself a nice camper van with mobile 3G internet laugh.gif

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A better comparison is to look at the interest only cost of the mortgage (as this strips out the impact of owning the house after 25 years) which gives a value of £1,521 giving you a very good deal once you have accounted for maintenance costs.

Alternatively though if you consider that the value of the house will in the long time increase with inflation and that the long term inflation rate is 2%, then you could look at just the "real interest" cost of the mortgage assuming that the long term real interest rate is 3% this gives a cost of £913 per month. Once you take into account maintenance costs this suggests you are only getting a fair deal.

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odd that VI's and bankers say that "affordability" is a good criteria...yet when it comes to renting, its all about long term investment.

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So looking at it rationally, it would cost you £325 a month to buy it. Sounds cheap.

We have just moved from a terrace to a semi – top notch area of Harrogate. 3 bed, 3 reception, nicely and individually decorated, garden front and back and off road parking. Worth circa £310k getting it for £825 pm. We were renting a terrace, nice-ish part of same town, 2 bed, street parking and nosey twonks always looking through the lounge window at £765.

Worked out that with a realistic 70k to put down on this property, could probably get at £290k the mortgage would be circa £1150!

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I guess one difference is that when you rent, at the end of 25 years and after paying £365k you own no asset (also note that it's unlikely that the £1200 a month payment will remain the same for the entire 25 years.

Yes, it'll go down as house prices go down and more and more rent out.

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Just about to move to my new rental, house was last sold (to a large long established charity, long irrelevant story) in 2007 for £365,000 and i'll be paying £1,200 a month.

So i divided 365k by 25 years by 12 months = £1,216. Interesting i thought.

According to the BBC basic mortgage calculator if i took a 365k mortgage with a 5% interest rate i would have to repay £2158 a month or £958 more than the rent. Add the taxes, fees and upkeep to that.

So what i want to know is am i missing the boat by not getting on the ladder? At least should i BTL?

Surely the price today would be 10-20% lower than 365k though?

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Surely the price today would be 10-20% lower than 365k though?

funny you should say that, the house i'm moving out of was also bought in 2007 for £230k and the landlady is putting it on the market for 275k. She has done very little to it, and it is weathering time poorly, so that 20% increase over 4 years she puts down to pure house price inflation. I queried the realism of this and as i've seen before the EA uses one bonkers valued recent house sale to tar the whole market situation. Some how the EAs here are living of one mad sale a month and still ramping the market ever higher. Looking at what else is available here (Bath) she might well get the 275 if the right delusional nutter comes along.

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So looking at it rationally, it would cost you £325 a month to buy it. Sounds cheap.

If you knew you were going to be there for the full 25 years then yes, it does sound cheap.

In this day and age though, staying mobile is potentially worth a huge amount. As long as I didn't have children I would always rent for the added earnings potential that mobility brings. Try being an owner occupier and moving every 3 years or so ! The stamp duty and fees alone would probably pay for the entire three years rent in some of the examples in this thread.

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Just about to move to my new rental, house was last sold (to a large long established charity, long irrelevant story) in 2007 for £365,000 and i'll be paying £1,200 a month.

So i divided 365k by 25 years by 12 months = £1,216. Interesting i thought.

According to the BBC basic mortgage calculator if i took a 365k mortgage with a 5% interest rate i would have to repay £2158 a month or £958 more than the rent. Add the taxes, fees and upkeep to that.

So what i want to know is am i missing the boat by not getting on the ladder? At least should i BTL?

If the buyer is paying 5% interest and inflation is 5% than the borrowing costs him nothing. (Plus he get's a great tax break)

He's making £1,200 minus his maintenance costs.

Financially you should BTL.

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If the buyer is paying 5% interest and inflation is 5% than the borrowing costs him nothing.

I wish I could meet one of these people who get paid in some magical inflation-linked currency, life must be great for them as whenever inflation goes up their debts disappear.

For those of us who live in the real world and get paid in pounds sterling, rising inflation and stagnant incomes (like we have now) make mortgages harder to service, not easier.

As for BTL, remember that tenants get paid in sterling, not inflation-linked magic beans.

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  • 284 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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