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dannyf

Better To Rent Or Buy Tool

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Just spotted this interactive tool to determine if its better to rent or buy based on many criteria which you can adjust live:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Its from this guy who seems to specialise in visualisations of algorithms/computations etc.

http://bost.ocks.org/mike/

Its in dollars but I can't think why you couldn't plug in values in quids for the same result.

Have fun,

Danny

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Its in dollars but I can't think why you couldn't plug in values in quids for the same result.

Have fun,

Danny

The American mortgage and housing markets are very different to their British counterparts in a number of ways that make this tool completely inapplicable in the UK. For example:

The standard US mortgage is a 30 year fixed rate deal; these don't exist in the UK, so British mortgagees have to consider the risk of base rate movements whereas Americans don't

In America, property taxes are paid by the owner of the house (so they appear as a negative for buying but not for renting). In the UK, they're paid by the occupant, so they affect renters and buyers equally

American homeowners can deduct their mortgage interest payments from their taxable income; British homebuyers cannot (although BTLers can...)

And finally, there's a big one that won't directly affect the results you'd get from a calculator like that but which is quite important if a crash happens: American mortgages are non-recourse, so if a US buyer finds themselves in negative equity, they can simply return the house to the bank and walk away without any debt. If you try the same thing in the UK, the bank will come after you for the difference between your outstanding balance and whatever they get for the house at auction...

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Just spotted this interactive tool to determine if its better to rent or buy based on many criteria which you can adjust live:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Its from this guy who seems to specialise in visualisations of algorithms/computations etc.

http://bost.ocks.org/mike/

Its in dollars but I can't think why you couldn't plug in values in quids for the same result.

Have fun,

Danny

Thanks for this! More d3 examples can be found here https://github.com/mbostock/d3/wiki/Gallery for the javascript programmers amongst us :)

Very good tool. The only thing which can't be factored in though is having to move due to the landlord selling up. This is an inconvenience in itself, plus you have the additional agent costs.

If you are free and single, this isn't really so much of an issue. With a family though it is a big headache.... I'm speaking as long term renter who has had to move on twice for this reason.

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My rent is £715, buying an equivalent house in my area would cost £932 a month (after adjusting for the UK). Buying is 30% more expensive. Yikes.

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<snip> And finally, there's a big one that won't directly affect the results you'd get from a calculator like that but which is quite important if a crash happens: American mortgages are non-recourse, so if a US buyer finds themselves in negative equity, they can simply return the house to the bank and walk away without any debt. If you try the same thing in the UK, the bank will come after you for the difference between your outstanding balance and whatever they get for the house at auction.." <snip>

Only in some states (12 of the 50, I believe), and not, generally, for remortgages.

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The American mortgage and housing markets are very different to their British counterparts in a number of ways that make this tool completely inapplicable in the UK. For example:

The standard US mortgage is a 30 year fixed rate deal; these don't exist in the UK, so British mortgagees have to consider the risk of base rate movements whereas Americans don't

In America, property taxes are paid by the owner of the house (so they appear as a negative for buying but not for renting). In the UK, they're paid by the occupant, so they affect renters and buyers equally

American homeowners can deduct their mortgage interest payments from their taxable income; British homebuyers cannot (although BTLers can...)

And finally, there's a big one that won't directly affect the results you'd get from a calculator like that but which is quite important if a crash happens: American mortgages are non-recourse, so if a US buyer finds themselves in negative equity, they can simply return the house to the bank and walk away without any debt. If you try the same thing in the UK, the bank will come after you for the difference between your outstanding balance and whatever they get for the house at auction...

Agree this is a big one. Most people buying in the UK don't even realise this!

BTW, this is something which is now changing on new mortgages in the US.

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