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ronnie

Debate On Bbc Website

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The 'dead money' quote strikes again...

"I would rather buy my own property, than pay extortionate rent's that some greedy landlords are charging, its just dead money otherwise."

So you would rather pay extortionate prices to own a property instead?

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Ah, the good 'ole "dead money". Know what dead money really is? It's the scattered sheets

of MEW agreements and unpaid credit card statements that lie by the side of the railway tracks ....

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The old dead money disscussion again....

For me dead money was the £700 a month my wife and I had to pay on train fares commuting to work as we purchased in the only area we could afford to buy a decent house.

Not to mention the possible thousands she spend on various treatments for the stress cause by 13 hour working days.

We now live closer to work and stress free paying less in rent than we did when we owned. People fail to realise it's not a black and white issue, it's not rent forever or buy for ever, it's doing the right thing at the right time.

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Very good points made here - 'dead money' can mean very different things to different people. Dead money to me is paying more for a house now than I may have to in the future, or paying anything for any house I don't particularly like, just to be on the ladder. Likewise, as Sledgehead mentions, extortionate interest through mounting debts can cause death, whether a living death or actual.

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I can't be bothered to sign up for another forum, but if anyone wants to post this feel free...

Where as some people may be coming around to the idea that IO mortgages are effectively renting from the bank, many still don't realise how much money they really do waste doing this. Someone found a saving of £500 excessive, personally I think this is reasonable (if you rent the right place* - I'll explain later). I rent a house for £800PCM, when it was advertised for rent, it was also advertised for sale at £350,000. Now without giving away too much details about my savings, even with my rather hefty deposit, I would still be paying around £1000PCM in interest on a mortgage, this £200 is the first saving.

The next saving is in maintainance, in the last 12 months our LL has had to replace the garage door (we actually refused to pay a proportion of the rent until this was done as we coundn't use the garage until it was secure), she has had to have an electrician in to fix her dodgy wiring and has had to pay for a roofer to replace roof tiles after the Bunsfield depot blew up (her insurance didn't cover this eventuality).

The most important saving of all is of course my own. I have my 'potential' deposit stashed away in various low/Med/high risk areas. The monthly interest from this covers more than half my rent. (To answer the obvious, 90% of my savings are infact that, at the most 10% is from STR**).

So for me a £500PCM saving is an underestimation.

*When I say 'rent the right place', I mean one in a reasonable area, from a longstanding LL with little if no mortgage. People who cannot sell their home are another good option, as they too don't have to cover a large mortgage. New BTLers cannot compete with these LL's as they don't need to cover huge mortgage payments. New LL's are easy to spot...

1) They rent out new build flats or ex LA properties,

2) Their rent is much higher than the average (as thay are paying through the nose for the mortgage),

3) Their property will remain on the market at a fixed price for many months before it is either rented out, the 'asking rent' is dropped or it disappears from the market altogether.

**I sold the studio flat I lived in December 2003 so I could live with my Boyfriend (we could not afford a larger place together so we rented a cheap house). Since then we have saved, saved and saved some more to try and reduce any potential mortgage we would get. As a result I have built up a good sized deposit, only a small amount of which is my STR fund.

Out of interest the owner of my old flat and neighbours (in almost identcal flats) have all been trying to sell in the last 18 months, not one has gone STC.

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But what happens if you rent for 25 years?

Surely rent prices will go up with inflation while someone who buys their home will pay the same amount for the whole time.

Am I missing something?

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But what happens if you rent for 25 years?

Surely rent prices will go up with inflation while someone who buys their home will pay the same amount for the whole time.

Am I missing something?

No you're correct. The situation was great in the early 70s when inflation raised wages and prices including rents yet left homebuyers with the same repayments, subject to interest rate fluctuations. The latter point is likely to be they key factor in the next few years!

Still, I won't be paying repayments or rent in 15 years from now, and I've just fixed my rate for 10 years.

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But what happens if you rent for 25 years?

Surely rent prices will go up with inflation while someone who buys their home will pay the same amount for the whole time.

Am I missing something?

I get your point but, I doubt anyones Mortgage payments will remain the same for 25 years.

Long term renting is another matter altogether, I know opinion on here is generally split. I personnally would like to own my own home but at the moment I would do so at great risk of loosing it. The first few years are always the most financially difficult (I'm sure you'll agree) and in todays financial climate it would be even more difficult. If I bought now, it would either be a place I would have to move from within the next 5 years or a place which I would struggle to afford. If interest rates and utility bills go up then I would be in trouble.

My Dad took out an endowment mortgage in the late 1960's and made a quite few bob from it, Is anyone making money from it now? Will people make money from it again? Nobody knows. To be honest I don't really think HP's are nessesarily that different, so who knows if it is better to buy or rent long term.

As I want to buy a home, I am unconcerned with long term HP's. The only people who should be are those buying for investment purposes (not just BTLs, but also those who are expecting their home to provide them with a pension).

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But what happens if you rent for 25 years?

Surely rent prices will go up with inflation while someone who buys their home will pay the same amount for the whole time.

Am I missing something?

Isn't the point that you DON't rent for 25 years. You rent (and maybe sell to rent) in a static or falling market and buy when prices have dropped back to the long term average.

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  • 301 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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