I have to confess I don't get the house buying craze. Maybe if I had a family I'd do it, but I have a beautiful large flat right now that as a buyer is beyond my reach which I don't have to pay upkeep on and considering the amount of plumbing problems & boiler problems we've had (if there's water involved it's leaked since we've moved in), I wouldn't want to own a place.
My husband's family have put pressure on for years about getting a down payment sorted and getting a mortgage and neither of us are bothered to be honest. We got married and we got 'well the family thinks we can get together for a deposit'. Don't get me wrong, I totally appreciate the sentiment, not a lot of people have a family as generous as that, my own family barely have a penny to their name! :rolleyes:
I do find myself thinking though, it's our decision and we will do it if we want to. Don't feel you have to 'just because'. I love the fact that my husband and I have the social mobility(is that the term??) to move if we want to work elsewhere. I have a friend who has a mortgage and she has mentioned how it will be a real problem if she has to move to find work.
Ignore them. I can't think of any other country that's more obsessed by owning property than this one. You like where you live now and you can move relatively easily if you fancy going somewhere else, so if renting suits you, that's fine.
It’s really, really awful, I feel so despondent...:(
All these wonderful folk being ripped of with rent when all I want is someone who I could trust to share my space and look after my pad when I go off on a jaunt to the other side of the world.
I feel the same way OP (I'm the same age as you too), but at the same time I really envy your position. When I graduated from uni I was so eager to flee the nest and get back to living independently, I didn't stop to think that if I decided to stay with my parents (who, at the time, moved into a much bigger place themselves to run a B&B, so I could've helped out with that), then I might be in a much better financial position now.
But beggars couldn't be choosers and whilst they moved up to the North West I snapped up the first job I was offered in the South East... naturally, a more expensive place to live... but I'm still in a house share, I envy your space and recommend that you keep hold of it with both hands!! But even I'm not regretting things too much - it's hardly been a waste of time - I rent now because I'm working in a place that I may or may not want to settle in, and that work will help me in the future when I'm looking to move up the career ladder so all the money I've pissed away into that roof over my head certainly wasn't a waste!
It's been reassuring reading what a lot of people on here have said. Quite a few of my friends are getting mortgages now and I definitely won't be in a position to afford one anytime soon! Anyways, it sounds like you're happy with the way things are. If you can, save up money where possible and maybe one day it'll be a possibility (especially if you meet someone you'd like to get a mortgage with!). Also I am so jealous with what you're getting for the money you're paying. It would only equate to a studio flat down here
When your single or probably with a partner renting is fine (up to a point). If you do have to move then it is a hassle but you cope. If you have kids, who are settled in a school, renting is more of a problem. Landlord only has to give you two months notice, and you have to leave. Who knows where you will get the next rented accommodation. The kids may have to change schools, moving will become a major hassle. If you dont find another property straight away, trying to sort out new schools, moving etc in the last couple of weeks is not something that appeals to me. Then if you move to a different area, then you have to make new friends, new neighbours etc.
The idea of paying someone elses mortgage grates on me. Although in the current climate with house prices as they are, I dont feel many people have a choice but to rent or stay at home. Personally I would stay at home for a few years and save a deposit, and then buy. Live a frugal lifestyle for a few years, and then reap the reward.
There's nothing wrong with renting as a short-medium term thing.
However, the maths are against it in the long-term, in most parts of the UK.
A typical adult, at age 20:
Option A, scrape together a deposit and pay a mortgage for 25-35 years, then own outright into retirement.
Option B, rent for maybe 70+ years, with rent payments increasing with inflation.
In many parts of the country rent and mortgage payments are more or less the same. It makes no sense to rent in the long-term EVEN IF there is no capital appreciation in the property.
And anyone concerned with maintenance could buy a flat, though it'll come with service charges. I would also consider a long-term fixed rate (10 yrs) on the mortgage to maximise the inflation-busting characteristics.
In your situation I'd probably prefer to rent a 1 or 2 bed appartment and put the difference in rent towards a deposit. However it is what each of us feels comfortable with someone people dont' mind renting for life others look forward to one day owning the place where they live.
I do think if you ever want to own that most people have to take a downside at some point, either living at home longer, sharing rather than being solo or living in a smaller place in order to get a deposit. It is up to you whether owning is important or not or whether to hope that you come into a lucky lump sum at some point ni the future.
The average age of a first time buyer is now about 37 or 38, so if you are in your mid-20s then I wouldn't start panicking yet.
With deposits so high (25% for a decent rate) then unless you have generous parents then it's just a matter of saving, saving and saving.
I hate renting described as "dead money" - it's no more dead than anything else you are paying for. It's a roof over your head, someone to deal with maintenance and gives you the flexibility to move easily at a time in your life when you are more likely to be mobile.
I just bought my first place last year at the very average age of 37. I had been renting since a student, earning decent money since I was 27 but it took me until then to get into a position where I could buy without over-stretching myself.
The first year after buying is then terrifyingly expensive as you face all of the costs that you were sheltered from while renting. Then at the end of the first year you get a mortgage statement which says you owe the same as you did a year ago as almost all of your mortgage payments have been for interest.
I'm just pleased I didn't buy a few years ago when all of the banks were offering 99% (or higher) mortgages. I'd be totally screwed now.
It is dead money just like leasing a car is. You come to the end of the contract and you have nothing. Whereas if you buy even if the car has depreciated in value you have still got it to trade in or use.
And it is ridiculous to say that owning a property restricts your movements. If you buy in a location that is a desirable rental area you can move when ever you please and your house will pay for itself.
The average age of a first time buyer is now about 37 or 38, so if you are in your mid-20s then I wouldn't start panicking yet.
With deposits so high (25% for a decent rate) then unless you have generous parents then it's just a matter of saving, saving and saving.
I hate renting described as "dead money" - it's no more dead than anything else you are paying for. It's a roof over your head, someone to deal with maintenance and gives you the flexibility to move easily at a time in your life when you are more likely to be mobile.
I just bought my first place last year at the very average age of 37. I had been renting since a student, earning decent money since I was 27 but it took me until then to get into a position where I could buy without over-stretching myself.
The first year after buying is then terrifyingly expensive as you face all of the costs that you were sheltered from while renting. Then at the end of the first year you get a mortgage statement which says you owe the same as you did a year ago as almost all of your mortgage payments have been for interest.
I'm just pleased I didn't buy a few years ago when all of the banks were offering 99% (or higher) mortgages. I'd be totally screwed now.
We did 110% but thankfully is still worth approx what we paid for it. The prices inflated for 6 months after buying and have only deflated to approx what it's worth/max 10k less.
We're using it as an asset anyway so the current market value doesn't matter much to us, as we will be renting it out soon enough as the area (close to the city centre) commands a fairly high rent for apartments. This will cover most of the mortgage next year and we'll be in a better position with income than we are now.
I'm not wanting my own property per se, my only concern was the "dead money" but you've all really reassured me
I'm only 25, I have years to save and as some have said I can save and think about it if/when I meet someone to live with.
I can leave at a month's notice, my Landlady is fantastic, I love who I live near/where I am, and lets face it I have a bargain!
Feeling much better, thanks x
As others have said, it is not dead money at all. The great joy of renting is when something goes wrong, needs repair/replacement it's all included in your rent. A phone call to the landlord or agent and along comes a person and does it for you. Brilliant! We are the only country obsessed with buying land and property, most people in Germany rent or used to when I lived there, and I lived in Florida for years where renting is the norm. As a single professional I loved the fact that I could up sticks and move off to new opportunities from Lands End to John o Groats or abroad and not have a house like a millstone round my neck. Equally if I wanted to move locally it was easy.
We did 110% but thankfully is still worth approx what we paid for it. The prices inflated for 6 months after buying and have only deflated to approx what it's worth/max 10k less.
The problem in your situation is that if you ever come to re-mortgage as interest rates rise then you will find that your LTV (loan to value) ratio is way over what any other lender will accept so you could find yourself locked into a very uncompetitive mortgage.
Even the working class are now obsessed with Capitalist house ownership.
I'm more than happy renting.
I'm not interested in buying property, I've been urged by family members to buy my Dad's council house ( while he's still in it ) as it's a right good bargain, but this will tie my usually flexible finances down to a bloody mortgage, sure, it's a bargain, but is making a profit that important ?
The Communist Hippy mantra that All Property Is Theft keeps me sane.
We did 110% but thankfully is still worth approx what we paid for it. The prices inflated for 6 months after buying and have only deflated to approx what it's worth/max 10k less.
We're using it as an asset anyway so the current market value doesn't matter much to us, as we will be renting it out soon enough as the area (close to the city centre) commands a fairly high rent for apartments. This will cover most of the mortgage next year and we'll be in a better position with income than we are now.
Fyi, I'm 25 and was 21 when we bought it
I too bought my first house at 21, (33 now) I managed to save a 10% deposit while at university, and then when I graduated I rented a house for 6 months while I looked at buying a house. Unfortunately had to pay a mortgage and rent for 6 months as the rented place was a 12 month minimum. I then moved 3 years later due to being made redundant and getting a job in London. I commuted to London for a few months from the first house but took 4 hours door to door, so wasn't a long term solution. Had no problems sold the house and upgraded to a bigger one nearer London. Just had our mortgage statement and we now have £120,000 in equity which is nice. If I stay at this house I will no longer have to pay a mortgage or rent in 10 years time as it will be paid off. But that isn't going to happen as we are planning to start a family in the next couple of years, and I want to move nearer to a great private school in the next town so will probably take out a bigger mortgage to get a bigger house.
I obviously rented while at university but didn't even really contemplate it long term once I graduated as all I had ever known was owning a house, I had seen my older siblings do it. I did have my OH so it was easier. I didn't have the option of going back home as my parents sold their house in England while I was at uni as they already lived in Spain full time.
OP, I think you would find it hard to go back and stay with you dad as you have enjoyed your freedom. Your set up seems to be the best I have heard about renting, so I would stick with it for now and see if you save a little each month for a deposit. Owning a house is great in my opinion but I am not so sure I would have jumped in when I did if I didn't have my OH. Due to my age I was lucky to get on the property ladder when I did, due to what has happened to the market since, I would wait and see how the market settles again, plus a good landlady is worth their weight in gold.
Even the working class are now obsessed with Capitalist house ownership.
I'm more than happy renting.
I'm not interested in buying property, I've been urged by family members to buy my Dad's council house ( while he's still in it ) as it's a right good bargain, but this will tie my usually flexible finances down to a bloody mortgage, sure, it's a bargain, but is making a profit that important ?
The Communist Hippy mantra that All Property Is Theft keeps me sane.
The problem with that, is that you live in a capitalist society
It is dead money just like leasing a car is. You come to the end of the contract and you have nothing. Whereas if you buy even if the car has depreciated in value you have still got it to trade in or use.
And it is ridiculous to say that owning a property restricts your movements. If you buy in a location that is a desirable rental area you can move when ever you please and your house will pay for itself.
it's only "dead" in the sense of spending any money on anything.
Housebuying only makes sense if prices go up. The repayments for buying and renting are not too different, I would have thought.
Leasing a car is a choice many people make. Car Manufacturers make it easy with options to buy, etc.
Personally, I prefer not to buy that way, but for a regular outlay, you get a always new trouble free car.
If renting out was so profitable, more would buy houses and do it. A lot of people got their fngers burnt jumping on that bandwagon, didn't they.
As I say - if house prices are static, renting is a real good option.
I agree with the posters who've pointed out that renting is not "dead money".
Residential property tends to be a comparatively mediocre investment. Particularly at the moment when the housing market is in the doldrums and likely to remain that way for some time.
You should look at alternative investments for example on the stock market. There are plenty of other investments which give you much more flexibility and liquidity than real estate.
You can also invest in unit trusts or tracker funds if it all seems too complicated. All of these investments will give you a much better return for your money than buying property.
PS. Must point out that this is a general rule - there is a wide diversity between different specific stocks and funds.
If so, then I don't really consider that a good investment either. It means lots of hassle with tenants, all the upkeep of the property on your hands and pocket.
If you leave it all in the hands of a management agency then that will also eat into your returns. Also your occupation rate will probably not be consistently 100 percent (few are). Plus the fact that house prices are static or falling in any case.
Again: there are much better investments than residential property or buy-to-let - which give you higher returns for much less hassle.
Buying property in the UK is mostly an emotional matter, emotions rule over investment logic.
<< Quote:
Originally Posted by Johnbee
Also In twenty five years' time, the renter will be paying £5000 a month in rent and the buyer will be paying £0. >>
<Rubbish, it'll be around £1000 >
I will only deal with this part of your incorrect post, to demonstrate.
You state very clearly that £440 rent now will be worth only £1000 rent in twenty five years time. You also ignored the fact that the buyer will be paying zero, but I will pass over that.
In the last 25 years GB house prices have risen by a lot more than 600% despite the troubles over the last few years and the previous big slump in 89. There is no indication that prices will fail to carry on going up in the long term - it is very likely that they will more than keep pace with inflation.
I am afraid that rents will go up according to the value of the asset being rented - that is just basic reality.
Still if you want to peddle the idea that it is not financially beneficial to own property, do so. However it would be better for all concerned if you refrain from giving financial advice.
I currently pay £540 for a £100,000 mortgage - of which around £480 is interest payments!
So don't worry too much about 'wasting' money on renting.
The way I see it is this, you are going to be working for approximately 45 years of your life. So as long as you spend 25 of them paying off a mortgage then you've got 20 years when you don't have too. So if you've got the money then buy young and enjoy the extra cash in your 50s. If you don't then there's no need to worry about it unitl you do.
The way I see it is this, you are going to be working for approximately 45 years of your life. So as long as you spend 25 of them paying off a mortgage then you've got 20 years when you don't have too. So if you've got the money then buy young and enjoy the extra cash in your 50s. If you don't then there's no need to worry about it unitl you do.
That was the theory - buy at 25 and have it paid off by time you are 50 - but the trouble is that many people are not able to buy until they are 35-40 which means paying a mortgage until you are 60-65. So much for an early retirement and living it up in your 50!
Of course, the alternative is life-long renting and then you have to find a way of paying your rent in your 60s, 70s, 80s and beyond. Better start saving!
Comments
My husband's family have put pressure on for years about getting a down payment sorted and getting a mortgage and neither of us are bothered to be honest. We got married and we got 'well the family thinks we can get together for a deposit'. Don't get me wrong, I totally appreciate the sentiment, not a lot of people have a family as generous as that, my own family barely have a penny to their name! :rolleyes:
I do find myself thinking though, it's our decision and we will do it if we want to. Don't feel you have to 'just because'. I love the fact that my husband and I have the social mobility(is that the term??) to move if we want to work elsewhere. I have a friend who has a mortgage and she has mentioned how it will be a real problem if she has to move to find work.
Totally agree.
All these wonderful folk being ripped of with rent when all I want is someone who I could trust to share my space and look after my pad when I go off on a jaunt to the other side of the world.
But beggars couldn't be choosers and whilst they moved up to the North West I snapped up the first job I was offered in the South East... naturally, a more expensive place to live... but I'm still in a house share, I envy your space and recommend that you keep hold of it with both hands!! But even I'm not regretting things too much - it's hardly been a waste of time - I rent now because I'm working in a place that I may or may not want to settle in, and that work will help me in the future when I'm looking to move up the career ladder
It's been reassuring reading what a lot of people on here have said. Quite a few of my friends are getting mortgages now and I definitely won't be in a position to afford one anytime soon! Anyways, it sounds like you're happy with the way things are. If you can, save up money where possible and maybe one day it'll be a possibility (especially if you meet someone you'd like to get a mortgage with!). Also I am so jealous with what you're getting for the money you're paying. It would only equate to a studio flat down here
Andrew Oswald, Professor of Economics, Warwick University thinks it is better for the economy when folks rent......
http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/oswald/timesrentingnov2004.pdf
So there you go....
The idea of paying someone elses mortgage grates on me. Although in the current climate with house prices as they are, I dont feel many people have a choice but to rent or stay at home. Personally I would stay at home for a few years and save a deposit, and then buy. Live a frugal lifestyle for a few years, and then reap the reward.
However, the maths are against it in the long-term, in most parts of the UK.
A typical adult, at age 20:
- Option B, rent for maybe 70+ years, with rent payments increasing with inflation.
In many parts of the country rent and mortgage payments are more or less the same. It makes no sense to rent in the long-term EVEN IF there is no capital appreciation in the property.And anyone concerned with maintenance could buy a flat, though it'll come with service charges. I would also consider a long-term fixed rate (10 yrs) on the mortgage to maximise the inflation-busting characteristics.
I do think if you ever want to own that most people have to take a downside at some point, either living at home longer, sharing rather than being solo or living in a smaller place in order to get a deposit. It is up to you whether owning is important or not or whether to hope that you come into a lucky lump sum at some point ni the future.
I'm not wanting my own property per se, my only concern was the "dead money" but you've all really reassured me
I'm only 25, I have years to save and as some have said I can save and think about it if/when I meet someone to live with.
I can leave at a month's notice, my Landlady is fantastic, I love who I live near/where I am, and lets face it I have a bargain!
Feeling much better, thanks
Good idea but should have mentioned I have two moggies to think of!! They're quite happy indoors but anything smaller would be mean.
(Another point, bloody lucky to find a rental property where my girls were allowed!)
With deposits so high (25% for a decent rate) then unless you have generous parents then it's just a matter of saving, saving and saving.
I hate renting described as "dead money" - it's no more dead than anything else you are paying for. It's a roof over your head, someone to deal with maintenance and gives you the flexibility to move easily at a time in your life when you are more likely to be mobile.
I just bought my first place last year at the very average age of 37. I had been renting since a student, earning decent money since I was 27 but it took me until then to get into a position where I could buy without over-stretching myself.
The first year after buying is then terrifyingly expensive as you face all of the costs that you were sheltered from while renting. Then at the end of the first year you get a mortgage statement which says you owe the same as you did a year ago as almost all of your mortgage payments have been for interest.
I'm just pleased I didn't buy a few years ago when all of the banks were offering 99% (or higher) mortgages. I'd be totally screwed now.
And it is ridiculous to say that owning a property restricts your movements. If you buy in a location that is a desirable rental area you can move when ever you please and your house will pay for itself.
We did
We're using it as an asset anyway so the current market value doesn't matter much to us, as we will be renting it out soon enough as the area (close to the city centre) commands a fairly high rent for apartments. This will cover most of the mortgage next year and we'll be in a better position with income than we are now.
Fyi, I'm 25 and was 21 when we bought it
As others have said, it is not dead money at all. The great joy of renting is when something goes wrong, needs repair/replacement it's all included in your rent. A phone call to the landlord or agent and along comes a person and does it for you. Brilliant! We are the only country obsessed with buying land and property, most people in Germany rent or used to when I lived there, and I lived in Florida for years where renting is the norm. As a single professional I loved the fact that I could up sticks and move off to new opportunities from Lands End to John o Groats or abroad and not have a house like a millstone round my neck. Equally if I wanted to move locally it was easy.
Its your money, your life, enjoy!
The problem in your situation is that if you ever come to re-mortgage as interest rates rise then you will find that your LTV (loan to value) ratio is way over what any other lender will accept so you could find yourself locked into a very uncompetitive mortgage.
I'm more than happy renting.
I'm not interested in buying property, I've been urged by family members to buy my Dad's council house ( while he's still in it ) as it's a right good bargain, but this will tie my usually flexible finances down to a bloody mortgage, sure, it's a bargain, but is making a profit that important ?
The Communist Hippy mantra that All Property Is Theft keeps me sane.
I too bought my first house at 21, (33 now) I managed to save a 10% deposit while at university, and then when I graduated I rented a house for 6 months while I looked at buying a house. Unfortunately had to pay a mortgage and rent for 6 months as the rented place was a 12 month minimum. I then moved 3 years later due to being made redundant and getting a job in London. I commuted to London for a few months from the first house but took 4 hours door to door, so wasn't a long term solution. Had no problems sold the house and upgraded to a bigger one nearer London. Just had our mortgage statement and we now have £120,000 in equity which is nice. If I stay at this house I will no longer have to pay a mortgage or rent in 10 years time as it will be paid off. But that isn't going to happen as we are planning to start a family in the next couple of years, and I want to move nearer to a great private school in the next town so will probably take out a bigger mortgage to get a bigger house.
I obviously rented while at university but didn't even really contemplate it long term once I graduated as all I had ever known was owning a house, I had seen my older siblings do it. I did have my OH so it was easier. I didn't have the option of going back home as my parents sold their house in England while I was at uni as they already lived in Spain full time.
OP, I think you would find it hard to go back and stay with you dad as you have enjoyed your freedom. Your set up seems to be the best I have heard about renting, so I would stick with it for now and see if you save a little each month for a deposit. Owning a house is great in my opinion but I am not so sure I would have jumped in when I did if I didn't have my OH. Due to my age I was lucky to get on the property ladder when I did, due to what has happened to the market since, I would wait and see how the market settles again, plus a good landlady is worth their weight in gold.
The problem with that, is that you live in a capitalist society
it's only "dead" in the sense of spending any money on anything.
Housebuying only makes sense if prices go up. The repayments for buying and renting are not too different, I would have thought.
Leasing a car is a choice many people make. Car Manufacturers make it easy with options to buy, etc.
Personally, I prefer not to buy that way, but for a regular outlay, you get a always new trouble free car.
If renting out was so profitable, more would buy houses and do it. A lot of people got their fngers burnt jumping on that bandwagon, didn't they.
As I say - if house prices are static, renting is a real good option.
Residential property tends to be a comparatively mediocre investment. Particularly at the moment when the housing market is in the doldrums and likely to remain that way for some time.
You should look at alternative investments for example on the stock market. There are plenty of other investments which give you much more flexibility and liquidity than real estate.
You can also invest in unit trusts or tracker funds if it all seems too complicated. All of these investments will give you a much better return for your money than buying property.
PS. Must point out that this is a general rule - there is a wide diversity between different specific stocks and funds.
Not sure what you mean here..
Do you mean "buy to let"?
If so, then I don't really consider that a good investment either. It means lots of hassle with tenants, all the upkeep of the property on your hands and pocket.
If you leave it all in the hands of a management agency then that will also eat into your returns. Also your occupation rate will probably not be consistently 100 percent (few are). Plus the fact that house prices are static or falling in any case.
Again: there are much better investments than residential property or buy-to-let - which give you higher returns for much less hassle.
Buying property in the UK is mostly an emotional matter, emotions rule over investment logic.
Originally Posted by Johnbee
Also In twenty five years' time, the renter will be paying £5000 a month in rent and the buyer will be paying £0. >>
<Rubbish, it'll be around £1000 >
I will only deal with this part of your incorrect post, to demonstrate.
You state very clearly that £440 rent now will be worth only £1000 rent in twenty five years time. You also ignored the fact that the buyer will be paying zero, but I will pass over that.
In the last 25 years GB house prices have risen by a lot more than 600% despite the troubles over the last few years and the previous big slump in 89. There is no indication that prices will fail to carry on going up in the long term - it is very likely that they will more than keep pace with inflation.
I am afraid that rents will go up according to the value of the asset being rented - that is just basic reality.
Still if you want to peddle the idea that it is not financially beneficial to own property, do so. However it would be better for all concerned if you refrain from giving financial advice.
So don't worry too much about 'wasting' money on renting.
The way I see it is this, you are going to be working for approximately 45 years of your life. So as long as you spend 25 of them paying off a mortgage then you've got 20 years when you don't have too. So if you've got the money then buy young and enjoy the extra cash in your 50s. If you don't then there's no need to worry about it unitl you do.
That was the theory - buy at 25 and have it paid off by time you are 50 - but the trouble is that many people are not able to buy until they are 35-40 which means paying a mortgage until you are 60-65. So much for an early retirement and living it up in your 50!
Of course, the alternative is life-long renting and then you have to find a way of paying your rent in your 60s, 70s, 80s and beyond. Better start saving!