Someone on this forum just bought his first house (me :D )

[Nick]

What I guess it boils down to, having read every post in this thread, is this:

If you're in it for the long term and AREN'T planning on either upsizing/downsizing your property* then buying is the way for you.

If you're happy to have someone else do all the worry about maintenance and you're prepared to wait for more affordable housing to become available, then renting is for you.

The thing is, unless you're prepared to make a 25 year commitment to a mortgage AND you're prepared to just ride it out if you end up with negative equity (which may take a LONG time to recover) renting IS a viable option.

*By this I mean that you can move house, but to a house of equivalent value/cost.

Personally, I bought at the bottom of the big crash way back yore. I moved into my first place straight from living with the folks, having saved up for a deposit. I wouldn't rent now, even though doing so would release roughly £80,000 of equity. I LIKE the fact this is my house.

Oh and Moby, those examples were from my (brief) experience of renting... I must've had a really bad landlord... Now I think of it, I never even met the bugger...

[Splash]

Shall we put it simply? If you buy at the bottom of the curve and sell when at the top you come out with more money. If you buy at the top and aren't sure you'll be staying in a property of similar value then you stand to lose (potentially a lot of) money.

Me? I rent. No idea where I'll be living in a year given then nature of my job, and I'm quite happy to put money away each month with a view that when I'm in a position and comfortable with the market I can put down a reasonable deposit on a property of my own. Renting suits my situation at the moment, and no amount of people (my parents for a start) telling me otherwise are going to change my mind.

Congratulations to the OP for making that decision off his own back - only time will tell if he was right or not, but he'll have a lot of life-experience out of it either way.

[greektony]

I'm not sure if I believe the prices will crash after reading this. I started to think, there seem to be so many young adults waiting for this "crash" before buying a house that won't they all rush out the second it starts to happen and cause the prices to rise again?

I know it has happened in the past, but more people are more clued up on it now. Mass anticipation of a crash might be enough to stop it from happening.

This is exactly what I have been thinking. As soon as there is a slight drop in prices, which there have been in some parts of the UK, hence the reason I bought now, people will get off the fence and buy. I don't think their will be a massive implosion in house prices, and I really hope I am not proved wrong!

In my case, as long as my house doesnt drop more than 50k to below £130,000 in the foreseeable, I dont have any issues.

IMO there are valid arguments both for and against buying/renting. i hope to work abroad in the near future so, having a house in the UK would be advantageous. I could also rent it out and get someone else to pay the mortgage for me which is always nice all you renters! I have just been looking on rightmove and I cannot find any comparable 2 bed flat to rent for anywhere near £800 a month, it is hedging over £1000 around where i have bought. So I am well chuffed. TBH I didnt even check about renting

But, Rave will be Rave & greektony will be greektony

[Steve B]

Totally wrong mate. I would much rather pay maintenance on a property i 'own' than throw money down the drain renting a property. Rememeber that a property is one of the best ways to invest your money these days. What is better:

£600 a month to Landlord

£600 a month for a property that will one day be yours?

£600 rent a month for 25 yrs = £180,000 pounds wasted!!

on a 25 year mortgage, you can expect to pay back as much in interest as you do in paying for the house. if you rent an 80 grand house for 25 years, you'll only pay 80 grand, but a mortgage will cost you just over 160 grand altogether.

[greektony]

but then you come out at the end with a house, hence the reason I personally dont see the point in renting

[Moby-Dick]

but then you come out at the end with a house, hence the reason I personally dont see the point in renting

not with those increasingly common interest only mortgages.

you'll have spent ( for arguements sake ) 160 over that 25 years. At the end of that 25 years , the bank will still want their 80 grand back.

[greektony]

I will concede that interest only mortgages are a waste of time, you may as well rent if you are going this route.

This is an interesting discussion, I am now just awaiting the Rave mans next pearl of infinite wisdom

[Nick]

Interest only mortgage?

You mean one with an endowment?

If so, those are rarer than rocking horse poo now, spesh after the whole shortfall debacle.

Thing is, it's like (although far cheaper), buying a brand new car on finance... you KNOW it's going to depreciate, you KNOW as soon as you drive it off the forecourt it's lost £2-3,000, but people like new cars and don't mind paying for them... I'd have one like a shot if I could afford it!

So it's down to how you look at it, do you want your own place or do you want to rent and pay less long and short term but have nothing to show for it?

Horses for courses and all that.

[redlight]

I live in a small village in a housing association 3 bedroom semi-detached house it is mine for life and and can be handed down once to one of my children(wife is joint tenant). It is non-estate surrounded by fields and I pay £71 a week rent. I can buy my house any time I want with a large discount since I have been a tenant for years and sure I have seriously looked into it even as far as arranging a mortgage but I sat and looked at the whole picture and I could find any compelling reason to buy. Except a big profit after waiting the three years that you have to wait if you want to keep all the profit. I would still have to buy somewhere else to live. If I wanted to buy here it would be impossible as the house prices are ridiculous(30 miles north of London). So I would rather rent and spend the money saved on paying interest to a mortgage company on my family. But if I was young again and just starting out I would probably go for a mortgage if I was in secure employment.

[JPreston]

....I could afford to buy if houses were still at their 2002 prices...

I could afford a Ferrari if they were still at 1970's prices

[TheAnimus]

Where? Rightmove is an easy method of comparing prices to rental yield, so lets see it.



If house prices crash, you're worse off than someone who stuck their money is (say) gilts. Or ATM, gold.



Oh absolutely. I drive a bus for a living, and although nothing's certain I reckon many people will need to ride buses when they can't afford their cars any more. Remind me what you do again?

The 7% is based on the true value, not the sale value, thats not too say you can't buy at that thou. If it where a purely business propersition you would think of it as simply buisness faith.

Why are you worse off? say you buy a house that you "love" rather than profit at the magic 7%, it costs for arguments sake 300k, renting it would cost you 20k a year say? Now assume your getting a good mortgage deal, looking for a 20year term, with a 10% deposite. You will of been wasting roughly 2k a year over renting. Say your house at the end of it is only worth 180k. How much do you think that 2k would of made?

Come on take your head out of your arse, your job is no more volatile than mine? I really wouldn't get fired, quite simply i'm bloody cheap, my contract has doubled in price in the first 9 months, i'm still earning about a 5th of the guy next too me, and i'm more intermit with the new system, having just re-written some middlewhere. I've a replacement cost that is quite high, and easily transferable where there is and has been a brain shortage for the last 15 years, combined with my work with getting kids into higher ed, there is a cronic shortage of people with maths comming up, you work for something that is interfered with by the government, by dad thought as a major he would have a job for life, he certainly never had anything but great aprasials, but politicaly gunners wern't wanted, even thou 6 months later, they offered him his job back, i despise that.

So. Why is negative equity bad? If you as an amature buy anything on the stock market, you will buy for at least 6months, otherwise your either a retard or not an amauter. This is because volatility normalises over time, in the 'olden days' of 90s people still used 'V curves' for the smiles, this worked for long term contracts, because 3 points is all you need as it will (eventually) go back to the natural pattern.

[greektony]

what Animus said

[Moby-Dick]

www.rockinghorse-poo-mortgages.com

There are still people who will go to such lengths to get onto the property ladder that they'd take a mortgage on these terms


TheAnimus - is a V curve also known as a moving point average ?

I'm sure I heard someone mention it at work about his projections for a stock.

[TheAnimus]

TheAnimus - is a V curve also known as a moving point average ?

I'm sure I heard someone mention it at work about his projections for a stock.

Don't know

I don't really know enough of the business side of my job, I end up been the one who has to solve the technical problems!

I'd imagine it could be, because the V points can slide, but in all honesty i wouldn't know :S

[redlight]

I think it is the same as a yield curve. Risk v return short term long term and all that.

[Rave]

But Rave, what happens if your prophecy of a house crash doesnt happen for years to come, or isnt as huge a crash as you are hoping for? Are you happy to never own a house and rent for the rest of your days?

Yes, of course, although I think that's pretty damned unlikely. As I keep saying, at the moment it's cheaper to rent a house directly than it is to get an interest only mortgage to buy it. That means that I live in my nice, spacious 3-bed end of terrace house for less money per month than I'd pay the bank in interest charges were I to take out a mortgage to buy it. That's INTEREST CHARGES ONLY, just in case you or anybody else missed the point. Repayments don't even come into it. Were I to buy a house now, the only way I could possibly end up richer is if house prices continued to rise at a higher rate than the interest rates available for sticking cash in the bank (or, for the adventurous, in a range of riskier investments) and I also think that's pretty damned unlikely. I personally scoff at the idea of a 'soft landing' but even if it happens I still win for the time being.

When prices crash (or stagnate) to the extent that it's cheaper to buy a house than to rent, then I'll buy. Until then, I'll rent. If I end up at retirement age having rented all my life and with a massive wodge of savings that I never got round to using as a deposit on a house, I've still got as many options as someone who slaved away for 30 years paying off the mortgage on the house they bought when it was massively overpriced. Pretty easy for me to sod off to a country where houses aren't obscenely expensive, for a start.

what Animus said

I would reply to Animus if I had the slightest idea what he said, which I don't.

Interest only mortgage?

You mean one with an endowment?

If so, those are rarer than rocking horse poo now, spesh after the whole shortfall debacle.

Nick, on this subject you seriously need to get with the program! Interest only mortgages are not only very common now, they're sold without any kind of repayment vehicle at all, not even one as dodgy as an endowment. My brother and his girlfriend bought their flat with a 25 year I/O mortgage. To be fair, they know full well what that means and are paying off some of the capital as and when they can, but plenty of people are not and are simply gambling on making a profit as house prices continue to rise. House prices are already vastly overinflated, so you can see what kind of a disaster waiting to happen this is.

I'm not making this up.

I could afford a Ferrari if they were still at 1970's prices

This is also a fatuous comment. What matters is inflation adjusted prices. House prices have risen far ahead of the general inflation measures (which admittedly are a fix, but still....) since 2002.