Rent or own

vizsla

Native
Jun 6, 2010
1,517
0
Derbyshire
Ok a bit random and nosy but today we happens to get talking to a chap from a mortgage company and we shared some mixed opinions! I was saying how's everyone should be given the opportunity to own there own house and shouldn't have to rely on having parents with a few quid to help them, I also stated that many people are already renting paying bills with a family etc so arnt always able to save thousands in this case couldn't they look at this individual's payment history, shorely if he's never missed a payment in x amount of years he should be eligible for a mortgage, of course the man disagreed, but anyway without being nosy I just wondered what's your position or even the position of a friend if you don't want to tell your own. Thanks
 

Andy BB

Full Member
Apr 19, 2010
3,290
3
Hampshire
Problem for the lender is that the value of their security - ie the house - can go down as well as up, and don't want to be left with say £150,000 loan with the house only worth £120,000! Hence the maximum loan of 90-95% of the house value. (to give an extreme example, I put a house up for sale (job move) at £147,000 market value just as the market plummeted, and eventually (nearly a year later) sold it for £82,000. Luckily the company compensated me for the loss:) )
 

wingstoo

Bushcrafter (boy, I've got a lot to say!)
May 12, 2005
2,274
40
South Marches
If the mortgage companies kept to the 25 year 3.5 times annual income or 4 times joint income we probably wouldn't have had the problems new buyers are seeing these days.

But greed has made a lot of problems for everyone. Now it is a 40 year mortgage, and have whatever you want, some were even offering 105% mortgages a while back.

I was of course very lucky, I sold my flat for £18,000 (£1500 more than I bought it for) and got a 100% mortgage for the £18,500 it cost for the run down place I bought. But it was still within the 3.5 times annual income, if this was still the case houses would still be affordable to many.
 

Macaroon

A bemused & bewildered
Jan 5, 2013
7,243
386
74
SE Wales
Never understood the attitude of the inhabitants of the British Isles to this ownership thing when it comes to property............
But that's as far as I can go with this, otherwise it becomes political and we don't do that here! (Boy, I've got a lot to say!)

Equity...............Better stop while I've still got some :)
 

Laurentius

Bushcrafter (boy, I've got a lot to say!)
Aug 13, 2009
2,540
705
Knowhere
Never understood the attitude of the inhabitants of the British Isles to this ownership thing when it comes to property............
But that's as far as I can go with this, otherwise it becomes political and we don't do that here! (Boy, I've got a lot to say!)

Equity...............Better stop while I've still got some :)

I have no desire to own the home I live in, renting is so much more practical in a lot of ways. I lived in a co-operative once which was neither one nor the other, and I can't say that was all it was cracked up to be either in that it had the disadvantages of both.
 

widu13

Bushcrafter (boy, I've got a lot to say!)
Feb 9, 2008
2,334
19
Ubique Quo Fas Et Gloria Ducunt
We own our gaff, we had a mortgage for 95% but when we got together we sold one property as it was a Regency building and a money pit. It broke even on renting it out, but it didn't make us any money. We paid off both mortgages and now live mortgage/rent free...it's lovely and makes for much less stress when looking at income amounts.
 

ex-member BareThrills

Bushcrafter (boy, I've got a lot to say!)
Dec 5, 2011
4,461
3
United Kingdom
Problem for the lender is that the value of their security - ie the house - can go down as well as up, and don't want to be left with say £150,000 loan with the house only worth £120,000! Hence the maximum loan of 90-95% of the house value. (to give an extreme example, I put a house up for sale (job move) at £147,000 market value just as the market plummeted, and eventually (nearly a year later) sold it for £82,000. Luckily the company compensated me for the loss:) )

All lenders carry indemnity so they dont lose out. The better ones carry that burden themselves but most pass it on to the mortgagee.

I bought a house as soon as i could save a 5% deposit as was the norm back in the day. I feel for people trying to get on the ladder now as 5% deposit mortgages are hard to come but outside of government backed schemes.

I dont understand those who castigate renters as its likely you will never release the equity in an owned house till you die and someone else benefits. On the plus side owning gives the option of accessing a big chunk of equity if everything goes pete tong. But of course if you are renting you will have been prudent and put something aside for such occassions i guess
 

dwardo

Bushcrafter through and through
Aug 30, 2006
6,463
492
47
Nr Chester
I wrote a very lengthy post but decided on a shorter post.
Financial Investment is always a gamble. Do the numbers and see what works for YOU and do your homework.
Then roll the dice and hope for the best.
 

British Red

M.A.B (Mad About Bushcraft)
Dec 30, 2005
26,893
2,145
Mercia
I think anyone who lends money gets to set the terms under which they are prepared to lend it.

I also think it is not the business of government or what have you to lend money or insist that others do. There will always be those who cannot afford to buy a home - and indeed those who should not (those who cannot manage their money) and those who don't want to be so tied down.

The idea that everyone should be a home owner is a modern myth. My Gradad worked his whole life but was an oddity amongst his peers (he was a steam train driver) because he owned his own home - a small terraced house. He never owned a car or went abroad and his only holidays were with family. He never had central heating and I can remember him being proud when he got an inside toilet. His workmates still considered him as a bit "uppity" for owning his house. There is no reason why suddenly everyone shoould be able to own a home when they never have before.
 

Andy BB

Full Member
Apr 19, 2010
3,290
3
Hampshire
All lenders carry indemnity so they dont lose out. The better ones carry that burden themselves but most pass it on to the mortgagee.

I bought a house as soon as i could save a 5% deposit as was the norm back in the day. I feel for people trying to get on the ladder now as 5% deposit mortgages are hard to come but outside of government backed schemes.

I dont understand those who castigate renters as its likely you will never release the equity in an owned house till you die and someone else benefits. On the plus side owning gives the option of accessing a big chunk of equity if everything goes pete tong. But of course if you are renting you will have been prudent and put something aside for such occassions i guess

I'd never castigate renters - each to his own, and for some its the sensible option.

However - assuming you can get on the ladder in the first place - the difference in actual cost between renting and buying is often either small or non-existent. And ten years down the line, when rents follow inflation and you're still paying the same mortgage per month you did 10 years ago, the difference can be quite startling.
 

ex-member BareThrills

Bushcrafter (boy, I've got a lot to say!)
Dec 5, 2011
4,461
3
United Kingdom
I'd never castigate renters - each to his own, and for some its the sensible option.

However - assuming you can get on the ladder in the first place - the difference in actual cost between renting and buying is often either small or non-existent. And ten years down the line, when rents follow inflation and you're still paying the same mortgage per month you did 10 years ago, the difference can be quite startling.

Sorry Andy i didnt quote selectively enough. I was referring to the lender 'losing out in a falling market' element of your post. Was not accusing you of any castigation xx
 

Harvestman

Bushcrafter through and through
May 11, 2007
8,656
26
55
Pontypool, Wales, Uk
I rent. Have never had the income to do otherwise, and my wife won't hear of buying anyway. I have no strong opinions either way.

One advantage of renting that is not often mentioned is that all maintenance is carried out by the landlord and is therefore free to the tenant. It is part of what you pay rent for. Therefore if the pipes burst, or the roof blows off, or the electrics fry, someone else pays the cost of the repair. That is really quite useful, not to mention all the smaller jobs that you can get done for you like replacement locks, minor repairs, etc. We even got free solar panels to heat water because the housing association we rent from got money from a government scheme to install them. 85% saving on our water heating costs, and no charge to us as tenants.
 

Haggis

Nomad
When I hear of the prices for homes in the UK, I'm horrified at the price tags. I was lucky here, I found 100 acres for $99 an acre, paid cash, and built our cottage out of pocket. We've had no rent or mortgage payments these last 16 years, and I never forget it for an instant. (My friends and family never let me forget it either.)
 

Dave

Hill Dweller
Sep 17, 2003
6,019
11
Brigantia
Well, from 97 through to 07, the average house price tripled.
[Mainly because the banks pumped hundreds of billion into the housing market and created a credit bubble, but also due to planning, land banking, not building enough houses, land ownership, immigration etc Basically for the benefit of the greed of a few]
Over that same decade council tax doubled, and the other staples, like gas and food, all increased exponentially. Whilst the median UK wage rose by a pitiful £6.5k
Which is why the national average age of a FTB is now 40. Because everybody watched as house prices rose further and further out of their reach, thinking it was madness and at some point sanity, would have to return.....It never did. They bailed out the banks.
As an example, take two people in the same job, on the same wage;
One is 43, and managed to get on the ladder before the boom. before 97, when you could still buy a house for 3.5x salary. The last time you could buy a house for 3.5x salary. He paid about £70k for his house, which is now 'worth' about £300k. The 43 year old is now mortgage free, he can afford cars, holidays, kids, a life etc And his mortgage repayments were never an excessive percentage of his wage. He could also sell his house, for a good pension when he retires.
Whereas the the national average age of a first time buyer is now 40 years old.
So the 40 year old is just 3 years younger. He is In the same job, on the same wage but has been forced to waste tens upon tens of thousands in rent.
And he is still struggling, paying the national average monthly rental which is now a staggering £750pcm. So he worked hard his entire life, with nothing to show for it. No capital. And he is bailing out the banks too. So he is paying to keep the banks assets, other peoples houses, at their historically massively overinflated levels, so bankers can declare profits and pay themselves larger bonuses. An underwriter of his own slavery.
We live in a very unbalanced society. I think its a cornerstone of a democracy that you should be able to work for something you can call your own. 'Private Property' If you're young enough, you should genuinely think about leaving the country.

What you'll find is people who own, will back ownership, and those who don't, won't. Self interest. 'They' divide and conquer us and ultimately control us.


[video=youtube;Y4WmDoYJhnk]https://www.youtube.com/watch?v=Y4WmDoYJhnk#t=79[/video]
 
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boatman

Bushcrafter (boy, I've got a lot to say!)
Feb 20, 2007
2,444
8
78
Cornwall
Owning, mortgage free, is a great position to be in for retirement. One problem seems to be that aspiring young house owners seem to want the whole lot as one package. Stupid, for example to have relatively short-lived white goods and carpets included in the mortgage.
 

SiWhite

Nomad
Apr 1, 2007
343
22
46
Deepest North Hampshire
We (well, the building society) own our home. I couldn't think of a dwelling as 'home' if I rented.

We rented from a Housing Association for a few years to save a deposit, then bought a three bedroom ex-council house just before the price slump in 2007. We were lucky that prices recovered by the time we sold - the value increased sufficiently that we effectively got six years of mortgage payments back when we sold.

We then bought our current house - it was a big leap financially, but we are in a good position - no children yet, two good salaries in recession proof occupations.

i think the mistake people make is to view their houses as a means of making money rather than as a home. I also feel very sorry for young folk trying to get on the ladder now.

most people seem to think that a new build plasterboard box on a new estate is a good buy - this is good for us as nice houses in nice isolated spots are less in demand!
 

slowworm

Full Member
May 8, 2008
2,181
1,109
Devon
One advantage of renting that is not often mentioned is that all maintenance is carried out by the landlord and is therefore free to the tenant.

It's not free, you pay for it in your rent. If you take a simplified example the landlord buys a house with a mortgage and charges a rent that has to cover the mortgage, maintenance and make a small profit. This is why it doesn't seem to make sense to me to rent if you can afford to buy. I also know quite a few tennants who have trouble in getting their landlord to fix stuff and in the places I rented it was easier to fix stuff yourself.

And whilst I understand it's harder now to get on the housing ladder people were making the same complaints when I first bought. I just saved hard, didn't insist on living in the perfect location and when I did buy I paid off the mortgage as quick as possible.

Oh, and a note on companies not lending over 3 or 4 times your salary. These oversimplified rules are great if you have a normal job but many people don't so we need some flexibility. They also don't take account of the actual person buying, many can cope with well over 4 times salary depending on what your other outgoings are.
 

Dave

Hill Dweller
Sep 17, 2003
6,019
11
Brigantia
Its the banks which are the problem whether you rent or own.
A travelling salesman drives into a small village, and parks outside a B&B. Intending to stay there for the night, he gets out, and enters the establishment and greets the owner, giving her a fifty pound note, then he goes back outside to his car to make a phone call.
The owner of the B&B goes next door to the carpenters, who built some stairs for her. She owes him £50, so she gives him the £50 note, and returns to the B&B.
The carpenter is delighted, as he owes his own neighbour, the butcher £50 for two weeks meat for his family. The butcher accepts the £50 and is delighted, as he can now pay his own debt, to his neighbour the publican £50. The publican takes this £50, and walks across the street to the bakers, and pays the baker the £50 that he owes him for an event he catered. The baker takes the £50 next door to the plumber, ad pays him for fixing his boiler. The plumber owes the owner of the B&B £50, so he walks over the street, into the B&B, and gives the owner the £50 note back.

At that moment the salesman walks back into the B&B, and says his boss was on the phone, and he wants him to drive to the next village, so the owner of the B&B gives the salesman his £50 note back, and he drives off.
So when the travelling salesman entered the village, everyone was in debt, when he left all the debts were cleared, but he didn't pay for anything!


[Money is a very convenient means of exchange, but in the example above, they could have just paid each other via a barter system]

Now if all those tradesmen were in fact bankers, every time the £50 debt was incurred, interest would have been charged. So none of the people would be out of debt, as the £50 note would not have covered their debt with the added interest.

So bankers serve no purpose whatsoever, in our society except as a parasite, to create debt and misery. Remember that next time you see one of those 'happy helpful' bank adverts on TV!

If we had a true democracy, there would be nothing to stop the government lending you a sum of money to buy a house, at a very low rate of interest. So nobody would have to pay 2 or 3 times what they borrowed from a bank back to the bank over 29 years.

Instead what has happened is that the government, [royal mint] have only created about 2-3% of the M4 money supply, which is all the money in the UK, as coinage and notes. Which equates to about £25 billion. Whereas banks have been allowed to create about 97-98% as electronic debt. When you ring up a bank, and ask to borrow money they basically just type that into existence, out of thin air, with interest.

Its insane really. We could all be rather well off. But we were not offered a chance to vote on the 'real choices' like who gets to create money in our society.....
 
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slowworm

Full Member
May 8, 2008
2,181
1,109
Devon
Sorry, but many of the negative comments about banks are just rubbish. For a start the reason why you pay a much larger sum back than you borrow is purely down to compounding interest, something down to mathematics not banks.

There is also plenty of opportunity for building societies, co-ops, credit unions etc but it seems many people prefer banks so they must take some responsibility.

And I expect if more people could afford to borrow then house prices would just rise and we'd be in the same position.
 

Dave

Hill Dweller
Sep 17, 2003
6,019
11
Brigantia
No, you've lost me there slowworm, what part of my comment is inaccurate then? Presuming it was my comment.
I understand the concept of compound interest. It just means interest gains interest doesn't it?
Ive just given that as an example above and said why think its wrong.
So what do you mean?
 
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