Good time to buy my 1st flat in the UK?
August 26, 2010 2:51 PM Subscribe
I'm thinking of buying a one bed flat for around 130k in Brighton or Bristol, UK. I have a 50k deposit. I am not committed to any area (or country for that matter) and I have no emotional need to own a house. But if it makes financial sense, I am in a position to do it.
But does it make financial sense to buy? Everyone apparently says yes, but I don't understand the maths. If prices stay flat, for instance, would it not make more sense to rent and invest the money elsewhere?
I'm really thinking short term, would I be up in, say, 10 years, if everything stays fairly steady. I can't really make the mental leap to factor in the benefit of owning the house in 25 years....
If house prices stay flat and you sell your place in ten years you'll get the money you paid into it out again. This does not happen when you pay the same money in rent, your landlord gets it instead. Your idea of renting and investing the mortgage money? That's two lots of money instead of one you'll be paying out.
posted by merocet at 3:06 PM on August 26, 2010
posted by merocet at 3:06 PM on August 26, 2010
One major financial advantage (perhaps the only real advantage?) of home ownership is as a hedge against rent inflation. By buying, you lock in your housing prices, while otherwise you'd pay increasing rents over the year. You need to estimate (and predict) rent inflation in your location to decide whether this is a major advantage to you.
If house prices stay flat and you sell your place in ten years you'll get the money you paid into it out again. This does not happen when you pay the same money in rent, your landlord gets it instead.
Yeah, and your bank gets the interest if you buy. And you lose the investment income from the rent/mortgage cost difference. You're just renting the money instead of renting a place to live.
posted by mr_roboto at 3:08 PM on August 26, 2010
If house prices stay flat and you sell your place in ten years you'll get the money you paid into it out again. This does not happen when you pay the same money in rent, your landlord gets it instead.
Yeah, and your bank gets the interest if you buy. And you lose the investment income from the rent/mortgage cost difference. You're just renting the money instead of renting a place to live.
posted by mr_roboto at 3:08 PM on August 26, 2010
I'm in the US, but fortunately math is the same here as in the UK. The reason everyone says it makes sense to buy a house if you can is this: Even if it doesn't appreciate in value during the time you've owned it and you sell it for what you paid, you have lost only the money that went towards interest, taxes, insurance, and upkeep. Whatever equity you accrued (your down payment plus that portion of your monthly payments that goes toward principal) you get back when you sell.
If you're renting, the money you spend on rent is gone forever from your pocket. However, you've made your landlord happy because your rent payments have covered his interest, taxes, insurance, and upkeep on the property, but helped him build equity.
posted by DrGail at 3:09 PM on August 26, 2010
If you're renting, the money you spend on rent is gone forever from your pocket. However, you've made your landlord happy because your rent payments have covered his interest, taxes, insurance, and upkeep on the property, but helped him build equity.
posted by DrGail at 3:09 PM on August 26, 2010
If you're renting, the money you spend on rent is gone forever from your pocket. However, you've made your landlord happy because your rent payments have covered his interest, taxes, insurance, and upkeep on the property, but helped him build equity.
For which he has sacrificed the opportunity of investing his money elsewhere. Don't forget about the opportunity cost!
posted by mr_roboto at 3:14 PM on August 26, 2010 [1 favorite]
For which he has sacrificed the opportunity of investing his money elsewhere. Don't forget about the opportunity cost!
posted by mr_roboto at 3:14 PM on August 26, 2010 [1 favorite]
You pay a lot of interest over the term of a 25-30 year mortgage. In that time you may also spend tens of thousands of pounds on repair, replacement and improvement.
Back when house prices were never going to stop increasing, buying instead of renting was apparently a no-brainer. Now, in the UK at least, it really depends on your circumstances and the specific location and circumstances.
posted by dickasso at 3:27 PM on August 26, 2010
Back when house prices were never going to stop increasing, buying instead of renting was apparently a no-brainer. Now, in the UK at least, it really depends on your circumstances and the specific location and circumstances.
posted by dickasso at 3:27 PM on August 26, 2010
Response by poster: I tried fermezporte's neat calculator for my circumstance, it seems to be all about price inflation
monthly rent 600
home price 130k
52k deposit
4% mortgage rate
Inflation rates
0% I would lose 17k compared to if I had rented
1% I would lose 2k
2% I would gain 15k, an annual saving of 1.5k over renting.
Seems like a total gamble on inflation. But if things stay flat (though I get 0% inflation is akin to negative inflation in real terms) renting is by a long way cheaper than buying?
posted by choppyes at 3:28 PM on August 26, 2010
monthly rent 600
home price 130k
52k deposit
4% mortgage rate
Inflation rates
0% I would lose 17k compared to if I had rented
1% I would lose 2k
2% I would gain 15k, an annual saving of 1.5k over renting.
Seems like a total gamble on inflation. But if things stay flat (though I get 0% inflation is akin to negative inflation in real terms) renting is by a long way cheaper than buying?
posted by choppyes at 3:28 PM on August 26, 2010
The NY Times has a great calculator to figure out if buying or renting is better over a certain time period.
Except that in the UK other considerations also come into play.
1) Interest and property taxes are not tax deductible which makes owning less financially alluring.
2) "Renter's insurance" and "homeowner's insurance" are different beasts with different pricing approaches to the US (and are, often, not even necessary - I don't believe we had insurance when we rented).
3) How come homeowners are shown as paying utilities but renters do not? Most mid-market renters in the UK have to pay all their utilities too. That's a substantial sum each year that makes renting look too favorable on this calculator.
posted by wackybrit at 3:39 PM on August 26, 2010 [1 favorite]
Except that in the UK other considerations also come into play.
1) Interest and property taxes are not tax deductible which makes owning less financially alluring.
2) "Renter's insurance" and "homeowner's insurance" are different beasts with different pricing approaches to the US (and are, often, not even necessary - I don't believe we had insurance when we rented).
3) How come homeowners are shown as paying utilities but renters do not? Most mid-market renters in the UK have to pay all their utilities too. That's a substantial sum each year that makes renting look too favorable on this calculator.
posted by wackybrit at 3:39 PM on August 26, 2010 [1 favorite]
Take a bit of a closer look at the NYTimes numbers (particularly the advanced settings)
They're assuming a general 2% inflation rate (in general) this may be low. It also assumes a 4% Return on "other" Investment. This may be high - considering most CD's right now are ~ 1.5% and that over the last 10 years stocks have lost value.
Honestly you're right on the cusp and it would really depend on where you see the property value going over 10 years. A 10 year window seems pretty safe considering the current market but I know nothing about Brighton or Bristol.
posted by bitdamaged at 3:41 PM on August 26, 2010
They're assuming a general 2% inflation rate (in general) this may be low. It also assumes a 4% Return on "other" Investment. This may be high - considering most CD's right now are ~ 1.5% and that over the last 10 years stocks have lost value.
Honestly you're right on the cusp and it would really depend on where you see the property value going over 10 years. A 10 year window seems pretty safe considering the current market but I know nothing about Brighton or Bristol.
posted by bitdamaged at 3:41 PM on August 26, 2010
Also, that calculator seems to add in taxes on the sale of the property when the value goes over $1m. This would also not apply to most single home owners in the UK where your primary residence attracts no capital gains taxes on sale.
posted by wackybrit at 3:41 PM on August 26, 2010
posted by wackybrit at 3:41 PM on August 26, 2010
I'm perplexed. If you rent in real terms you throw money away and end up own nothing more than you started with. If you buy, you own something, eventually all of it. If rents were really low and mortgages really high and you didn't have a deposit OK, but they aren't so where's the dilemma? Your flat will be worth more in 10 years, especially in those areas of the country. Skelmersdale or Wigan might be different, but Brighton or Bristol? No chance.
posted by A189Nut at 3:58 PM on August 26, 2010
posted by A189Nut at 3:58 PM on August 26, 2010
If you buy, you own something, eventually all of it. If rents were really low and mortgages really high and you didn't have a deposit OK, but they aren't so where's the dilemma?
Well, again I may be a bit wrong due to US/UK differences, but it's not "rent" vs "mortgage", it's a comparison of total cost.
For owners, thats: mortgage (principal + interest, you're only getting principal back remember), maintenance (can be huge), insurance (wayyy more expensive for owners, at least in US), property taxes (those exist in UK I assume?).
For renters, it's: rent. Many places I've rented they even include some utilities (water and gas are common), so add those in to the owning cost.
Owning can easily be way more expensive than renting, so just because you get the principal back doesn't mean it's a better option.
posted by wildcrdj at 4:06 PM on August 26, 2010
Well, again I may be a bit wrong due to US/UK differences, but it's not "rent" vs "mortgage", it's a comparison of total cost.
For owners, thats: mortgage (principal + interest, you're only getting principal back remember), maintenance (can be huge), insurance (wayyy more expensive for owners, at least in US), property taxes (those exist in UK I assume?).
For renters, it's: rent. Many places I've rented they even include some utilities (water and gas are common), so add those in to the owning cost.
Owning can easily be way more expensive than renting, so just because you get the principal back doesn't mean it's a better option.
posted by wildcrdj at 4:06 PM on August 26, 2010
If you rent in real terms you throw money away and end up own nothing more than you started with.
Well, you've presumably had a place to live for the duration.
If you buy, you own something, eventually all of it.
To buy requires "renting" money. You "throw your money away" on these rental fees, called interest. You also forgo the opportunity to invest your money elsewhere.
Remember: the first rule of investing is diversify, diversify, diversify. If all of your money is going into your mortgage, not only are you only investing in one sector--real estate--you're investing only in a very small segment of that sector. It's the least diversified sector possible.
But housing prices always go up, right?
posted by mr_roboto at 4:09 PM on August 26, 2010 [1 favorite]
Well, you've presumably had a place to live for the duration.
If you buy, you own something, eventually all of it.
To buy requires "renting" money. You "throw your money away" on these rental fees, called interest. You also forgo the opportunity to invest your money elsewhere.
Remember: the first rule of investing is diversify, diversify, diversify. If all of your money is going into your mortgage, not only are you only investing in one sector--real estate--you're investing only in a very small segment of that sector. It's the least diversified sector possible.
But housing prices always go up, right?
posted by mr_roboto at 4:09 PM on August 26, 2010 [1 favorite]
Response by poster: Thanks for all the advice. A189Nut, I am perplexed too. But I am worried that I don't have a handle on the true cost of buying.
If I buy the flat today for £130k, and in 10 years time I sell it for £135k in 2020 (which is pessimistic I know) on the surface, I have made 5k and enjoyed free rent. However, the calculators factor in other things which suggest that actually my bank balance might even be lower than if I had rented the whole time! I might take a lie down....
posted by choppyes at 4:12 PM on August 26, 2010
If I buy the flat today for £130k, and in 10 years time I sell it for £135k in 2020 (which is pessimistic I know) on the surface, I have made 5k and enjoyed free rent. However, the calculators factor in other things which suggest that actually my bank balance might even be lower than if I had rented the whole time! I might take a lie down....
posted by choppyes at 4:12 PM on August 26, 2010
Real story: I bought a house in 1990 for £56k and 20 years later it is worth £200k and is now paid off. If I'd paid rent instead, I'd still be paying - got to live somewhere - and I'd own nothing and then I'd be dead. Paying for new gutters and the odd improvement wouldn't get close to the difference. Now maybe that isn't going to be duplicated in the future in the UK, but Brighton, acknowledged as one of the most desirable out of London cities? Bristol not far behind?
posted by A189Nut at 4:14 PM on August 26, 2010
posted by A189Nut at 4:14 PM on August 26, 2010
I'm perplexed. If you rent in real terms you throw money away and end up own nothing more than you started with. If you buy, you own something, eventually all of it
Its not that easy. Go ask all the people that are now upside down in their mortgages whether they'd have more money and equity now if they'd rented.
posted by bitdamaged at 4:26 PM on August 26, 2010
Its not that easy. Go ask all the people that are now upside down in their mortgages whether they'd have more money and equity now if they'd rented.
posted by bitdamaged at 4:26 PM on August 26, 2010
No-one can predict what will happen to the property market in 10 years time. But if you're looking at somewhere like Brighton or Bristol, you'll probably be okay. Check out how property prices have changed over the recession compared to London and then to other major cities in the UK to make sure though! Some areas suffer more from the overall economic climate than others.
And once you've bought, price changes become less of an issue - if you want to move, the price for the house you want to move to will change in proportion to the place you own.
To do the sums, compare rental prices for somewhere you'd want to live with the equivalent house / flat you're looking to buy, factoring in current interest rates. And maintenance (if the boiler packs it in on Christmas Eve, if you own your place, you need to pay to get it fixed...) And estate agent charges. Interest rates are lowish at the moment, but will probably rise over time (although they're high compared to the base rate at the moment, based on the last 20 years, so the difference may change). And remember that while a lot of your mortgage payments are interest, some will be capital repayments - effectively money in the bank.
Also think about how much return you'd actually get on £50K - at the moment, possibly not much!
And also think about what price you're willing to pay for security - not having to pay to extend the lease every year, and being able to decorate / renovate to get a place how you like it. Until I bought my flat, I didn't realise how good it is to walk through the front door after a shitty day at work and think "ah, I'm home, and it's all mine".
posted by finding.perdita at 4:35 PM on August 26, 2010 [1 favorite]
And once you've bought, price changes become less of an issue - if you want to move, the price for the house you want to move to will change in proportion to the place you own.
To do the sums, compare rental prices for somewhere you'd want to live with the equivalent house / flat you're looking to buy, factoring in current interest rates. And maintenance (if the boiler packs it in on Christmas Eve, if you own your place, you need to pay to get it fixed...) And estate agent charges. Interest rates are lowish at the moment, but will probably rise over time (although they're high compared to the base rate at the moment, based on the last 20 years, so the difference may change). And remember that while a lot of your mortgage payments are interest, some will be capital repayments - effectively money in the bank.
Also think about how much return you'd actually get on £50K - at the moment, possibly not much!
And also think about what price you're willing to pay for security - not having to pay to extend the lease every year, and being able to decorate / renovate to get a place how you like it. Until I bought my flat, I didn't realise how good it is to walk through the front door after a shitty day at work and think "ah, I'm home, and it's all mine".
posted by finding.perdita at 4:35 PM on August 26, 2010 [1 favorite]
I am a bit more optimistic about property in the UK: It is an island, land use is very aggressively managed and regulated, new construction is extremely expensive and highly regulated, it is under housing pressure because of immigration and home ownership is highly valued. I really think it comes down to the specific property and location. You are looking in a price range that is extremely affordable for the UK. It is a tough decision but there is no reason to think that waiting longer will make it easier. Knowing what I know about the UK I would buy if I were going to live in it and wanted to own and live in my own home. If I were doing it for strictly financial considerations I would be in limbo as you are. One good thing--no matter what you do you will never know what would have happened if you had done the other.
posted by rmhsinc at 4:49 PM on August 26, 2010
posted by rmhsinc at 4:49 PM on August 26, 2010
The reason that A189Nut's investment turned out well is that Britain has had a huge housing bubble, actually bigger than the bubble in the U.S. Don't count on that happening again in the future.
The argument that renting leaves you with nothing is a common financial fallacy. They forget that by renting you can save and invest the difference. So the home owner ends up with no savings account and a $250,000 house. The renter ends up with no house but $250,000 in savings. One is not necessarily better off than the other. They both have the same net worth.
Now exactly how this balances out depends on a lot of factors that you need to guess like rent inflation and home price inflation which can vary from neighborhood to neighborhood. But the New York Times calculator is as good a guess as any.
If the numbers turn out to be roughly in the same ballpark for renting and buying, then that says it's a toss up. In that case your decision isn't an investment decision. Instead it is a lifestyle choice. Do you want to be a home owner or do you want to be a renter. A home owner has more choice on how to decorate and use their home, but has much greater responsibilities in both time and money. A renter has less freedom with respect to use of the rental, but instead has fewer responsibilities and greater freedom to move. You should make the choice based on how you would prefer to live, not on which you think will be the better investment because no one can really guarantee which will be the better investment.
posted by JackFlash at 4:53 PM on August 26, 2010
The argument that renting leaves you with nothing is a common financial fallacy. They forget that by renting you can save and invest the difference. So the home owner ends up with no savings account and a $250,000 house. The renter ends up with no house but $250,000 in savings. One is not necessarily better off than the other. They both have the same net worth.
Now exactly how this balances out depends on a lot of factors that you need to guess like rent inflation and home price inflation which can vary from neighborhood to neighborhood. But the New York Times calculator is as good a guess as any.
If the numbers turn out to be roughly in the same ballpark for renting and buying, then that says it's a toss up. In that case your decision isn't an investment decision. Instead it is a lifestyle choice. Do you want to be a home owner or do you want to be a renter. A home owner has more choice on how to decorate and use their home, but has much greater responsibilities in both time and money. A renter has less freedom with respect to use of the rental, but instead has fewer responsibilities and greater freedom to move. You should make the choice based on how you would prefer to live, not on which you think will be the better investment because no one can really guarantee which will be the better investment.
posted by JackFlash at 4:53 PM on August 26, 2010
Response by poster: a coin it is...
the crash cycle does seem very short - only 18 months from peak in Jul 07 to trough in Jan 09. In my GCSE maths informed eyes, even the most optimistic prediction must include another dip....
And this is pretty scary
http://media.economist.com/images/20050618/CSF103.gif
posted by choppyes at 6:14 PM on August 26, 2010
the crash cycle does seem very short - only 18 months from peak in Jul 07 to trough in Jan 09. In my GCSE maths informed eyes, even the most optimistic prediction must include another dip....
And this is pretty scary
http://media.economist.com/images/20050618/CSF103.gif
posted by choppyes at 6:14 PM on August 26, 2010
One thing to consider is the loss of personal mobility when you own a house, especially since you say you are "not committed to any area (or country for that matter)".
If you are renting, you can suddenly decide to move to Paris or Vladivostok, and all you need to worry about is giving your landlord notice and packing. If you own a house, you cannot leave town at a moment's notice.
posted by monotreme at 6:19 PM on August 26, 2010 [1 favorite]
If you are renting, you can suddenly decide to move to Paris or Vladivostok, and all you need to worry about is giving your landlord notice and packing. If you own a house, you cannot leave town at a moment's notice.
posted by monotreme at 6:19 PM on August 26, 2010 [1 favorite]
Considering that, financially, it's a bit of a wash (or, at least, that you don't know for sure how it'll go), I'd suggest ignoring the financial aspect of it and focusing on other aspects of your life that are important to you. Are you interested in learning skills that come with home ownership? Do you have hopes/plans regarding a spouse/partner (and, if so, how would a house vs. an apartment affect those hopes/plans)? Do you have time in your schedule to allow for the time commitment of working on a house? Is there a lot of travel that you'd like to be able to do in the near future?
I think monotreme's point is a good one. Don't see your opportunity cost as strictly financial. There are sacrifices you'd have to make regarding your freedom if you end up buying a place. These might be exactly the kinds of compromises you're okay making, and the tradeoffs could be worth it for you. Just recognize that there's a freedom that you have when you're renting that, at 30, you might want to hold on to.
posted by Alt F4 at 7:30 PM on August 26, 2010
I think monotreme's point is a good one. Don't see your opportunity cost as strictly financial. There are sacrifices you'd have to make regarding your freedom if you end up buying a place. These might be exactly the kinds of compromises you're okay making, and the tradeoffs could be worth it for you. Just recognize that there's a freedom that you have when you're renting that, at 30, you might want to hold on to.
posted by Alt F4 at 7:30 PM on August 26, 2010
A189Nut: "I'm perplexed. If you rent in real terms you throw money away and end up own nothing more than you started with."
The premise underlying the idea that renting can be better than buying with a mortgage can be explained like this:
Say you can afford $2000 per month to spend on accommodation and an investment. A quick check says this could be repaying a $240k loan at 6.45% (Aus rates) over 20 years.
Most people combine the two and buy a home. It gives them a roof over their head and a capital investment they can see and touch. Nice. Of that $2k per month, 10% would be put aside for taxes and repairs, while the remaining $1800 would go toward the mortgage. After twenty years they would have paid $417k. If their house does not improve by that much then they have lost money (total interest = $700+ per month for 20 years). However, it could be argued that money is not the only criteria to be valued in this equation, and some properties would appreciate far more than this.
But if you could afford $2k per month and were renting instead say for $1000 pm you would have another $1000pm or $12k each year to put into a wide variety of investments, some possibly making far more rapid, actual, retrievable profit than long term home investment. As a renter you wouldn't be paying taxes or repairs, nor would you be locked into one location. As an investor of this sort you could vary your portfolio as required to keep up with the times.
The benefit of renting comes into effect when you invest the same amount of money in the accommodation/investment mix but don't combine them.
posted by Kerasia at 7:43 PM on August 26, 2010
The premise underlying the idea that renting can be better than buying with a mortgage can be explained like this:
Say you can afford $2000 per month to spend on accommodation and an investment. A quick check says this could be repaying a $240k loan at 6.45% (Aus rates) over 20 years.
Most people combine the two and buy a home. It gives them a roof over their head and a capital investment they can see and touch. Nice. Of that $2k per month, 10% would be put aside for taxes and repairs, while the remaining $1800 would go toward the mortgage. After twenty years they would have paid $417k. If their house does not improve by that much then they have lost money (total interest = $700+ per month for 20 years). However, it could be argued that money is not the only criteria to be valued in this equation, and some properties would appreciate far more than this.
But if you could afford $2k per month and were renting instead say for $1000 pm you would have another $1000pm or $12k each year to put into a wide variety of investments, some possibly making far more rapid, actual, retrievable profit than long term home investment. As a renter you wouldn't be paying taxes or repairs, nor would you be locked into one location. As an investor of this sort you could vary your portfolio as required to keep up with the times.
The benefit of renting comes into effect when you invest the same amount of money in the accommodation/investment mix but don't combine them.
posted by Kerasia at 7:43 PM on August 26, 2010
In Australia the situation is made far more complicated by generous allowances for home-owners. not sure that that applies to the UK.
However, the simple version, which a lot of people above seem to have missed, is that your mortgage (plus maintenance, rates, etc etc etc) will be higher than your rent, for the same sort of place. If you're totally scrupulous about saving the difference, overall property is a historically conservative option, and when you're young you should consider other investment classes. The only way property makes it back is with capital growth. And the fact that it's forced savings (which has a lifestyle cost)
I wouldn't offer financial advice to a stranger, but my very distant reading of the UK is that capital growth should continue, you have a housing shortage and population continues to grow.
overall, there are so many factors, taht it really comes down to what you want emotionally. Living in teh same place and the security of not having your landlord kick you out at their whim, versus being tied down into one relatively immovable asset.
Me, I bought a place.
posted by wilful at 8:11 PM on August 26, 2010
However, the simple version, which a lot of people above seem to have missed, is that your mortgage (plus maintenance, rates, etc etc etc) will be higher than your rent, for the same sort of place. If you're totally scrupulous about saving the difference, overall property is a historically conservative option, and when you're young you should consider other investment classes. The only way property makes it back is with capital growth. And the fact that it's forced savings (which has a lifestyle cost)
I wouldn't offer financial advice to a stranger, but my very distant reading of the UK is that capital growth should continue, you have a housing shortage and population continues to grow.
overall, there are so many factors, taht it really comes down to what you want emotionally. Living in teh same place and the security of not having your landlord kick you out at their whim, versus being tied down into one relatively immovable asset.
Me, I bought a place.
posted by wilful at 8:11 PM on August 26, 2010
Sorry, small derail.
In Australia the situation is made far more complicated by generous allowances for home-owners. What generous allowances? (what have I missed out on?) AFAIK, there are no tax advantages to owning your own home in Australia, only negative gearing on investment (not primary residence) properties.
posted by Kerasia at 8:31 PM on August 26, 2010
In Australia the situation is made far more complicated by generous allowances for home-owners. What generous allowances? (what have I missed out on?) AFAIK, there are no tax advantages to owning your own home in Australia, only negative gearing on investment (not primary residence) properties.
posted by Kerasia at 8:31 PM on August 26, 2010
In the last 20 years there have been two property crashes - one in 1990 and one in 2007/2008. Each time the market has recovered. In 1996 when I bought it my flat was worth £65K. Even with the recent property crash and low inflation it's now worth at least £250,000. At the height of the market in mid-2007 it was worth around £280,000.
Odds are, looking at how prices have risen or fell over the last 20 years, that you will be well up on your investment in years to come. Now is a good time to buy, prices are low, the market is stagnant. In the last few years short-term property speculators have lost out, but I would be surprised, looking at historical data of house price movements over the longer term, if you would lose on your investment.
When you find somewhere you like, check it out on houseprices.co.uk and that'll show you the sale prices of other properties in the same street over the last ten years or so.
posted by essexjan at 11:53 PM on August 26, 2010
Odds are, looking at how prices have risen or fell over the last 20 years, that you will be well up on your investment in years to come. Now is a good time to buy, prices are low, the market is stagnant. In the last few years short-term property speculators have lost out, but I would be surprised, looking at historical data of house price movements over the longer term, if you would lose on your investment.
When you find somewhere you like, check it out on houseprices.co.uk and that'll show you the sale prices of other properties in the same street over the last ten years or so.
posted by essexjan at 11:53 PM on August 26, 2010
You don't necessarily have to take 25 years to pay back a 25 year mortgage. Some mortgages allow you to overpay without penalty, and then to borrow back the overpayments easily if you really need to. If you can afford make serious overpayments at the beginning you'll make a big dent in the amount of interest you'll eventually pay.
When you do finally pay off the mortgage, you'll own the house free and clear and hopefully never have to pay rent again. This can give you an enormous amount of freedom: it's much easier to take a lower paying but more satisfying job, work part time, start your own business, spend more time with your family, or just feel less stress when layoffs are impending.
However, don't underestimate the advantage of having a good landlord who will fix whatever is going wrong with your house. If you're not particularly handy and you think you'd struggle to hire workmen in without getting fleeced, or if you won't have the cash flow to keep up with the ongoing maintenance, it's going to cost you a lot in the long run.
posted by emilyw at 4:17 AM on August 27, 2010
When you do finally pay off the mortgage, you'll own the house free and clear and hopefully never have to pay rent again. This can give you an enormous amount of freedom: it's much easier to take a lower paying but more satisfying job, work part time, start your own business, spend more time with your family, or just feel less stress when layoffs are impending.
However, don't underestimate the advantage of having a good landlord who will fix whatever is going wrong with your house. If you're not particularly handy and you think you'd struggle to hire workmen in without getting fleeced, or if you won't have the cash flow to keep up with the ongoing maintenance, it's going to cost you a lot in the long run.
posted by emilyw at 4:17 AM on August 27, 2010
Final word - many rents in the UK are MORE than mortgage payments
posted by A189Nut at 12:39 PM on August 27, 2010
posted by A189Nut at 12:39 PM on August 27, 2010
This thread is closed to new comments.
posted by fermezporte at 3:04 PM on August 26, 2010 [3 favorites]