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Home ownership strongly associated with unemployment watch

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    (Original post by peter12345)
    I have a couple theories:
    The English "castle" mentality
    The fact that they are so expensive - status symbol
    Home ownership is a sign of being in the "middle class"
    I have another theory to add. English legislation is far more leniant on landlords than on the continent.
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    (Original post by Haze)
    Mortgage interest and home maintenance are 'dead money' two. Also dead is the massive portion of your net worth tied up in an asset that historically has been fairly close in performance to stocks, even with the spending on improvements. It is also the national average, including the current London bubble. The only thing houses have going for them(financially) is the subsidies and tax breaks the government gives owners.

    If you want to own your own home, and can afford it, go for it. But it's not some wealth building silver bullet.
    You pay rent you don't get a penny back. Fact.
    You pay a mortgage and maintain what you have you'll get something back.

    Owning your own home is therefore miles better.
    Besides, once you become a pensioner you can sell it and spend the money on a cheap n cheerful park home and spend your remaining years going off on jollys.
    What can you do with the rent money you've paid? er... nothing - it isn't yours anymore.
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    Doesn't surprise me.

    People with more than one property can just rent one of them and live off the profit without working. Life is also much cheaper when you own a home because half of people's earnings go towards paying rent if not more.
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    "You pay rent you don't get a penny back. Fact.
    You pay a mortgage and maintain what you have you'll get something back.

    Owning your own home is therefore miles better.
    Besides, once you become a pensioner you can sell it and spend the money on a cheap n cheerful park home and spend your remaining years going off on jollys.
    What can you do with the rent money you've paid? er... nothing - it isn't yours anymore."

    WHat if renting is cheaper than the mortgage? what if you dont have to pay for wear and tear on the building like decoration furnishing hot water and central heating etc etc?. What if in a mobile job market you can get a better job elsewhere?What if you lose your job? What if you get into negative equity?

    The argument or at least parrt of it is personal flexibility versus longterm financial security.
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    (Original post by moonlost_luke)
    I have another theory to add. English legislation is far more leniant on landlords than on the continent.
    Interesting. Never knew that.
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    (Original post by JC.)
    You pay rent you don't get a penny back. Fact.
    You pay a mortgage and maintain what you have you'll get something back.

    Owning your own home is therefore miles better.
    Besides, once you become a pensioner you can sell it and spend the money on a cheap n cheerful park home and spend your remaining years going off on jollys.
    What can you do with the rent money you've paid? er... nothing - it isn't yours anymore.
    The reason people can buy houses is through borrowing. Instead of wasting money on rent, you waste it by paying interest on your mortgage. For example, you buy 10% of the house and borrow the remaining 90%. This is not unique to property; you can do exactly the same thing with shares or any other productive asset. You can buy 10% with your own money and borrow the remaining 90% with a share financing scheme, if all goes well the dividends on the shares will pay off your debt and at the end of it you have paid the debt and own the shares.

    The problem with your reasoning is that borrowing money to make an investment is a big financial gamble. It assumes cheap debt and increasing prices. If interest rates go up you end up paying far more on the mortgage than you would pay on rent (the average rental yield of property is about 5%, many mortgages charge something like 3.5% at the moment so homeowners are 1.5% ahead, but this is likely to change over the next few years). And if property prices decrease even a small amount you quickly find yourself in negative equity since you only paid for 10% of the house.

    Most people think it is irresponsible to invest in shares using 90% borrowed money. But people do not apply the same reasoning to property because they have got so used to constantly increasing property prices over most of the last 40 years. As soon as the interest rate and property price party stops - personally I do not think it can go much further - there will be millions of people with mortgages who wish they were still renting. Paying rent (and saving the extra, since rents are cheaper than mortgages) is less risky.
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    (Original post by JC.)
    You pay rent you don't get a penny back. Fact.
    You pay a mortgage and maintain what you have you'll get something back.

    Owning your own home is therefore miles better.
    Besides, once you become a pensioner you can sell it and spend the money on a cheap n cheerful park home and spend your remaining years going off on jollys.
    What can you do with the rent money you've paid? er... nothing - it isn't yours anymore.
    The house I was renting last year was £700 pcm. It went up for sale for £200,000. The best mortgage I could potentially get for the house was 5%. The interest alone would be £833 pcm. What additional benefit would I get from the additional £133 of dead money in a plateaued (and potentially collapsing) housing market?

    (not withstanding of course, stamp duty, solicitor's fees, house maintenance costs and the fact that I would almost certainly be moving in a year or two)
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    (Original post by Captain Crash)
    The house I was renting last year was £700 pcm. It went up for sale for £200,000. The best mortgage I could potentially get for the house was 5%. The interest alone would be £833 pcm. What additional benefit would I get from the additional £133 of dead money in a plateaued (and potentially collapsing) housing market?

    (not withstanding of course, stamp duty, solicitor's fees, house maintenance costs and the fact that I would almost certainly be moving in a year or two)
    On a house up at 200k you're paying at the most 175-180 in the current climate.
    Realistically on something of that value you're unlikely to get accepted onto a 5% product. 10% is the norm and really you aught to put down as much as you can afford.

    In reality it's usually the case that paying a mortgage is cheaper than renting. My previous house was £450pm (I live in the sticks) and the mortgage on the current place is £305 with 15k down. The house are worth about the same.

    I don't see any argument for renting over buying. At some point you WILL get the majority of your expenditure back (assuming you keep up with the repayments) with renting you don't ever see a penny back.
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    (Original post by JC.)
    On a house up at 200k you're paying at the most 175-180 in the current climate.
    Realistically on something of that value you're unlikely to get accepted onto a 5% product. 10% is the norm and really you aught to put down as much as you can afford.

    In reality it's usually the case that paying a mortgage is cheaper than renting. My previous house was £450pm (I live in the sticks) and the mortgage on the current place is £305 with 15k down. The house are worth about the same.

    I don't see any argument for renting over buying. At some point you WILL get the majority of your expenditure back (assuming you keep up with the repayments) with renting you don't ever see a penny back.
    The vast majority of the amount you pay on mortgage is interest, not repayment of the debt. As the example I posted; the interest alone would have been ~£800 with repayment on top of that. Most of the money you spend on a mortgage is similarly dead money. On top of that you have the additional costs of stamp duty, legal fees, house maintenance

    Now, I don't know what type of mortgage you have, but the example I gave was with a 10% deposit and a fixed rate mortgage. Considering BoE interest rates can only really increase, a non-fixed mortgage exposes you to significant liabilities should they increase this to 2% at some point (and historically, they've been higher). So yes, a non-fixed mortgage may be cheaper in the short term, but can put you in significant difficulties later on.

    Other reasons not to buy:
    -Need for mobility. My current job can change geographical location every two years. The material and temporal costs of relocating are significantly less by renting than buying. Not to mention, selling a house at the moment can take years if you're not willing to take a hit on your selling price.
    -The state of the housing market. The house prices are currently bolstered by everything the government can think of to prop it up. House prices may not fall, but if they do, buying will leave you materially significantly worse off.
 
 
 
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