Omega Owners Forum

Please login or register.

Login with username, password and session length
Advanced search  

News:

Please play nicely.  No one wants to listen/read a keyboard warriors rants....

Pages: 1 2 3 4 5 6 [7] 8 9 10   Go Down

Author Topic: Cost of rent in the private rented sector.  (Read 17422 times)

0 Members and 1 Guest are viewing this topic.

Doctor Gollum

  • Get A Life!!
  • *****
  • Online Online
  • Gender: Male
  • In a colds and darks puddleses
  • Posts: 28089
  • If you can't eat them, join them...
    • Feetses.
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #90 on: 11 September 2018, 23:42:41 »

Agreed it is numerically the same thing, but you still have the debt and you haven't factored for risk.

The risk is that your investments don't cover the debt after 25 years. For that to be true you would have to achieve negative growth (real losses) on your investments over a 25 year period. To achieve that you'd have to be spectacularly incompetent, or the world would be ending and you should've invested in baked beans and shotgun shells.

Yes you still have the debt. But if you borrow (say) £100K today on a salary of £25K, and wage inflation averages 3% p/a, then in 25 years time you've still got to repay £100K, but your salary will be £52K. Or put another way, your debt is now only about £50K in real terms.
 
An interest only mortgage over 25 years on £100K @ 1.4% costs £136K over the term, or £120 p/m + £100K at the end. A repayment mortgage on £100K costs £118K, or £393 p/m. source : https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

If you invest the difference (£393-£120 = £273 p/m) over a 25 year period, then 5% pa growth returns £162K so you're £62K up. 5% + 2%CPI returns £221K so you're £121K up. Or you could just give £273 p/m extra back to the bank.
However, if you focus on paying the mortgage off before investing, it would be done in say 7 years. If you then invested your £393 for the remaining 18 years (of the 25 year period) you would have 18 years growth in 100% equity in the property AND £154k# in growth on the £393 pm invested.

# based on £393pm for 18 years at 5% and inflation increase of 2%.
Logged
Onanists always think outside the box.

biggriffin

  • Omega Lord
  • *****
  • Offline Offline
  • huntingdon, Hoof'land
  • Posts: 9736
    • Vectra in a posh frock.
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #91 on: 12 September 2018, 11:15:21 »

Done a water leakage job at  a "Townhouse" (3 floors) in Enfield yesterday  . . .nothing special , in fact pretty run down  ???

Once inside found it was split into 9  single rooms all induvidually let by the landlord at £200 a WEEK each . . . That  equates £7200 per month  :o :o :o  or  £ 86 Grand a year

Some property owners are making a LOT of money  :o :o :o :o :o

I wonder about the immigration status of the tenants  ::) I'll guess that the house was Edmonton way


And the landlord, but he isn't paying tax, and probably find it's an illegal conversion.
Logged
Hoof'land storeman.

LC0112G

  • Omega Baron
  • *****
  • Offline Offline
  • 0
  • Posts: 2439
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #92 on: 12 September 2018, 19:54:17 »

Agreed it is numerically the same thing, but you still have the debt and you haven't factored for risk.

The risk is that your investments don't cover the debt after 25 years. For that to be true you would have to achieve negative growth (real losses) on your investments over a 25 year period. To achieve that you'd have to be spectacularly incompetent, or the world would be ending and you should've invested in baked beans and shotgun shells.

Yes you still have the debt. But if you borrow (say) £100K today on a salary of £25K, and wage inflation averages 3% p/a, then in 25 years time you've still got to repay £100K, but your salary will be £52K. Or put another way, your debt is now only about £50K in real terms.
 
An interest only mortgage over 25 years on £100K @ 1.4% costs £136K over the term, or £120 p/m + £100K at the end. A repayment mortgage on £100K costs £118K, or £393 p/m. source : https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

If you invest the difference (£393-£120 = £273 p/m) over a 25 year period, then 5% pa growth returns £162K so you're £62K up. 5% + 2%CPI returns £221K so you're £121K up. Or you could just give £273 p/m extra back to the bank.
However, if you focus on paying the mortgage off before investing, it would be done in say 7 years. If you then invested your £393 for the remaining 18 years (of the 25 year period) you would have 18 years growth in 100% equity in the property AND £154k# in growth on the £393 pm invested.

# based on £393pm for 18 years at 5% and inflation increase of 2%.

Huhh?? How are you going to pay off the mortgage in 7 years? That needs £1251 p/m @ 1.4% APR to clear £100K. In which case you could have invested (£1251-£120 = £1131 p/m) over a 7 year period and if the return were 5%+2%CPI you would end up with £122K, so be £22K up.

There is no combination where borrowing money at X% and putting it into investments returning Y% doesn't leave you better off, providing Y > X. You are using other peoples money to make you more money.
Logged

Doctor Gollum

  • Get A Life!!
  • *****
  • Online Online
  • Gender: Male
  • In a colds and darks puddleses
  • Posts: 28089
  • If you can't eat them, join them...
    • Feetses.
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #93 on: 12 September 2018, 22:39:11 »

Quote
Huhh?? How are you going to pay off the mortgage in 7 years? That needs £1251 p/m @ 1.4% APR to clear £100K. In which case you could have invested (£1251-£120 = £1131 p/m) over a 7 year period and if the return were 5%+2%CPI you would end up with £122K, so be £22K up.
Focused intent... It has to be a very deliberate lifestyle choice or it simply isn't achievable. No car payments, no credit cards, no extravagance.
Logged
Onanists always think outside the box.

LC0112G

  • Omega Baron
  • *****
  • Offline Offline
  • 0
  • Posts: 2439
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #94 on: 13 September 2018, 00:02:58 »

Quote
Huhh?? How are you going to pay off the mortgage in 7 years? That needs £1251 p/m @ 1.4% APR to clear £100K. In which case you could have invested (£1251-£120 = £1131 p/m) over a 7 year period and if the return were 5%+2%CPI you would end up with £122K, so be £22K up.
Focused intent... It has to be a very deliberate lifestyle choice or it simply isn't achievable. No car payments, no credit cards, no extravagance.

So use the same focussed intent and invest the money at 5%+2%CPI, rather than pay off the cheap loan at 1.4% and you'll be £22K better off in 7 years.

Or if you really must pay off the mortgage, investing the same £1131 p/m @ 5%+2%CPI for about 6 years will build the required £100K to pay off the mortgage - so about a year earlier than your 7 years.
« Last Edit: 13 September 2018, 00:07:13 by LC0112G »
Logged

Doctor Gollum

  • Get A Life!!
  • *****
  • Online Online
  • Gender: Male
  • In a colds and darks puddleses
  • Posts: 28089
  • If you can't eat them, join them...
    • Feetses.
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #95 on: 13 September 2018, 00:27:29 »

Potayto, Potarto...

You'll struggle to get much below 2% on anything more than a 2 year tracker, And investing that short term is risking a loss.

And buying a habitable property for less than £100k notwithstanding...

An interesting debate though :y
Logged
Onanists always think outside the box.

TheBoy

  • Administrator
  • *****
  • Offline Offline
  • Gender: Male
  • Brackley, Northants
  • Posts: 105837
  • I Like Lockdown
    • Whatever Starts
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #96 on: 13 September 2018, 17:57:14 »

Also @ TB you bought considerably earlier than I did, I only bought when I was 27.  :)
But you still lost in the Smugness battle ;D


Bought my first at 21, when interest rates were well into double figures. Its all swings and roundabouts.


In reality, mine was paid off years ago, I only keep it running because it pisses Barclays off - I have a £125k guaranteed loan at about 1.4% in I want it, that under new rules, they have to show on their books :D
I appreciate the sentiment, my opinion of Lloyd's is broadly similar, but to keep a mortgage hanging around is madness.

Get it paid off and get your mortgage payment invested in something like, I don't know, retirement  ::)
As its costing me zero, and its pissing off Barclays, keeping it going is one of those, errr whats the wankword, win-win scenarios... ;)
Logged
Grumpy old man

STEMO

  • Guest
Re: Cost of rent in the private rented sector.
« Reply #97 on: 13 September 2018, 18:02:59 »

Also @ TB you bought considerably earlier than I did, I only bought when I was 27.  :)
But you still lost in the Smugness battle ;D


Bought my first at 21, when interest rates were well into double figures. Its all swings and roundabouts.


In reality, mine was paid off years ago, I only keep it running because it pisses Barclays off - I have a £125k guaranteed loan at about 1.4% in I want it, that under new rules, they have to show on their books :D
I appreciate the sentiment, my opinion of Lloyd's is broadly similar, but to keep a mortgage hanging around is madness.

Get it paid off and get your mortgage payment invested in something like, I don't know, retirement  ::)
As its costing me zero, and its pissing off Barclays, keeping it going is one of those, errr whats the wankword, win-win scenarios... ;)
How does that work, exactly?
Logged

TheBoy

  • Administrator
  • *****
  • Offline Offline
  • Gender: Male
  • Brackley, Northants
  • Posts: 105837
  • I Like Lockdown
    • Whatever Starts
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #98 on: 13 September 2018, 18:07:42 »

Maybe  :P  :D  :P

But you do have dual incomes, MrsT is full time mummy. So again all in round-abouts.
Thats a lifestyle choice ;)

But my first house was bought be me alone, interest only (only think remotely available) and I earned sod all.

Everything in the house was cast-offs from friends and family, or skip diving.  And cars? I had a pushbike ;)


The millennials always think they have it harder. They don't. Just less willing to make sacrifices.


But anyway, I'm still ahead on smugness front, (effectively) mortgage free at 43, with no help from anyone...
Logged
Grumpy old man

TheBoy

  • Administrator
  • *****
  • Offline Offline
  • Gender: Male
  • Brackley, Northants
  • Posts: 105837
  • I Like Lockdown
    • Whatever Starts
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #99 on: 13 September 2018, 18:10:43 »

Also @ TB you bought considerably earlier than I did, I only bought when I was 27.  :)
But you still lost in the Smugness battle ;D


Bought my first at 21, when interest rates were well into double figures. Its all swings and roundabouts.


In reality, mine was paid off years ago, I only keep it running because it pisses Barclays off - I have a £125k guaranteed loan at about 1.4% in I want it, that under new rules, they have to show on their books :D
I appreciate the sentiment, my opinion of Lloyd's is broadly similar, but to keep a mortgage hanging around is madness.

Get it paid off and get your mortgage payment invested in something like, I don't know, retirement  ::)
As its costing me zero, and its pissing off Barclays, keeping it going is one of those, errr whats the wankword, win-win scenarios... ;)
How does that work, exactly?
Offset mortgage. I owe £<single figures>k, and keep exactly this amount, plus £5, in a linked offset account. So no interest to pay.

(add the extra £5, due to some of their accounting scams and roundups, just to ensure I'm never paying interest.
Logged
Grumpy old man

STEMO

  • Guest
Re: Cost of rent in the private rented sector.
« Reply #100 on: 13 September 2018, 18:32:28 »

Also @ TB you bought considerably earlier than I did, I only bought when I was 27.  :)
But you still lost in the Smugness battle ;D


Bought my first at 21, when interest rates were well into double figures. Its all swings and roundabouts.


In reality, mine was paid off years ago, I only keep it running because it pisses Barclays off - I have a £125k guaranteed loan at about 1.4% in I want it, that under new rules, they have to show on their books :D
I appreciate the sentiment, my opinion of Lloyd's is broadly similar, but to keep a mortgage hanging around is madness.

Get it paid off and get your mortgage payment invested in something like, I don't know, retirement  ::)
As its costing me zero, and its pissing off Barclays, keeping it going is one of those, errr whats the wankword, win-win scenarios... ;)
How does that work, exactly?
Offset mortgage. I owe £<single figures>k, and keep exactly this amount, plus £5, in a linked offset account. So no interest to pay.

(add the extra £5, due to some of their accounting scams and roundups, just to ensure I'm never paying interest.
But you're losing the interest on your savings, so no loss or gain.
Logged

STEMO

  • Guest
Re: Cost of rent in the private rented sector.
« Reply #101 on: 13 September 2018, 18:37:27 »

If you're coming towards the end of your mortgage, and you surely are, then the monthly interest can't be that much anyway? Ours is about £9 a day.
Logged

Mister Rog

  • Omega Baron
  • *****
  • Offline Offline
  • Gender: Male
  • Wales
  • Posts: 2606
    • Volvo XC70 & V70 D3
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #102 on: 13 September 2018, 22:26:41 »

Maybe  :P  :D  :P

But you do have dual incomes, MrsT is full time mummy. So again all in round-abouts.
Thats a lifestyle choice ;)

But my first house was bought be me alone, interest only (only think remotely available) and I earned sod all.

Everything in the house was cast-offs from friends and family, or skip diving.  And cars? I had a pushbike ;)


The millennials always think they have it harder. They don't. Just less willing to make sacrifices.


But anyway, I'm still ahead on smugness front, (effectively) mortgage free at 43, with no help from anyone...

A major issue. Excessively high lifestyle expectation. Not prepared to start at the bottom.



Logged
“The desire to be a politician should bar you for life from ever becoming one.” Billy Connolly

Doctor Gollum

  • Get A Life!!
  • *****
  • Online Online
  • Gender: Male
  • In a colds and darks puddleses
  • Posts: 28089
  • If you can't eat them, join them...
    • Feetses.
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #103 on: 13 September 2018, 22:35:07 »

Maybe  :P  :D  :P

But you do have dual incomes, MrsT is full time mummy. So again all in round-abouts.
Thats a lifestyle choice ;)

But my first house was bought be me alone, interest only (only think remotely available) and I earned sod all.

Everything in the house was cast-offs from friends and family, or skip diving.  And cars? I had a pushbike ;)


The millennials always think they have it harder. They don't. Just less willing to make sacrifices.


But anyway, I'm still ahead on smugness front, (effectively) mortgage free at 43, with no help from anyone...

A major issue. Excessively high lifestyle expectation. Not prepared to start at the bottom.
Those that do, really do... Entirely debt free, including the house, before 30.

Those that don't, smoke weed, moan and whine and then have the gall to vote left. Shoot the lot. Or tax weed :D
Logged
Onanists always think outside the box.

tunnie

  • Get A Life!!
  • *****
  • Offline Offline
  • Gender: Male
  • Surrey
  • Posts: 37511
    • Zafira Tourer & BMW 435i
    • View Profile
Re: Cost of rent in the private rented sector.
« Reply #104 on: 14 September 2018, 09:51:06 »

Maybe  :P  :D  :P

But you do have dual incomes, MrsT is full time mummy. So again all in round-abouts.
Thats a lifestyle choice ;)

But my first house was bought be me alone, interest only (only think remotely available) and I earned sod all.

Everything in the house was cast-offs from friends and family, or skip diving.  And cars? I had a pushbike ;)


The millennials always think they have it harder. They don't. Just less willing to make sacrifices.


But anyway, I'm still ahead on smugness front, (effectively) mortgage free at 43, with no help from anyone...

Damn you.  :P  ;D ;D

If I over pay though, should see it reduced to late 40's.

Have to say, I buck the trend generally in my team, most others just rent or do room shares.
Logged
Pages: 1 2 3 4 5 6 [7] 8 9 10   Go Up
 

Page created in 0.028 seconds with 18 queries.