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Author Topic: Cost of rent in the private rented sector.  (Read 17436 times)

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Mister Rog

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Re: Cost of rent in the private rented sector.
« Reply #75 on: 11 September 2018, 19:08:13 »

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  ::)


 . . . . . or a "new" Omega   ???

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relluf

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Re: Cost of rent in the private rented sector.
« Reply #76 on: 11 September 2018, 19:14:15 »

To Quote my Father.

You are either renting bricks and mortar

or

renting money


whatever circumstances suit at the time.
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Doctor Gollum

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Re: Cost of rent in the private rented sector.
« Reply #77 on: 11 September 2018, 19:25:20 »

To Quote my Father.

You are either renting bricks and mortar

or

renting money


whatever circumstances suit at the time.
Proverbs 22:7 says it all...
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ronnyd

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Re: Cost of rent in the private rented sector.
« Reply #78 on: 11 September 2018, 19:43:42 »

No. 14 is quite apt. :-X
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Kevin Wood

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Re: Cost of rent in the private rented sector.
« Reply #79 on: 11 September 2018, 20:46:48 »

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 ::)

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.
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LC0112G

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Re: Cost of rent in the private rented sector.
« Reply #80 on: 11 September 2018, 21:02:29 »

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 ::)

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.

Agree, paying off the mortgage is madness. If someone (the bank) is prepared to lend you money at 1.4% APR, then you take all you can get and invest it in something that averages 5% + CPI per year.
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Doctor Gollum

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Re: Cost of rent in the private rented sector.
« Reply #81 on: 11 September 2018, 21:05:46 »

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 ::)

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.
For clarity, I said to pay off the mortgage and take the amount (that is no longer needed for the now paid off mortgage) and invest it.

Anyone considering borrowing against equity to invest is asking to lose everything next time the housing market tanks.
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Doctor Gollum

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Re: Cost of rent in the private rented sector.
« Reply #82 on: 11 September 2018, 21:32:47 »

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 ::)

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.

Agree, paying off the mortgage is madness. If someone (the bank) is prepared to lend you money at 1.4% APR, then you take all you can get and invest it in something that averages 5% + CPI per year.
If your house was paid off completely, would you borrow against it to invest it?
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LC0112G

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Re: Cost of rent in the private rented sector.
« Reply #83 on: 11 September 2018, 21:38:00 »

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 ::)

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.
For clarity, I said to pay off the mortgage and take the amount (that is no longer needed for the now paid off mortgage) and invest it.

Anyone considering borrowing against equity to invest is asking to lose everything next time the housing market tanks.

Why? If the housing market tanks, but all the money borrowed against the house is invested in other assets, then those assets (providing they are well diversified) won't tank - or at least they won't tank by anything like the same amount.

Providing you keep paying the mortgage interest off each month, then your home is safe for the mortgage term - typically 25 years. Over any 25 year period you care to mention, a diversified investment portfolio has always averaged at least CPI+5%. You are asking for trouble if you borrow against a house to buy another (BTL) house though - that's single sector investing and is considered suicidealy risky investing by most. 

If mortgage interest rates look like they are going to exceed investment returns, then you cash in the investments and pay off the mortgage. That is one reason not to use pensions as the (only) investment mechanism - you can't get at the money till you're 55. However, you can put £20K p/a in SSISA's and those investments would be realisable within a few days if so required.
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Doctor Gollum

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Re: Cost of rent in the private rented sector.
« Reply #84 on: 11 September 2018, 21:42:55 »

Again, if your house was paid off completely, would you borrow against it to invest it?
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LC0112G

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Re: Cost of rent in the private rented sector.
« Reply #85 on: 11 September 2018, 21:43:14 »

Agree, paying off the mortgage is madness. If someone (the bank) is prepared to lend you money at 1.4% APR, then you take all you can get and invest it in something that averages 5% + CPI per year.
If your house was paid off completely, would you borrow against it to invest it?

Yes. It's the same thing. I wouldn't have paid off the mortgage in the first place though. No point. Pay the interest each month so the debt remains the same, invest the 'repayment' part of the mortgage yourself and after 25 years your investments will have grown by (say) 5% +CPI, but your debt will still be the same.   
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Doctor Gollum

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Re: Cost of rent in the private rented sector.
« Reply #86 on: 11 September 2018, 22:01:57 »

Agreed it is numerically the same thing, but you still have the debt and you haven't factored for risk.
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LC0112G

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Re: Cost of rent in the private rented sector.
« Reply #87 on: 11 September 2018, 22:47:20 »

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.
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Mister Rog

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Re: Cost of rent in the private rented sector.
« Reply #88 on: 11 September 2018, 22:50:59 »

Blimey, a lot of convoluted thinking here. It can be simple. I've never overthought things, just gone with my gut, and kept things simple, and long term. However . . . my rules

Rule No 1:
Buy property whenever possible and as soon as possble, even if it's a shithole. Too many people have "lifestyle" aspirations that are simply too expensive. And by buying you are gaining equity.

Rule No 2:
Take a long term view. Don't expect to double your money in two years. You won't

Rule No 3:
If you buy in an expensive area, stay there. If you move out you will never be able to afford to move back

Rule No 4:
Have a very long term aim. I lived in London for 40 years. I never expected to retire there and didn't. I cashed in and moved to a much cheaper and more pleasant area.

Rule No 5:
Do not over analyse and overthink. Just do it.



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Viral_Jim

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Re: Cost of rent in the private rented sector.
« Reply #89 on: 11 September 2018, 23:04:48 »

If the money were in a decent pension, though, its growth would outstrip the 1.4% by a country mile and get there tax free, so in reality the opposite is best.

Hell, @1.4%, even inflation is greater than the interest! A mate of mine is the same, he has 3 x BTL flats on (then) 95% interest only mortgages that were BoE base +0.75% or something daft, paying them off or changing deal in his case would be madness.
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