Why buy a property?

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    #16
    Bar the deposit, isnt it cheaper to mortgage anyway rather than rent?? Isnt this why a lot of people "buy to let" as the rent more than pays for the mortgage??

    And you are missing my point about house prices doubling etc. Yes, house prices are relative. But, as someone has said, you can use this to secure other monetary sources. And, as I said, if you really wanted to, you could live in a house for 20 years, have around 4 times the money you had originally, sell the property and rent.....retirement sorted :-D
    Any posts by myself are my opinion ONLY. They should never be taken as correct or factual without confirmation from a legal professional. All information is given without prejudice or liability.

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      #17
      Interesting debate

      Sounds a bit like the 'am I ready for children?' question - the point being that if you're asking yourself the question, then whatever rational argument might say, you probably aren't ...

      Originally posted by Floob
      I understand it is far more common to rent in Europe?
      Historically this is true, but it is also becoming in many countries (eg. Netherlands where we live) much more popular to buy. In part because here you still get tax relief on all your mortgage interest payments (except in a some circumstances; the writing's on the wall for that one I'm afraid) so it really does make financial sense. It took us some time and a lot of Excel spreadsheets to get our head round the idea that because of the tax relief it genuinely was financially advantageous to us (1) to invest/save spare cash we had and then (2) have a large mortgage, instead of using the cash to make a deposit and reduce the sum of our mortgage debt.

      Good luck anyway.

      Juliet

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        #18
        Boring

        Sorry Floob You Said It. You Are Boring!!!

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          #19
          Originally posted by deandevy
          Sorry Floob You Said It. You Are Boring!!!

          Bit Harsh, ok, YOU say something interesting!

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            #20
            Not sure if there's any point posting on this but MY reason for buying my first house were:

            - I can finally put a nail in a wall if I want to and paint my walls in another colour than boring magnolia
            - I'm sure the house is in a good condition and that I don't have to battle it out to get the boiler (or anything else) fixed
            - The money I spend in the mortgage is MINE (except the interests but I'm prepared to put up with that)
            - By the time I retire I will hopefully have moved up the property ladder and own a house far too big for myself, sell it and move into a nice little property somewhere in the world and use the rest of the cash to finally enjoy life (meaning without the worry of paying bills and working for it).
            - And if they're lucky, my kids will inherit something from me which hopefully will help them not to have to work as hard as me to have a decent life.

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              #21
              So does buying a house boil down to the fact it is a better investment than having money in the bank?

              For example if I buy a £125k flat outright now, it should be worth approx £250k in 10 years? 125k profit.

              If this 125k was left in a bank (5%) it would be worth approx £200k? 75k profit.

              But if I bought a flat for £125k with £50k deposit and 75k mortgage I'd end up paying 150k (£100,00 for the mortgage inc interest) over 10 years. 100k profit.

              So it seems if I put much less than 50k down or paid it back over more than 10 years I'd make less than keeping it in the bank?

              I realise interest rates will change, but I'm guessing the relative difference between savings and mortgage rates should keep in sync.

              Is that right? Or are my figures totally screwed?
              I'm trying to boil this down to the simplest view possible.


              =============

              Mind you, I guess I would have to pay 40% on all the bank interest, whereas I wouldnt with the value of a house?

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                #22
                But you would get taxed on any interest earned in a bank, you dont, as long as you live in it, on the profit from a house.

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                  #23
                  Originally posted by dazalock
                  But you would get taxed on any interest earned in a bank, you dont, as long as you live in it, on the profit from a house.

                  Yep - I added that above, I guess that makes a massive difference.
                  So the equity in a house, should be passsed from house to house, or invested in other homes so that you can use the extra value and benefit from it whilst not being taxed?

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                    #24
                    This is like one of those threads where you can only answer with a question.

                    You buy a house, it gains equity, you live in said house and then sell, equity is tax free. You buy 2 houses using some equity, you live in one and the process starts again, you rent the other, and in very basic terms will need to pay some CGT on the profits if you sell that.

                    You put money in a bank, you pay tax.

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                      #25
                      We Bought Our First House To Live In. Then We Bought Our First Rental Property From The Equity Of Our House, Then 2 Years Later We Bought Our Second Rental Property Again From The Equity From Our House. We Did Manage To Get These Houses Cheap As They Did Need A Lot Of Work Done To Them. With Rent Coming In From Both Houses We Are Now Mortgage Free.

                      I Am 27 Years Old 3 Houses No Mortgage.

                      Surely Buying Your Own House Is Worth It In The End. My 2 Young Children Will Have A House Each When They Are Older.

                      Surely This Is Interesting Enough Dazalock.

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                        #26
                        Yes it is! And ive placed it on my wall to re-read time and time again.

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                          #27
                          lol. I was only joking when I said about him being boring, it's that everyone was giving him good advice but he kept repeating himself and not understanding the difference between buying and renting.

                          This is an excellent forum and I have learnt a lot from it. I have made mistakes in the past because of not knowing where to go for advice, but now I know where to look before I make any mistakes again. Thank you.

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                            #28
                            Originally posted by deandevy
                            lol. I was only joking when I said about him being boring, it's that everyone was giving him good advice but he kept repeating himself and not understanding the difference between buying and renting.
                            I wanted to get my head around why spend more to get a house, the answer seems to be because over time you will recover more (than putting it in a bank). Mainly due to taxes?

                            Now I'm wondering if I should get a 4 bed house, live in it and rent rooms. Or get two smaller flates, live in one rent one.
                            Bearing in mind I have approx £150k I would layout on property - what would you go for?

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                              #29
                              Originally posted by Floob
                              Bearing in mind I have approx £150k I would layout on property - what would you go for?
                              Personally, I would split it, use it for four deposits on BTL interest only mortgages. Initially, the income is about the same as buying one outright but in the longer term, you have four properties with an average value growth better than savings income and the security of a constant income even if one is empty or you have a problem tenant. The rent is about the same as a savings account so double bubble and as rents only go up whereas the relative cost of mortgages comes down, your income continually grows. Invest the amount you would pay as capital repayment and pay off the capital when you feel like it, not monthly. Try an offset mortgage, I have just renegotiated mine and got a lower interest rate than I could get with repayment mortgages.

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