To think it’s only the banks that win..,

[Picturesonthewall]

So, on a £100,000 mortgage at 3.5% over 25 years the person who took the mortgage would actually pay £150, 238 so if they sold at £125k it wouldn’t be a gain of £25k it would be a loss if £25,238.

How much would the rent be over that period?

The banks always win otherwise they wouldn't be in the business of lending money. And as mentioned above how much would rent be?

But you've won by having a house to live in. Mortgages aren't for money-making they're for providing a home.

Yes, and you've not added in stamp duty, and 25 years of home maintenance.

Nor the possibility that the housing market could drop, and that property might sell for less you paid for it, or at only a small gain (from which you couid net off allied costs or not)

1. Banks aren’t a charity

1. 3.5% is internationally and historically dirt cheap. Money has almost never been cheaper - most people I know are paying >2% on their mortgage. Our is massive with a not great ltv and hence is “only” sub 2.5%

1. I’d be amazed if in 25 years the house did not increase by more than 25%

1. If you didn’t have a home would you be planning on sleeping in a park?

1. Your maths is shoddy as it doesn’t factor any asset maintenance

HTH

Interesting point!

Rent would be similar from a crude calculation? Say £500 a month 25 years is £150k.

Makes a big difference if you can afford to overpay on your mortgage, cuts thousands off.

2% 🤦‍♀️

Of course banks win. They are a business, not a public service. What you gain is the ability to buy your own home, and largely have autonomy over it. Mortgages are no compulsory, if you don’t like them, feel free to rent or fund your property purchase another way.

What happens if you stop paying the mortgage and the bank has to repossess the house and sell at auction for £75k? Then the bank has lost £25k

Plus, where do you think the bank got the £100k in the first place to lend to you? It’s from peoples savings where they pay maybe 1.5% (£20k)

I guess the big thing is in the first 25 years maybe rent and mortgage repayment are equal but what about for the next 25 years? You'd own the property so no mortgage repayments but still have to pay £500 a month rent so over 50 years you're £150k down.

Yes of course you would have to pay rent and banks aren’t a charity but it’s just interesting how often you hear ‘i bought a house for x, had a huge mortgage and sold it for y and then made z in profit’... I always think, no, you didn’t - you got a small amount of your money back.

But over the last 25 years house prices have increased by almost 400% so your scenario is very unlikely

I would say it's still the best investment you can make
Nothing is guaranteed but there has been no long term period (15+ years) over the last 50ish where prices have not increased

But they also had somewhere to live for that time, so fine, take the interest paid off the profit, but also add the amount of saved rent on. In many cases, the amount of interest charged is far far less than the amount of rent a similar property would cost.

If you're paying 3.5% interest on your mortgage, you need to remortgage, as that's very high these days, you should be able to get a deal for around half that, unless you're sub-prime.

What happens if you stop paying the mortgage and the bank has to repossess the house and sell at auction for £75k? Then the bank has lost £25k

I think you'll find that it's you who's lost £25k, not the bank. They won't think 'oh well' they'll chase you for the money, which you'll have to pay back unless you want to declare bankruptcy, and you'll probably still pay some back via an income payments order plus not be able to get another mortgage or many other credit products for a very long time.

Horseman

1. No - never said they were

1. Yes but that’s irrelevant

1. Why? Properties don’t have to go up in value over the period you buy and sell. I used to own in London and over the period I had it yes it did. Where I am now is not London and may not have those gains. Of course if you stay in exactly the same place for 40 years then maybe but considering you or I probably won’t you are being complacent.

1. Again, irrelevant. That’s not the point if the post.

1. I don’t see how a simple equation of what you spend and what you get back as shoddy compared to speculation about figures pulled out of your backside.

Amazing stat @jackstini! No wonder we have a housing crisis!

Of course the interest rate is relevant. The interest on our mortgage is about £40 pm. Ignoring the capital repayment, because that's paying for an asset that we will eventually own outright and therefore be able to sell to get the money back, that £40 pm, or call it £50 pm including buildings insurance is paying for somewhere to live. If we rented instead, the rent would be at least 10x that amount.

But back in the days when interest rates were very high, people were paying hundreds of pounds a month, if not more in interest. So it could well have been then that mortgage interest cost more than rent, so renting was possibly the cheaper option.

In your scenario the banks win because they are providing a service . Sometimes people are happy to stick their head in the sand when it comes to finances and only look at the monthly expense as opposes to the overall cost .
Houses are often viewed as an asset when in fact they are a liability. Assets make you money .

It was irrelevant because it was termed as ‘dirt cheap’.

Well, if you had paid rent at say £800 pcm, you'd have spent £240,000

But I wouid find it a bit odd if, at the end of 25 years, the person said they had made £115,000 (because that's the amount they had saved on rent).

The cost of the mortgage itself, and any other costs that are part and parcel of being a home-owner aren't usually included in the profit/loss on house prices. Probably because people's financing arrangements vary so much, whereas knowing how much the basic price tag is going up or down is more useful in many ways.

Is the potential for nitpicking one if the reasons why it's considered unmannerly to discuss house prices at dinner parties?

So my relevant points are irrelevant
🙄

The reality is while it can go up or down over 25 years there will be inflation and your property will appreciate in value.
(Btw great stat jackstini 😉)

And it is a fact is base rates are LITERALLY at an all time low 🤷‍♀️
www.mortgagestrategy.co.uk/historical-interest-rates-uk/

And 5. Actually supports your “banks profit from us” argument

I don’t really get what you want out of this thread.

What level do you want to borrow money at?
1%...
0%...
-5%... 😂