AIBU to think if you’re STUCK in the RENTAL TRAP…

[Didyousaysomethingdarling]

...and been reliably paying years and years of rent, you should qualify for a mortgage, which equals your monthly repayments?

If so, it looks like the Tory ‘Lifetime Mortgage’ pledge is aimed at getting your vote.

In a bid to get more people on the housing ladder the Tories have pledged to ease affordability rules arguing that more than two million people could afford a mortgage at a rate of 2.35pc but would fail the current tests of 7pc and above (taken from The Telegraph).

I think they’ve stolen the idea from the Jamie Pogson petition. Could this make a difference to you?

Also, average duration in a nursing home is about two years. Even at 1k a week, many, many people would have a chunk of cash left over after 2 years in a nursing home if they own their property outright (assuming that the value of property and the cost of nursing homes doesn't wildly diverge in the next 50 years).

Avoiding owning property purely so you don't have to pay care fees looks a bit like cutting off your nose to spite your face.

@Fatted
Thank you again for replying.

I wouldn’t do it because it would never happen. It’s impossible to believe a word that comes out of Boris Johnson’s mouth. You know, the guy who reckoned he didn’t want an election? Well, not that day anyway....

I’m torn about all this, we rented for the last 8 years, first house was fine but we needed somewhere bigger so moved to a farm cottage which was expensive and damp/mouldy. We had been on the housing association list for 8 years and were finally offered a house in one of the rural areas I chose which never happens and so we have taken it. It’s a lovely house and I love it and will even more once it’s all decorated etc and as someone else pointed out if anything goes wrong I just need to pick up the phone

My issue is I have a friend with a wider group
Of friends who often had get togethers and to be totally honest I’m sick to the back teeth of being asked why we don’t just buy blah blah and being made to feel like dirt and a failure because I don’t own a house? 🤔. I have a good job on community nursing and DH is a site surveyor on good money, we put money away and we do lots of things with our DC I don’t particularly want to cut back on our lives just to put more money away which we would need to do to save the money needed for a deposit

@justanotherlemontree

LOL. Do you think he's changed his mind about laying in front of the Heathrow bulldozers too?

I think the catch (or one if them) is that your calculations are based on INTEREST only mortgages. So yes, staying with tge example given above, if you rent for 750/month you can afford a 450/month mortgage interest. But at 2.35% interest, your loan would have been 230,000. How will that be paid off at the end of the term? Because if you need to pay it off monthly costs jump to 1,200/month rather than 450. Plus you are now responsible for upkeep, insurance, etc.

Fuck the tories

@cochineal7

It’s a repayment mortgage. The aim is for the mortgage to be fully paid off over the ‘Lifetime’ term.

For example (I’m not a mortgage advisor but I think the figures are correct, perhaps a more knowledgeable person could check?).

£300k 30 year repayment mortgage at 2.35% per month = £1,367

£300k 30 year repayment mortgage at 7%per month = £2,160

Agreed you would be responsible for the upkeep and insurance.

My point was that the government want you to have a house to sell to fund care rather than them have to fund it.

@Rhinosaurus

Did you miss CmdrCressidaDuck's post?

Also, average duration in a nursing home is about two years. Even at 1k a week, many, many people would have a chunk of cash left over after 2 years in a nursing home if they own their property outright (assuming that the value of property and the cost of nursing homes doesn't wildly diverge in the next 50 years).

Avoiding owning property purely so you don't have to pay care fees looks a bit like cutting off your nose to spite your face.

Surely the focus should be on making hone ownership more affordable? I don't know how that can be achieved aside from losing the deposit needed for a home. but I'm not voting for the Tories, they're the problem not the solution.

Yes I read it. So £200k the government wouldn’t have to pay out if someone had a property to sell to fund it themselves. I’m not saying people would avoid owning property so that they didn’t have to fund care, I am saying the government would prefer people to own a property so that they can fund their own care.

@Dazedandconfused10

Surely the focus should be on making home ownership more affordable?

A Lifetime Mortgage would do just that, for lots of people currently renting in the South East!

Well, yes, the government would prefer people to own properties for all sorts of reasons. Not least that it has various social benefits and people generally want to. And 200k multiplied by thousands of people a year is a very large sum that nobody wants to have to find in the already well-accounted-for tax budget. Are we supposed to think that's sinister?

I'd rather rent forever than vote Tory. Any policy of theirs other than making the rich richer is complete and utter bollocks.

@didyousaysomethingdarling

You still need a deposit (I know it's not easy, I bought this year after renting in the south east!) But i don't believe it will happen. If the banks lowered the deposit needed this wouldn't even be a thing. They need to stop pushing over priced new homes and focus on filling empty homes.

@Dazedandconfused10

They need to stop pushing over priced new homes.

100% agree with this . New home prices are massively inflated.

@didyousaysomethingdarling Yes your numbers seem to be approximately right for a 30 year fixed rate repayment mortgage. My point was based on the 450 quoted earlier which can realistically not include repayment. In any case: the policy needs funding. Because if this was commercially viable it would be offered. Many countries have longer-term fixed rate mortgages (although 30 years is exceptional), but it is not at all suitable for everyone and although it may be a very good product for the consumer in a very low interest environment as we have now, it is by no means a good deal if interest rates are at the higher end of the scale. Suppose you buy in 2024 and interest rates are 8% fixed for a 30 year loan. If interest rates crash in 2030 you would want to remortgage cheaper. But fixed comes with exit fees. Not such a good deal anymore then. The plan sounds all nice and cosy but is not workable without the lenders somehow being compensated if the rates are not commercially viable. And who will be funding that? Will it come from the same 350/million a week saved?

Tories don’t need to snivel for votes. Like I have alluded to and will keep alluding to until I’m proved wrong The British Public adore them. Oh and I hope to God I am feAsting on those word on Friday 13th December. I highly highly doubt it though
Too many people are brainwashed and too many turkeys love the idea of Christmas.

@BooseysMom - slightly off topic but a response to your comment What's not fair is social housing where repairs are done free of charge and the rent stays low. With shared ownership you pay rent, will prob never afford to buy the house outright, your rent increases annually and yet you have to do all repairs and maintenance. Grrr!!

Yes my rent is low (I have just moved into a 3 bed council house so my 5 year old doesn't have to share with her parents and my disabled 17 year old child can still have the space she needs) but repairs are not done so easily, 2 months in I am still fighting for a broken downstairs bathroom window to be fixed, drug paraphernalia which was found in the garden to be cleared, smashed wired in security lights to be fixed, so whilst I appreciate I have very low rent (400 per month) getting repairs done isn't so easy and your comment comes across as a little bitter. Believe me I would jump at the chance to partially own a property and be able to afford to be in that position so we didn't have the stigma associated with renting social housing. As it stands I am a carer and my husband works a full time physical job that pays minimum wage so not likely to be in that position ever.

Back on topic - this would not sway me at all to vote for tories. I don't believe anything that comes out of their mouths. I feel this is just another lie to entice those trapped in the rental market to vote for them and then it will never materialise.

Actually I think the main reason for encouraging people to buy is because the insane amount we spend on housing benefit, a third of which already goes to pensioners, is only going to get bigger if more and more people rent for life. Those landlords renting to pensioners want paying somehow, and it comes from public funds.

Of course this would be less of an issue if we had rent controls but we don't.

Also, lifetime renting discourages citizens from saving for retirement because so much of a personal pension is eaten up by rent that you have to save a lot to make it worth your while, which is obviously a very bad state of affairs and not one that the government wants to encourage. For example, a one bedroom flat here is typically £170 a week. In London and the South East it's more. To even get to that plus the £140 a week spends you'd need to bring you up to parity with someone who never saved but instead relied on housing benefit and state pension, never mind having anything extra to show for your years of saving, you need quite a sizeable pot. So a lot of people just don't bother. With owner occupation running at around 65%, that's potentially a lot of people not bothering to save.

So yes, it's in the government's interest that people don't rent forever.

But of course they don't want to enable people to buy through making houses affordable, so instead they come up with scheme after scheme to allow people to spend more money than is fiscally advisable.

I agree. I've thought this for years..........but so long as I have a hole in my arse I'll never vote Tory........... vulnerable people being taken care of will always trump anyone's right to own a home for me. 💁🏻‍♀️

OP, you’re posting from Tory campaign headquarters right?

@cochineal7

Agreed, UK early redemption charges are punitive.

Not so in other countries for example America, France and The Netherlands. UK lenders want you to remortgage frequently, so they make extra money from arrangement fees.

Ideally early redemption charges would be low, you'd need to be able to pay off 10% annually without being penalised and the mortgage should to be portable. Let's hope this would be so.

it is massively oversimplistic to imagine that a person or couple who can afford a specific rent can equally afford a mortgage with repayments of the same amount.

Mortgages are a commitment for decades. Interest rates can go up massively.

If you are paying £800 rent and the economy crashes and you lose your job you can hand in your notice and leave and live in a room in a shared house or go live with your parents whatever you can afford.

if you have a mortgage which has repayments of £800pm when interest rates are 2.35% and the economy crashes and interest rates and unemployment rocket and suddenly you have no job and interest rates are 5.0% and you are supposed to pay the bank £1,110 per month, and then interest rates are 8% and you are supposed to pay £1,519 per month and meanwhile you can't sell because what with the economy crashing no one can afford to buy. and the banks lose vast amounts of money and fail.

That is where such a policy leads. Mortgages are correctly only granted to people who have significant disposable income in excess of what is needed to service the mortgage, fulfil other living requirements. That disposable income, which in good years is available for holidays, luxuries and fun times, is the bank's safety net to know you can still manage in the tough times.