To think people with an average mortgage are still far better off than their renting counterparts

[Theinventoroftoasterstrudel]

I met with a friend today who was moaning about having sorted their remortgage this week and how their payments have increased by £250 a month due to interest rises. She's now paying £1000 for their 3 bed semi and I do fully appreciate how stressful knowing this remortgage was due has been for them this past year and how painful suddenly paying so much more is. I'm not in any way trying to minimise that for my friend or others with a mortgage in this position.

However, I rent and we live in a very similar property in a similar area to her which I had been paying over £1100 for for the past 2 years and a few months ago this increased to £1250. When we were told about the increase we looked to see if there was anything we could possibly find for cheaper and everything comparable was actually closer to the £1400 mark.

I feel like the news has covered the impact interest rises are having on home owners virtually every day since the mini budget last September but renter's have only had a cursory 'and rents will increase due to landlords passing on their increases' at the end of the odd story. And with zero acknowledgement that rents were already so much higher than mortgages anyway and still are. It's not like renting has suddenly become the better option; it's still utterly impossible!

Am I being unreasonable to think there needs to be more outrage and support for renters and not just those needing to remortgage.

That may be so. And renting a damp property for thousands is also a bad financial decision like many on here claim but people don’t have a choice at times.

I left care at 18 without a penny to survive. Buying a house at that time wasn’t an option. Staying with parents and saving a deposit wasn’t an option. It took me 20 years to save a deposit for our first home and without the help to buy scheme it would have been another 20 years.

Should I have not had children because I hadn’t bought a house yet? Do you tell all the renters struggling that they were irresponsible to have children? If you never afford to buy then you just never have children?

Like many renters on here I was sold the ideal of save a deposit, buy a house and everything is better. I personally would have been better staying in rented. At least I would have my savings to fall back on right now but they went into the house. I appreciate that’s not the case for everyone but many many home owners right now are in badly maintained houses because they can’t afford the work and at risk of losing their homes because they can’t afford the mortgage.

Because the help to buy scheme only applied to new builds.

So buy a new build with help to buy. You need £10k deposit.

Buy an older home with no help to buy. £20k deposit.

For many it was the only way they could buy a home and they believed all the rubbish spouted on here about how home ownership leaves you much better off financially etc.

In hindsight if you couldn’t afford to buy without help to buy you couldn’t afford to buy. But I didn’t expect massive interest rate rises in the first 5 years of buying when we were in negative equity. If we were 10 years into ownership we probably would have been able to ride it out more.

But tenants also have all of these issues, with less control. I have no idea what my landlord is doing about their mortgage. I have no say in how they handle it. So if they up and decide to sell tomorrow, I will have nowhere to live. Given how much rents have risen in the last year, and how I’m a single mother, even though I pay my rent on time and have prioritised it for a decade it will be a struggle to find any property at all within distance of my work and there’s no way we’ll find another one near DD’s school, despite them supporting her through the SEN diagnostic pathway. Being made homeless due to cost increases is going to affect both homeowners and tenants, yet as the OP’s AIBU states, those who rent are given little more than a cursory sentence while those who own and are capable of making their own decisions around their property and financial management are given the focus.

There’s a chain response people can follow when they’re struggling and those who rent are only one stop away from the bottom, which is homelessness. Those who own can sell and buy somewhere smaller, or sell and rent. If you rent and can’t find anywhere to live, you’re fucked.

Again like I’ve said earlier.
Not when you’re in negative equity.

It will cost me £80k to sell our house right now and walk away with nothing but the debt.

I won’t be able to afford to rent as I’ll be paying off the negative equity on top of the rent for many many years.

I would end up homeless once the house is repossessed and looking for a council property.

I haven’t lived in this area long enough to qualify for a council property however so I would have to move back to my home area. Hence I will have to leave my job and find a new one. Kids will have to move school.

For a lot of people it really isn’t as simple as sell and buy a cheaper house.

5% mortgages for ftbs were a standard.
If they bought the former council house 2 streets away for about 100k, thry needed 5k if they could make up the rest - 95k in salary, which many could. That was about 25k on single salary.

They just couldn't afford to buy the new build with 180 snags and on draining garden without help to buy. People could afford to buy older, bigger in most cases, houses.
Note I am talking in my area, but I am pretty sure we are not some absolutely unique situation.

Just want to add that I have absolute sympathy about your current situation.

I needed a house big enough to house my children so this wasn’t the case in my situation.

In my area most older houses are sold for more than the new builds. They are also better quality and have large gardens etc. so that’s why. I live rurally so the new build housing estates are not popular with those who are used to houses with land.

At the time (5 years ago) help to buy and a new build was the only option for us to buy a home. I knew then what I know now. I would have stayed where I was and waited. It’s likely I will end up back there anyway now except this time with my savings wiped out and a massive debt to pay off due to the negative equity.

We are now mortgaged homeowners after many years of renting, it is better.

The points about maintenance costs making it not much cheaper than renting initially are true, and if I didn't do nearly all the work myself (which costs a lot of time) they would be even more hugely expensive.

The advantages are unquestionable though, we can do what we like, decorate, modify, upgrade, garden/landscape etc and nobody else has any say in the matter. We are also building up equity, and in 25 years time will own it outright whereas renters must pay as long as they live.

Then of course there is the elephant in the room of inflation and house price increases. The mortgage amount is fixed at the point of purchase, repayments may go up and down with interest rates but over time they go down in real terms as money becomes worth less. Rents will continue to rise indefinitely unless there is some seismic shift in economic policy.

Even with other costs as long as you stay in your mortgaged home you are better off than renting.

I made money on my first home and lost quite alot on my second because I had to move. I appreciated renting because if neighbors were horrible I could up sticks.

But my mortgage now even with a high interest rate is just a little more than my rent was. And with buying you are chipping away at the money rather than rents going up.

Yeah, I’m perplexed that people live in places where new builds are more expensive than older houses. Here, a three bed semi new build costs roughly the same as a three bed semi older house which needs work.

The new build semi is also smaller, with thinner walls, etc.

New builds generally work out cheaper here because they tend to be located further away from the CBD built on cheaper land; they tend to be smaller per number of rooms (although do have larger kitchens and generally a separate utility which is fab) and they tend to have more bathrooms than older houses. New builds also tend to have smaller gardens.

We considered a new build because we could get a 4 bed, 3 bath, 2 public rooms and dining kitchen with garage, for around the same price as we could get a 3 bed, 2 bath, 2 public room with tiny kitchen semi detached older house.

The new build also had incentives like £12k cash back, free upgraded flooring, etc.

New builds are definitely more expensive here in London, usually by at least 100k - and often they’re billed on big billboards as “affordable” homes. Lol. Many are flats rather than houses, and are significantly more than a flat would be in a conversion in an old house. After the cladding scandal I wouldn’t touch a new build with a barge pole.

I am in Glasgow and that is not my experience at all. New builds are also rarely flats, they are mostly large scale developments with mixed housing on the commuter belt. I’ve not seen any with cladding (most of those with cladding are 1960s towers, with a few exceptions)

Flat living isn’t as common here in general.

And this is where you need to take responsibility for personal decisions. Lots of other people in your situation would have only had one child or two.
You absolutely had the right to decide to have 3 children. But that choice had financial consequences. You seem to have a bit of a victim mentality but you chose to have a relatively big family without having the money to buy a big enough house, unless through Help to Buy. You chose to have children early, before buying a house. Sorry but that is a big reason why you find yourself in your current situation, it isn’t all “government”.

I didn’t have children early, I bought a house late. Because I did it all on my own, after leaving care without a single penny of help from family.

Secondly I chose to have 2 children. But I also care for my sisters child who was removed from her care by social services. But again do you go round telling renters they shouldn’t have children?

I don’t blame the government for my situation but I do think the help to buy scheme led to multiple people taking on crippling debt without being fully aware of the full implications of it and I think only applying the scheme to new builds has led to people being forced into negative equity as they had to buy a new build. Which was cheaper for me anyway but the state of the housing market means that ‘brand new home’ has needed thousands of work doing to fix the appalling building standards that are somehow deemed acceptable.

If the government launch a scheme to “help” people get on the housing ladder I expect that scheme to actually help. If the NHBC claims to protect buyers from buying houses that have massive issues I expect house builders to actually be held account for the bodge jobs they do.

A profit? How dare they? They should pay the tenants to live there!

Help to buy was just a way of making the unaffordable affordable.

What it has done is propped up prices and made people take on larger amounts of debt than they would have done if the market had been left to properly find its own level.

It doesn't benefit homebuyers at all. It benefits homeowners.

As to whether people with mortgages are better off than renters, that depends on how much negative equity they have - which will be making a comeback as rates go up and prices drop.

Yes I agree. It made the an affordable house, affordable to us at the time and was our only option to get on the housing ladder.

5 years later with my mortgage interest now at 8.7% and in negative equity it’s no longer affordable.

We didn’t budget for that and so we would have been better not buying as now we will end up with the house repossessed and losing the savings we used as a deposit unless the situation changes very soon which I don’t see happening.

Rented for years and now have had a mortgage for almost 3. We now pay buildings insurance, mortgage protection, boiler servicing, appliance cover, and whilst it doesn't amount to over 3k it does add up. All it takes is one repair and could easily be thousands extra a year.
That being said rent prices are outrageous. We pay about £100 more for the mortgage than when we were renting. We only managed a mortgage because my SO had a bit in savings following a previous house sale. We used a FTB scheme and I took on loads more responsibility to double my salary.
I have seen family have to move several times due to no fault evictions and the stress is unreal.
I don't know what the solution is

It’s crap for everybody. But you can’t directly compare rent to mortgage.

Your £1200 rent covers all the upkeep of the property too - replacing boilers, roofs, driveways, safety certificates, fire alarms etc.

Her £1000 doesn’t cover any upkeep. My house currently needs two doors replaced, a new boiler, a new driveway, external wall repairs - all of this together will cost near enough £15,000, and add to that the kitchen is about 35 years old and really needs replacing, easily another £15k.

The big difference is obviously equity at the end, so of course buying wins out on that. But the increase in price is just as rubbish for anyone.

I understand that I really do but at the same time some of those issues can't be compared with renting either.

I'll give you boiler and safety certificates but as somebody who rented for years most landlords won't give a shit about doors, drive way or an old kitchen.

Last time I was looking to rent most landlords are after the absolute highest price with the lowest standards of housing possible.

Aren’t the HTB equity loans paltry interest though?

So you just pay the interest. You just can’t move etc.

I assume that you bought a long time ago, which really illustrates the point that it's more about which generation you are, rather than whether you're a homeowner or a renter.

I'm sure that most people who bought in London in the past 10 years will be paying a much higher mortgage, as house prices have risen so much more than wages.

Of course there are always exceptions, but as a whole, baby boomers and gen x are sitting pretty, while millennials and gen z are screwed over. It doesn't matter whether they are renters or homeowners - they are screwed either way because of the time that they were born.

It’s not paying the help to buy interest that’s the issue for us.

It’s the fact that help to buy meant we had to buy a new build so now we’re in negative equity, as is common with new builds in the first few years. So we can’t remortgage and we are stuck on the SVR rate.

Combined with interest rates going through the roof. The house that looked affordable thanks to help to buy, in fact isn’t.

1.75% x CPI + 2%.

So even with a mega horrific CPI of 10.1%…

1.75 x (10.1% + 2%) = 1.96%.

Paltry.

My last rental property I lived in was beautifully done up throughout. Everything modern.

Most of us with mortgages aren’t living in pretty character houses. Most of us are living in 1980’s box like semis that weren’t built as well as Victorian era houses, and are now needing a lot of work.