Why Buying a House Can Save You Over a Million Pounds

[@economicshelp]

Text version of video, with more calculations on how total cost of rent can vary depending on what rent inflation is. www.economicshelp.org/blog/216339/economics/buying-vs-renting-a-house/

[@Helen_white1]

I'm in Michigan, and the housing market here over the past 7-8 years has been unprecedented. Houses that were purchased for $130K in 2015 are now going for $590K. These are tiny, poorly constructed 950-square-foot homes in quiet, mediocre neighborhoods. Meanwhile, nicer, average-sized homes in better neighborhoods that were over $300K a decade ago are now selling for $750K+. It's wild.

[@Thompson-e7h]

A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advice but get buying, cash isn’t king at all in this time!

[@berniceburgos-]

I concur; I've been in frequent communication with an investing advisor for more than 17 months. I definitely remember needing inspiration to keep my business running after a protracted divorce. I researched licensing consultants, sometimes known as portfolio coaches by some.

[@Kin-28-8]

How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?

[@berniceburgos-]

“Stacy Lynn Staples” has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.

[@Grace.h-t8o]

I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.

[@a7xhamilton]

Always great content. Really pleased you've now gone for thumbnail cam alongside slides. The slides and charts are always excellent and my only complaint was how brief some were shown due to cutting back to talking head. Keep doing what you're doing Thanks

[@WillisLeyton]

I'm glad you made this video, it reminds me of my transformation from a nobody to good home, $21k biweekly and a good daughter full of love..

[@wisewolf225]

I'm staying renting even though I could buy my own house... why? Because my landlord never increases my rent, it's £500 per month fully furnished, not far from Sheffield either so pretty good location. The money I've saved is now invested and earning me a nice 2nd income. The reason they don't raise the rent is because they own every property that's rented out (they have about 70 properties) and they prefer to hang on to good tenants for the long term. One bad tenant can cost a huge amount of money/stress. I realise I'm pretty lucky here... and if my rent was going up every year then yeah I wud probs buy something

[@David-bi6lf]

I think you are also lucky that the owner is willing to make such a poor return on investment. Say that house is only worth £100k which I doubt at £500 p/m that's only 6% return, less if it's worth more and that's not taking into account maintenance and other costs. Yes the property can increase in value but that is not a given. A better return can probably be made from index funds and it would be passive.

[@wisewolf225]

@@David-bi6lf They bought this particular property for £3500 a long time ago, it's now worth £270,000, It's a townhouse which is split into 3 flats so they're making a nice bit of cash on it... even at £500 per month.

[@patdbean]

You can sum it up quite easily:- . It is not buy-to-let that is the issue. It is mortgage-to-let. If all land lords owned outright , it would be less of an issue. ​@@wisewolf225

[@tomatofeind2019]

I used to be a landlord like that. I'm doubling the rent for my Tennants now

[@David-bi6lf]

@@tomatofeind2019 all the more reason rent increases need to be capped to stop scummy behaviour like that.

[@gavjlewis]

You missed one advantage of renting. If your relationship breaksdowns she can't take half your house.

[@abumaalik9272]

Don't marry her, just keep her as a girlfriend.

[@gavjlewis]

@@abumaalik9272 Thanks for the advice. 11 years too late for me. But remember this to save yourself! 😄

[@ep1929]

​@@abumaalik9272 and do a rent book

[@tomatofeind2019]

@@abumaalik9272 doesn't stop someone talking a part of the value of the house. If they contribute to the upkeep of the home, mortgage, bills, maintenance etc they will be entitled to some. However it's costly to get it

[@philipjamesparsons]

I thought the comments about paying off the mortgage rather than paying into a pension or investing it were interesting. If you do run the numbers, the tax efficiency of a pension will serve you better than paying off the mortgage ASAP. Especially if you are paying any higher rate tax. Investing in index tracker funds in a pension or ISA, based on historical performance will likely more than offset the mortgage interest. Especially when the compounding effect is taken into account. You will have to ride the stock market roller coaster though. So, basically, sensibly invested money is likely to produce better results than paying off the mortgage.

[@ProfoundFamiliarity]

I think this is probably true although paying off the mortgage seems less risky and we might not necessarily see index funds produce the same returns over the next 30 years as they have for the last 30.

[@xParesh]

I borrowed less than I could and took on a lodger so with overpayments so 6yrs in I'm half way being away from being mortgage free and will still have another 20yrs of peak earning power before retirement so I'll have an enormous amount of disposable income for that period. I think too many people borrow too much for a property they don't need. If you borrow just what you need then its possible to clear your mortgage in half the time, saving an enormous amount of interest and opens up financial freedom options earlier.

[@ProfoundFamiliarity]

Well done

[@Definetly_not_a_BOT]

We kept working remotely for the UK while moving abroad where it is cheaper to live. Win win 🖐️

[@dlc2479]

Exactly, I laughed at the year 50 estimate of £2m on rent because I'll be long gone by year 20 much less year 50😂😂😂 I'll have enough to buy cash abroad with my investments

[@ilikeboringthings9]

But there is opportunity costs associated with buying a house....investing deposit, buying and maintenance costs into equities, being able to move easily for a better paying job etc. Also, folk tend to move more than once and spend big on home decoration/remodelling, these are other hidden costs. It's a more complicated picture.than you present here.

[@williamwren2662]

Agreed per my comment ... Whilst a good video, especially Re. Rent price inflation, it simply does not lay out all of the opportunity costs / investment assumptions. For example, say if you’re a ambitions late 20s FTB target market, where the £20k deposit is currently a large % of your disposable liquid investment pool: - You forgo your freedom on day 1 for a price of c.£210k (£473,337-£265,000). - You forgo the opportunity to invest your £20k of capital in diversified liquid securities, (or your own business which could yield far more) yielding an average of 10% p.a over the 30 year period, compounding to c.£350k - The constraints of having a significant personal debt liability with 360 monthly payments to avoid bank repossession, leading to difficulty in operating flexibly, assessing risk subjectively - therefore constraining future business/income growth. - The assumptions baked into property price speculation / mortgage leveraging in the West has worked well over the 2000s, given growing working populations % & record low interest rates. How will property growth compare to other asset classes over the next 20 years? Headwinds to the former inputs, could suggest comparatively not so well. REITs can provide property investment for shorter time horizons to benefit/diversify from the asset class upside anyway. In summary, alternatively you could: Continue to rent within your means and flexibly relocate, save, invest, maintain freedom, objectively take business risk, buy for cash at a discount when you're around 40 and you actually know where you/your family want to permanently base, with no personal debt liability in between. Anton Kreil's train of thought: kzbin.info/www/bejne/jImyeZ6pbZl_a9U&ab_channel=westbamwestbam

[@dlc2479]

Also he's assuming that you buy 1 house and stay in it. Most don't, most are want to climb the property ladder and get progressively more expensive houses

[@Tierneyboi95]

Always enjoy your content but you’ve missed out the associated opportunity costs of buying i.e. you could have invested your deposit and maintenance/renovation costs into other assets such as an index fund. This changes the numbers substantially! In the very long term, on average you would expect the costs of renting and buying to be comparable to one another

[@Ligerpride]

You could easily say the same thing for investing any surplus income from mortgage compared to rental payments as rent would get higher while a mortgage payment stays nominally similar. Also the house purchase is essentially an (highly leveraged in the most part) investment too.

[@hughjohns9110]

It depends how well the fund performs.

[@Caerdan]

Alongside rent inflation making it more expensive than buying, also don't underestimate the government's tendency to look after homeowners (as they tend to be a larger voting block) and neglect renters.

[@hughjohns9110]

@@Caerdan in what way do they "look after" homeowners?

[@Caerdan]

@@hughjohns9110 During Covid, the government introduced a policy allowing mortgage holders a 6 month payment holiday without affecting credit history, renter's got no support. Following the recent interest rate rises, the government met with lenders and agreed a package of support for mortgage holders, including not having homes repossessed for 12 months and moving to an interest only mortgage temporarily. Renter's got nothing despite also facing similar unaffordable rent increases. The only real policy intended to help renters has been the Renters Reform Bill, but this has been watered down so much that it is unlikely to make a material difference to renters.

[@patriciawaplington9808]

Thank you so much for this, it’s helpful for young people wondering what to do.

[@brucelee6695]

Good Illustration, practical. Thanks!

[@murunbuch]

Great video, but you have missed out an upside of renting. Take the £20,000 deposit, upfront £6000 housing cost, plus the initial difference in mortgage payments vs rent, plus the yearly maintenance costs, and put all of that into a stocks and shares ISA over the same 50 year period. Now what's the difference in the final amount?

[@damienheads7151]

As a younger person I will say you are having a laugh. Renting is a trap that very few of us will be able to escape until perhaps middle age at best

[@dlc2479]

​@@damienheads7151The sad thing is that as young people, we are best placed to take advantage of investing but many have your mentality and are obsessed with sinking all of your money into an asset that barely keeps up with inflation😂

[@daspeed198]

@@dlc2479 A house provides security, also Idk why people argue about buying or renting using investing as their argument. I feel a lot of pro renters act as if having a mortgage means you won't be investing anything, you can do both.

[@dlc2479]

@@daspeed198 Agreed, pro renters make that argument because pro owners often argue that their home is an investment when they're actually liabilities for most. It's possible to grow your net worth faster as a renter.

[@daspeed198]

@@dlc2479 100%, the way I see a house is as a Ultra super mega emergency fund which is only worth anything in the very worst of scenarios. People can argue about the most optimum strategy but 99.9% of people aren't gonna do that so just do what suits you best

[@atilla4352]

Wait for the a.i. crash in 10 yrs and see people starting reduce in numbers since low birthrate (unless boats will be constantly scheduled😅)

[@lh4394]

I always looked at it in long term as a percentage of your income. As your income goes up over time you pay less of that as a % to your mortgage but rent you seem to be paying the same % or slightly more year over year

[@robbiepalmer7916]

I'm disappointed that this video has made the common mistake of making a false equivalence between someone with lots of capital to invest, and someone who doesn't, instead of 2 people with the same upfront capital choosing between buying a home vs renting and investing in something else In your example the buyer has £26k up front for deposit + upfront fees, and then £1-2k per year of maintenance costs The renter is treated as if this money has disappeared! An apples to apples comparison would be if the renter invested this £26k and £1-2k per year in something else, e.g. A globally diversified index fund Locking this money up in an illiquid, undiversified asset of a single house has a huge opportunity cost versus alternative investments Yet this seems to always be overlooked And then the comparison comes down to person A had loads of money and invested it, person B had no money to invest, look how much better off person A was after 30 years, therefore buy a house

[@Waferwafermagiccracker]

Then do the math and show us how renting is way better.

[@a1white]

It’s also the case that the mortgage cost, which doesn’t rise with inflation the same way that rental costs do. Your income will probably go up at close to the inflation rate so after 15 years, for example you’ll have much more disposable income if you have a mortgage than if you rent and your rent has been increasing. So you can invest and save your money more than you can if you rent over the term of your mortgage. He explains this clearly towards the end of the video.

[@daspeed198]

Owning a home allows for a more stable and secure lifestyle with costs decreasing as you get older, the renting with large investment approach is better on paper although relies on the person acting in a very specific way. Likely scenario is that the renter will spend more money on lifestyle because of having a greater amount of free income at the start, we all know people that rent and have cars with large payments which they could be investing instead. at the end of the day do whatever suits your approach best, if you're a hardcore investor who will always meet their investment targets thats the better approach, for the average person though buying is probably better.

[@realharo]

The problem with making projections decades into the future is that the world is about to change in massive ways with AI and possible mass unemployment, demographic decline, and other factors.

[@Soraviel]

By 2030, the talent pool will decrease by 25 percent, I have learned from financial times, as the years go by the older population in the UK will increase. There will be less and less of the younger population (it will continue to shrink).

[@marcus.H]

Surely in uncertain times you would rather own a house rather than owning nothing???

[@Soraviel]

​​@@marcus.H of course who wouldn't, the issues is that is going to become scarce in 3 decades

[@marcus.H]

@@Soraviel what is going to be scarce?

[@realharo]

@@marcus.H The problem is that all these calculations assume a growing stable career and income. In absence of that, you may want to keep your options open, such as moving to a lower cost of living area and getting by on a much lower income if needed. If you have a massive debt, you can't easily do that without first going bankrupt. Of course if the changes in the economy are large enough, there will probably be some government intervention - people will be demanding a bailout. But if it only hits a couple of industries, you may be on your own.

[@mattanderson6672]

Excellent analysis Thank you Sir

[@Rahul-oy4bp]

1. If renters are investing money in Equity asset class that grows at 12%. A house price grows at 3%, and mortgage payments 4% makes -1% appreciation. At 12% returns over 30 years compared to buying house with 3% returns. Just the initial £50k invested at 12% compounding returns 30 years gives £1.5 mil and 50 years its £14.5 mil. Rent vs Buy , I would say don't place everything in one asset class. All money in a house and some issue with it will cause disaster and same with equity.

[@lifeofranco]

Good point, but where would one get 12 percent a year return?

[@Rahul-oy4bp]

@lifeofranco last 10 years S&P 500 growth is 10%. If one picks good company stocks, then returns above 15%.

[@daspeed198]

@@Rahul-oy4bp if it's so easy do it, also those values are pre inflation, 7% is a much better estimate. You also have to look at the fact a homeowner will be able to invest more on a monthly basis than a renter within 5-10 years of owning with the gap only getting bigger in their favour. You also assume the renter actually has 50k to invest up front (they likely don't as they're renting) and that they would actually invest that money and not buy a car or spend it on holidays (Like many do). In an idealistic scenario you are entirely correct however you fail to take human nature into account.

[@lystraeus-]

@@daspeed198 As long as all numbers are nominal it's ok to compare them. The homeowner missed out on those early gains, though. Due to compunding that hurts even more. Look at it this way: you expect £x in wealth over y years, how do you invest it? Equity does better - lots of eco studies show this. It's easier to diversify - less risk, and better risk-adjusted return. With homeownership you need leverage - a mortgage - to make up the difference. And that's not only far from a sure bet, it's irresponsible considering you're already making a single large play on one property on one local area. Even if it works out, were you adequately compensated for idiosyncracy? (Flood risk? Fire risk?). Plus leverage for equity is pretty cheap nowadays: High beta funds, 2x funds, cyclic sectors. Human behaviour is key: the mortgage commits you to save for the long term. Helpful for many but you can learn that discipline for investments too. And by the time you're old and need the security of home ownership, the renter can take their savings and just buy a home outright. Whereas the early homebuyer permenantly missed out, and now has to suffer the lower returns of bonds to lower their risk.

[@jacknakamori3280]

Work on the assumption you want a nice home in a nice spot that you'd be satisfied to live in forever. £1m+. Buying in cash is a foolish move - your property value won't outpace inflation. You'll also deprive yourself of HUGE opportunity cost and associated advantages. Getting a mortgage will be nigh on impossible for all the the highest earners too, and you'd be clobbered with the repayments. Plus, such homes are expensive to maintain. So! If you want to live in a nice place in style, and aren't seeking to sacrifice your working life for some mediocre legacy (that will be taxed to high heaven) for kids that you AREN'T having, RENT. However, you are happy to live in some nondescript grey British town, and live in a £200k house forever, you'll trade 25 years of your life living in a crap place to accomplish something decidedly mediocre. Just save the damned money living somewhere inspiring! Every time I hear someone in their 40s/50s say they 'own' their home, the caveat is they've invariably suffered a crap lifestyle for decades. I'm not sure why so many are happy to settle for this fate. And especially now renting in cities is demonstrably cheaper than owning.

[@Mysterkoma]

I think I made this sort of mistake. I moved to cheaper area from Watford to Wakefield. Bought nice house for 300k but I now live in absolutely shity, deprived and rainy south yorkshire. My quality of life dropped down significantly. I have not desire to even go to a town for dinner here. I should have bought smaller house in Watford with nicer weather, parks, restaurants and friends around. My big mistake

[@lenco5994]

A property is actually a liability rather than an asset.

[@lazareth1674]

You mean a mortgage, not a property.

[@lenco5994]

@@lazareth1674 Well...if you have got more than one, otherwise, you need to pay for maintenance. 😅

[@daspeed198]

@@lenco5994 rent is a much larger liability than maintenance

[@jsward96]

8:49 "buying a house is a torturously long process" That's what my family told me before I put in an offer for my condo here in the states (we left the UK around 20 years ago). We were all surprised by how soon the close date was when the seller accepted.

[@grahamlaw85]

Another fantastic vid!

[@heatwave7595]

Buying a house is a good choice but not in Britain, where you pay riduculous loads of money for a moist shed or a larger cardboard box that is there called a 'house'. There is no future for Britain.

[@SamJenkinsStephenson]

Another point to add with pros of house buying : Valuation of property increases with inflation if reasonably maintained during remortgage can reduce LTV significantly thus reducing interest payments in long term

[@wattbenj]

If you're a cash buyer yes. But interest is so ridiculous now that it's essentially rent. If you're paying 5% on a house at today's prices you're going to end up paying for the house twice over. It's an extortion racket. We should be able to build our own homes.

[@thomasmcdonald5542]

You need to keep in mind that the monthly price for the mortgage will stay static whilst you hopefully earn more as inflation erodes the real mortgage cost. Many people after a good amount of time are able to start overpaying as the value of the mortgage relative to their increased income is lower. You also have a home at the end you can live in for mortgage/rent free, other than maintenance costs. If you rent and have some disposable income you could invest this and hope the investment increases to the point that it outstrips the cost of a mortgage over time, but this is a gamble.

[@wattbenj]

@@thomasmcdonald5542 I think this is good advice for the 1980's, but wages have massively stagnated in recent times. An average family home where I am costs £500k. I just can't see a future where we're all on £100k as the norm. Even today, £100k per year is only £59k after tax. And a lot of us ambitious ones are only on £30k after going to uni, getting skills, trying things like starting businesses. I think a real estate collapse like Japan in the 1990's is the realistic base case, rather than the alternative.

[@shaun906]

you tend to double what you pay, i paid a ridiculous 32k for my house in 2001, i will have paid back 64k over 25 years. but its now valued about 130k, well, 4 years ago.

[@R53Hole]

Can't people build their own homes? There are ways.

[@R53Hole]

@@thomasmcdonald5542 Don't forget council tax.

[@millwow]

The average couple has a pension income of ~£560/week. Call it £2500k per month. At the moment, average private rent is ~£1250. So half of the income of an average couple in retirement. It will be extremely difficult to make a pension pot stretch to fit around private rent.

[@Alex-pr6zv]

My retired parents took out a 20K loan with Aviva to pay for a much needed extension as the banks were'nt giving them anything. Within a couple of years, that figure had ballooned to 40K as charge upon charge and compound interest took effect. With a collective effort, they cleared the loan but if they hadn't, they would no longer own the property now.

[@Talkathon408]

All that happens then is they claim housing benefit. It's easier if they're on pension credit but also possible on a full state pension due to low income rules. It's ridiculous though that pensioners should have to claim that. On balance though, there aren't that many pensioners in such a position. Most will have a low mortgage or even be mortgage free, others will live in social housing, including sheltered accommodation both of which the rent is quite low. Demand for sheltered housing is very low too. There's about 15-20x less demand for it than regular social housing.

[@bobjames6622]

@@Alex-pr6zv So they didn't get the full financial breakdown of the loan before they signed up? Sound like a couple of right pillocks to me.

[@millwow]

​@@Talkathon408 - you are definitely right. According to the Pension Policy Institute: 78% of pensioners own their homes and only 6% are in the private rented sector. However, they expect that this will fall to 63% owning and 17% privately renting by 2041. So the problem seems like it is set to get worse over time. So by the mid 2040s, we will have ~1/5 pensioners - or a few million people - privately renting. If they all ended up on housing benefit, that could double the number of claimants. It's quite the conundrum!

[@dlc2479]

As has already been mentioned, if they have no assets then they'll be able to claim benefits to fund the rest. If they do have assets, then the whole world is open to them. Many warm climates are begging for monied retirees to move and enjoy enviable lifestyles. Why choose to stay in the UK and live in the same house you picked in your 20s/30s when you can live elsewhere and enjoy a better lifestyle? Another thing worth mentioning is that the government ceases property to pay for care fees anyway so most won't even be able to pass it down as we're living longer now. You'd rather be the renter with no house to cease than the homeowner who spent their entire life in the house only to have it taken away to subsidise the renter....

[@bluegoose7832]

not to mention that there are some areas where landlords increased rent by over 10% for a couple of years... I had a colleague who is in their 30s who had to quit her job, move back in with parents down south because rent in the part of Manchester she lived in went up 10% two years in a row, while her wage only went up 2% per year. I'm not sure if that was legal to increase rent by THAT much, but it happened. This was in 2022.

[@slavmarin7827]

thank you!

[@70Harry07]

Greeat video, however you didn't expand on the selling your house to fund a retirement home part enough. One you pay off your mortgage, its not long before you have to sell your house to fund a retirement home. You pay rent all your life and the council put you in a retirement home for free. It all works out the same in the end.

[@stephen2203]

In my working life time, roughly 40 years, the cost of renting has increased ten-fold. I therefore submit that it is likely the same will be true over the coming 40 years.

[@ProfoundFamiliarity]

If you rent and invest the difference, you *might* be better off in the long term but I personally don't think I could necessarily afford to do that because rent increases would erode my disposable income.

[@daspeed198]

spot on, that model also assumes people actually invest the difference (most people wouldn't)

[@stevencalvert9454]

Buying a home is always bets in the long run byt our main problem is house prices are out of control and completely ridiculous as it stands so people simply don't have a chance to buy one the uk is screwed as we bring in more people than the annual housing build on a already short fall

[@jerryyau4215]

In UK buy house is better than other investments are mainly tax system, where it don’t count the capital gains for first home.

[@jonhdoe629]

Video suggestion could you make a video on much uk house prices might grow over the next 30 to 50 years thanks

[@TurkeyFamily]

It all depends on timing. People enjoy the benefit of renting rather than buying. However, buying a house means settled down and you have no rights to change job / industry breaks / world tours but just work and repay mortgage. At the end of the days you might get more money in return and safe feeling while you get old. However, you loss your agility and ages in young to enjoy the world. It really depends on how you think. There are lots of choices out there and the world is big.

[@SGIQ7]

What happened with your lodger😊?

[@tommyboy3227]

Good video but would be much clearer if the figures were inflation-adjusted.

[@mariembuenaventura1278]

Looks gloomy, is there any solution to atleast curve the rent and mortgage increase in cost?

[@David-bi6lf]

Its quit simple really. If you are renting you are likely to be paying someone elses mortgage. Buy to let mortgages have higher interest rates than owner occupier. Landlords expect to make a profit or at least break even and have an appreatiated asset at the end. There is no way its cheaper to rent unless it is council or social housing.

[@jacknakamori3280]

Try living in the capital.

[@lh4394]

I'm assuming you'll be talking about the economic conference happening today. I think Germany done something similar de reg after ww2

[@Soraviel]

I can't see a lot of people buying homes in the UK even by 2030 or even after that (within 3 decades, AI will change the landscape)

[@R53Hole]

lol wth is AI going to do?

[@JB-yt7dd]

@@R53Holethey’re saying more and more people won’t be able to get a decent paying job, so where is the demand to buy houses going to come from? Unless prices collapse

[@bogdanbogdan3551]

With AI, without AI, people need to have a shelter. It may be something like in China due to enormous population and sleep in a cylinder, but this will applicable only if you are single

[@Tensquaremetreworkshop]

And building one can save you even more.

[@itscooldawgdonteventrip]

house cost a lot. capital cost a lot. if your rent is super low and you can put your money in the investment .. it will work for you as if it was a house. ( even better actually .. no interest against you but for you and no maintenance cost. ) I am sure in the graph the rent + investment outpace the raise of the rent ( if you live in a rent increasing situation. )

[@damienheads7151]

Parents with a substantial amount of money have a duty to their children to give them money for a house, not when they die, but before, or else it will leave their children paying much more over the course of time than if they had. Unfortunately that generation of parents are largely ignorant of how difficult it is and will not do so, which will leave their children paying much more and probably not having their own children as result. A very sad state of affairs. I find myself in a similar position, except will be having children, and so as a result have decided to earn what I can to then buy a house in Mexico where my money will go a lot further.

[@233kosta]

And not overpaying for one will save even more.

[@Jonnyicey]

My mortgage costs me £580 a month however only £150 quid of that goes to capital repayment, £430 on interest.

[@marcus.H]

If you added £150 on top you would double your real repayments. Why not cut out smoking or other unnecessary habits. It would let you retire early. Also, if you're paying £300 per month on a car, switch to a cheaper older car without payments. That would instantly triple your real repayments 😊

[@David-bi6lf]

​@@marcus.Hwow why do you make so many quite possibly insulting assumptions about a persons financial situation? Unnecessary habits, who says they have any. They might have already done everything feasible to reduce costs and can do no further. It also makes more financial sense to save additional money if you happen to still be on a fixed mortgage taken before interest rates went up but of course you just assume this is not the case.

[@Jonnyicey]

@@marcus.H I'm actually quite good with money already I'm just letting people know what I pay on interest Vs capital. I own my car outright and plan to keep it another 10 years or so, don't smoke don't drink either at the moment and I've overpaid my mortgage as much as i can this year.

[@marcus.H]

@@Jonnyicey very good 👍🏼😊 it really pains me to see when people waste money in the good times then later they have nothing in the bad times 😞

[@marcus.H]

@@David-bi6lf 😂😂😂 why did you take offense? Can't you imagine someone literally just wanting other people to succeed? Look, a new car every 5 years can cost tens of thousands in payments. Smoking and drinking are the same. when those funds are directed straight towards capital repayments - especially on a mortgage up North - they can make a huge difference in your balance - even after just a few years Why is that offensive to discuss?

[@David-bi6lf]

Makes no financial sense to overpay unless your mortgage rate exceeds the best possible savings rates after tax.

[@hughjohns9110]

Not true. Once your mortgage is paid off your home can't be repossessed (unless you are foolish enough to secure other loans against it).

[@David-bi6lf]

​@@hughjohns9110I think you've you have misunderstood what I have said. If you have deposible income available it makes better sense to put that aside into a savings account if the after tax interest is higher than the mortgage as opposed to overpaying the mortgage and make a lump sum overpayment if the interest rates swap. In no way does this increase the chances of reposession. In fact it decreases it because you have that money available in emergency situations. Once you paid extra on the mortgage you cant get it back.

[@hughjohns9110]

@@David-bi6lf really? And when did interest on savings ever exceed mortgage interest? I don’t think I’m the only one misunderstanding something.

[@David-bi6lf]

​@@hughjohns9110now for a lot of people including myself. I still have nearly 3 years left of a 1.2% fix that I took out while interest rates were rock bottom. Savings rates are nearly 3 times that.

[@princeandrew5430]

My rent hasn't increased for over 8 years, and was already very cheap in 2016.

[@billykotsos4642]

But Andrew youre a Royal...you dont pay rent

[@WillyJunior]

Lucky you. That isn't the reality for the majority

[@TheHappyTDFamily]

He does have out of court settlements and legal fees though which are expensive, he's got it tough! r​@@billykotsos4642

[@theolddog5129]

A family member rents out a property in outer London and has not increased the rent in 8 years since the tenants moved in. The rent was actually reduced by about 5% when the cost of living crisis hit in order to limit the hit on the tenant family. The tenants are also first class and really look after the property. A win-win situation with mutual respect between landlord and tenant.

[@1292liam]

8.30 not really, cos your borrowing like 50k, not 250k (as now

[@3thinking]

The only fact you need to know is this. Rents rise with inflation and debt is eroded by it. When you pay off a mortgage you live rent free in a house you could never afford at today's prices.

[@andyx7488]

Pay bigger deposit get less mortgage monthly payment will be half the rent

[@kylelacy-andrews9017]

A good video, but interested to hear more about the impact of what you might do with any surplus income as a renter. Ben Felix has a great video dealing with this and points out the "opportunity cost" of being invested in real estate vs the stock market, which has a higher expected long term return.

[@Rahul-oy4bp]

Uk is aging and population will peak and decline. House prices is inflated by the govt and when the govt cannot extract more from the people the house prices will fall and money will flow in the economy. A house is the most illiquid asset class that in many times does not even beat inflation but more stable than other assets.

[@yuenkwanhumble4668]

I hope you are doing okay.

[@atilla4352]

Im already looking in the Durham areas like Peterlee... This is a scam.

[@ilikeboringthings9]

Yes, you were bailed out by the taxpayer following 2008.

[@stevejwilliams61]

Far better off buying in the long term.

[@ABombs1]

The other benefit of renting is that you're not spending a massive chunk of your money, say, a deposit of 20k plus all those expenses in the video. Which means you can put it to good use in various stocks and bonds, something stable and safe but which out-paces inflation. S&P reliably does so and always has, even after major economic disasters. Your only risk would be if the world we know collapses and burns, at which point I'm sure we all have bigger things to worry about than saving for a house anyway. Currently I have about 80k split between a 4.5% return in bank savings, and stocks giving me upwards of 6%. Compound that over 30 years instead and you can probably just bulk buy a few houses in the country with your earnings if you really want, while also having lived a more convenient life renting in the city while young.

[@philipjamesparsons]

This is very true. I have rented, been mobile and built my career over the last decades. Investing in ISA’s. pension and low cost index tracker funds has served me well. I will buy a house soon but will pay a minimum deposit. I could buy outright if I wanted. Over the 100 last years, market growth has been 10%pa on average. Despite, wars and financial crashes markets have produced returns that can more than cover mortgage and rent costs.

[@jacknakamori3280]

So, so true!

[@daspeed198]

For us money savy people this would absolutely work, but I think we all know atleast a couple people who would fumble this opportunity, I'm personally gonna go down the homeownership route for the security but the other approach is a good shout if done right

[@ABombs1]

@@daspeed198 oh don't get me wrong, I want to own a home, I don't even want to think of it as an investment I think that's kinda terrible. I just want a place that's mine for me and the wife to settle. We got a lot of money but no chance probably of ever buying, at least in the UK to our standard of living (normal)

[@danydany3974]

Most expensive and low quality among oecd countries.

[@tomp5207]

Wow. You are quoting total numbers over 50 year periods, not inflation adjusted. And you are not looking at corresponding investment returns on the capital repayment element. It’s an interesting topic but this is the worst (least depth) video I have ever seen on it.

[@kennethvenezia4400]

Ya, that's if the neighborhood doesn't go to shit, and I wish you luck with that. 250 thousand doesn't put you in an exclusive neighborhood. It most likely puts you in a vulnerable area. In 30 years, God knows what the area will be like. What I witnessed regarding the behavior of a critical mass of the modern citizen, I'm not impressed at all. I think it's just going to be more pain, austerity, crime, and poverty for some time to come. 😂You really didn't think labour was going to help, did you?

[@R53Hole]

How to save even more? Buying a tent🏕

[@JohnSmith-s5y]

I am 57 so I better rent for 30 years. Plus in 30 years time definitely will be a war.

[@RB-cs5dw]

Buying a house is a scam, you end up paying double of its value then when you leave it to your kids it gets taxed to death, screw that I’m away to sell my home next year and move into social housing, will pay 1/3 of what I pay now in rent, rest of the money we will enjoy the holidays, plus if we loose our jobs we can not be made homeless where as bank can kick you out

[@maximuswong3092]

Ok boomer

[@WillyJunior]

You can't just "move into social housing". You will find it very difficult unless you're broke, which is worse.

[@kacperpiotrowski7239]

Do not forget that money tommorow is Worth less today, if you discount by 2% (target inflation) the value is less.

[@SlothWindGod]

Wait genuine question how do you get on social housing? Don't you need a low income for that?

[@TasmanianDevil22]

The main reason for buying for me is that everything is down to me to sort out. No reliance on a landlord being reasonable with rent rates and any issues with repairs can be acted on immediately. Security of tenure as well. It is an unwelcome opinion of myself. If you don't own it, you are not in control. Same as gold, if you don't hold it you don't own it. Same principle