If i rent i pay £200, if i go for mortgage i pay £300 for same property and must put 30% down,what is better?
and morgtage payments may be even increased by a bank say in 10 years, while rents r unlikely to be above what people earn.
Answer:
It better to pay for a mortgage. However you have to make sure that you can afford it. Otherwise you would loose too much because of hasty decisions. Go to your bank and talk about your financial situation with them. Shop around for a while before buying anything.
Good luck !
I'll be honest with you. I never liked renting. At least with buying, you gain an asset in your home which you can always borrow against in a time of emergency. With a rent, that money is gone and never comes back
At the end of 10 years of rent all you will have is 10 years worth of rent receipts, after 10 years of buying you will probably have 1/2 your mortgage paid off and you will well be on your way to owning property. Why pay off someone elses mortgage?
A simple answer: try a lease vs. buy analysis tool in the Internet. Reading your question, however, I detect some confusion of inexperience. So I will try to clarify a few things. The property bubble you mentioned (increase in value of real estate) may be good if you have the money to invest today, using a fixed rate mortgage loan. For instance, assuming a 30% down payment (seems high) you would finance 70% at 6.5% fixed for 30 years. Every year you would be accumulating equity by making your monthly mortgage payments. You also accumulate equity faster by virtue of the property appreciation (your 25% property bubble). However, you must consider all the ownership costs in the evaluation model: property maintenance, insurance, taxes, etc., as well as the tax exemptions or write offs as allowed by local tax authorities. Owning your own home is almost always a good investment, if you can afford it. Renting is only a necessary expense for most who can not purchase a home (the majority).
It is better to be a homeowner than a renter. When you rent an apartment, your payment goes down the drain before your eyes, whereas if you own the house, you are making payments and expect to own your house after a certain number of years. Also, the interests are tax-deductible.
different mortgage solutions exists, I have outlined some below
Note : I would suggest you read :
http://umgarticles.atspace.com/mortgage..
Pension Plan
Using a pension plan to accumulate the balance of your mortgage is a tax free saving scheme. The balance of your house will be saved over a period of time until you can pay your final balance. If you do intend to use a pension fund to save for the balance of your house, consideration should be taken into account to open another pension fund for retirement purposes too.
ISA Plan
With an ISA plan you invest in stocks and shares via an Individual Savings Account (ISA) - which is a tax-free method of saving. This method of saving may not be suitable for most borrowers. Before considering this option you should consult with an independent financial adviser.
Endowment
An endowment is still the most common type of interest only mortgage which also provides life assurance cover and a fixed payment for investment. The endowment policy along with the interest only mortgage should in effect end at the same time, leaving you with the ownership of your home and nothing to pay. Endowments have undergone much criticism; this is due to investors being promised high returns from their investments. However lately this has not been the case, borrowers have found their investments have been as good as expected and a shortfall in the end amount of invested cash will not match the amount owed on the current property.
Taking into account the recent problems that have arisen regarding endowment policies it is worth remembering that returns on endowment policies have been pretty good, however you do need to see the term out in full. Also endowments do provide life assurance as part of the actual policy, so in the unfortunate event of a death the mortgage balance is paid in full.
Advantages of an interest only mortgage
• Your investments and savings could accumulate more than the required amount to cover the final payment; this could leave you more cash for your own personal use.
• Some plans have good tax benefits and help reach the required amount it a quicker and cheaper rate.
Disadvantages of an interest only mortgage
• In the unfortunate event of your investments not acquiring the designated amount of cash to cover the loan repayment, the investor could face a shortfall which they will then need to pay. If you are worried about a shortfall on your investment, you should keep in touch with your investor and request regular updates on the situation of your endowment. If the worst comes to the worst, you can increase payments to compensate for the loss of investment.
• Cashing in your endowment, ISA or pension could have adverse effects on the amount of money you have saved over the past however many years. If you do decide to cash in any existing policies you may be subjected to a penalty, this could be a cash amount specified by the investment company/lender. Please seek professional advice if you are worried about the end results of your finances, don’t be too hasty as most policies accumulate more of the cash in the final year
for a complete informational package I suggest you visit one of the many mortgage informational sites the best free one in my opinion
http://umgarticles.atspace.com/mortgage..
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