Should I buy or rent but how?
Where do I get the money from?
We all hear the issues of people struggling to get deposit’s together to buy houses and then banks are not willing to lend as they feel these people can’t afford them – really?
In essence, we have two major issues here and these need to be addressed in two very simple easy steps by the Government and the Bank of England…..but neither have the ‘Balls’ to does this! (So to speak!)…..
To rent a place….
Firstly, you need to be assessed by a reference/credit check per person! This can be as much as up to £195 per person and then you may also have an application fee of up to £250 and in some cases, some agents may even charge for children! Now whether you can get this for less or not but let’s say all in for £250, here is the start…
Then you need a deposit and this can be dependent on results of the above ranging from a month, six weeks, two months or three months….
Then you may also need a month up front too….
Say, let’s say the rent is £1,000 and you are couple plus they want two months deposit this could cost you £3,000 plus say the application of £250, that is a total of £3,250 even before you walk through the door!
An important thing to remember is that the application is not a Passport! So, if the place fall’s through and you can’t find another place, you then move to another agent and you have to pay an application fee all over again! Potentially, if you can’t find a place, you could go through to two or more agents which means at least £500 or more and with no house…..
Buying a house….
OK – the days of 100% mortgages have disappeared but if you are lucky you may get on a Government scheme to help you to buy or a shared purchase and failing that, you may need to find a deposit of 5% (if you are lucky) or in most cases 10% and above…..
So buying a house, let’s say (if you can find one) around £150,000, you could need to find anywhere £7,500 but in most cases £15,000 and above…..
Plus with changes to finding a mortgage or arranging a mortgage – you will need to involve a broker which could be £1,500 and above before solicitors and survey fees! So, you have just kissed goodbye to possibly £2,000 and that is before stamp duty/taxes (if applicable) and removal fees!
Then dependent on your credit history – the choices of getting a mortgage may vary, thus meaning a choice of interest rates based on your credit rating with the High Street lenders. Failing them based on your report, you will have to choose another lender and in some cases if your credit history is poor, you will be placed with Sub-Prime Lenders who charge more than double High Street Lenders!!
And here is the issue……
- Renting can be classed as dead money (and yes here in the United Kingdom we want to own our own place, more than anywhere else in the world) and the cost can be so high with rental payments being more than mortgage payments!
- If you have bad credit, you don’t get the best mortgage rates on offer and tend to go higher thus meaning higher interest rates which means higher mortgage payments
In both the cases above, the situation creates the issue of debt increasing and people getting into financial trouble as they are being forced to pay more money than they need to.
Thus, high rents means you struggles to pay bills, so you juggle your money to pay the rent and then other bills in order of importance and this then affects your credit rating. Now these rents are high and it could that these rents is driven high by agents asking high prices and in a lot of cases, the rent can be more than double the mortgage!
So with Letting/Estate agents driving up prices whether be for rental or purchasing the property, how can people afford to rent or buy as a realistic rate these days without getting into debt?
Here is an example for you to consider……
I was speaking to the cashier in my Building Society recently and she said she was moving. I commented that no doubt she got a deal on her mortgage with Building Society with staff discount and she said no. It transpired that with what her and her partner earn, the best mortgage they could get was for £138,000 and they would need at least a 10% deposit. Yet, as she said, there was no where within traveling distance of where they both worked, they could buy for that amount.
Now here is the kicker……
She then explained, that the rent they were paying for their flat, if this was changed to a mortgage payment, they would be paying for £320,000 mortgage! Now explain if that is fair……
In summary, yes we could blame debt issues on people not paying their bills when they are due. Yet what are their paying for their rent or mortgage? Is this at high rates which is creating their bad debt position? Are banks/building societies charging too wider range of rates which is fueling this bad debt issue…..
Furthermore, could the issue be created here with Estate and/or Letting Agents? We see more and more of these opening each and every week – how many do we need? With more and more appearing, they all need to earn wages and pay for the running costs of their business – so this doesn’t help at all. Have you noticed that Estate and Letting Agents are normally always on the High Street or very prominent positions – thus meaning they are paying very rents for their offices! With them all trying to get business, they will be quoting higher sales prices or rental rates to secure the business and thus the seller or landlord wants the most money too, so they choose the Agent offering the most…..
So in summary, are Estate/Letting Agents responsible for driving up prices which create high prices for people wanting to rent or buy the properties or is it the banks/building societies both offering such wider ranges of rates which then create high rates and making/creating debt issues…who do you think is to blame……
And just to give you something extra to think about……..
Britain’s smallest £1,000,000 home up for sale… … …. – Monday 10th February 2014
UK’s most expensive parking space sold for £400,000… … …. – Thursday 13th February 2014
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