I rent my own property via an interest only mortgage (don’t worry – I have advised myself on suitable investment vehicles for repayment of the capital) and my mortgage payment is half the amount that a similar property a few doors away is let for. The upkeep of my property is not £600 per month.
When I pass away, and assuming we don’t have a massive house price slump in the interim, my beneficiaries may pay inheritance tax but only because they are receiving £285,000 tax free initially. Would my landlord make an ex-gratia payment to my beneficiaries to acknowledge my 40-plus years of loyal renting?
Buying is also a useful tool in anyone’s retirement planning. You rent for 30 plus years (via your mortgage which, as Richard accurately states, is effectively the property of the lender during that time) and then through repayment, down-sizing, a lifetime mortgage or even a combination of all three, you live rent-free during your golden years.
I would definitely agree with Richard that perhaps lenders could assist first-time buyers more by not granting large borrowing capacities. However, affordability calculations have corrected the anomaly that income multiples were. Why should buyers be limited by the same borrowing calculations when in 1998 my £32,000 mortgage cost £241 per month, whereas in 2001 my £80,000 mortgage cost £233?
Some people will over-stretch themselves, whether advised or not, whether buying or renting.
Steve Langrick
Ashley Law (Ashbourne)
