Hey Arjun, Another great video! Totally agree that a house you live in is not an investment. If you live in your house long enough, the gains will eventually average out. By the way, did you intentionally leave out the capital gain tax on sale of a property? Mathematically it is a loss but as per government you have made a profit and have to pay tax on it, further adding to your real losses.
Yep agree with that. Yes capital gains tax is another factor. Technically unless you keep track of those expenses for 25 whole years people would have recorded this as a profit and had to pay capital gains taxes on this. Pretty painful in my opinion! Glad you enjoyed it!
Hi Arjun, Thanks for the nice video. I quite disagree about the calculation while extrapolating it into the general scenario. Let's assume monthly mortgage value equals rent value or slightly high, at 25 years the savings that come from the rent option will be very low. But the house could sell more or less similar value and the cash in hand in 25 years will be high.
Thanks for your comment - this is just one scenario. But Rent and mortgage are rarely the same. You can check this online on Zoopla or Rightmove. If they are indeed the same then yes it absolutely makes sense for a person to buy. I shared my video based on my assumptions, one of which includes mortgage being higher than rent and the difference being put into the stock market. There will always be multiple scenarios and it is difficult to model for all assumptions.
Are you saying that house of 500k will yield 1400 a month in rent? I think that's not correct. In my area house of 500k will easily yield 2000 to 2300 per month. Also why is housing appreciation at 2% in your calculation when historically it was at 4% inflation adjusted? Maybe I missed it.
The link to the spread sheet should be in the video description; you’re welcome to play around with it. Rent yields are subjective and area/house dependent - I’ve used my house as a reference point. many factors go into deciding what situation works for whom.. I’m not here to dictate what other people should be doing, I’m only presenting the data and facts as I see them.
@@TheNimbleNomad Apart from this in my view, in this case we can have 2 options 1.To live in UK for 10-15 yrs then shifting to home country or quitting there coz of financial freedom. 2. U have to live there for 25yrs+ and let the kids be educated and grown up as UK citizens If the decision is 1, it is good to take a rented house; provided you have to reinvest the difference in mortgage and rent into stock market or mutual funds. Also taking a mortgage at your late 20s or even 30s is more like a burden. (Depends on the financial stability of the person) If the choice is 2, then owning the house will be good rather than renting for sure, Period. Because at later point of time, there will be real estate boom and the land property may increase. Taking that into consideration owning the house will be good. And I think u are from Indian origin so Index mutual funds gave 15% CAGR growth in the past. There are better funds as well with 20%+ growth.
I’m currently going through this whole dilemma myself. I have to educate my daughter, but finding a house to buy right now is like searching for a needle in a haystack. The market is absolutely booming for property in the UK, people talk about buying a property for £600-700k, in my head this is a $1M. I have not even earned this kind of money in my lifetime yet. To your point of argument, people are under the assumption that property prices only go up.. I disagree with this, when you have deflation and/or recessions then you can end up with negative equity where the bank is asking you to pay the negative equity difference or foreclose. At the moment I like having flexibility, the schooling system is not so straightforward and I can move if I need to find a good school for my daughter.
I am really thinking about buying a flat because I do not like to stay with flatmates anymore. I have a full time 20k per year and I am going to study 3 years full time at Uni to reach my goals. I cannot rent alone at 450 average in my area, but I could get a better quality flat for about 250 pcm. I have a decision in principle and all, but have some doubts. Would you suggest to keep renting or buy a flat if I plan to live there for about 4 years and then sell and move away? I already know that I do not plan to live here.
I think you need to future proof beyond 4 years. You may think 4 years is a long time but honestly it’s not when it comes to buying, you’ll barely be paying off any of the capital. Mortgages work where they front load the interest payment.. you only start paying the capital / principle in year 3 and 4 realistically
I can’t provide you advice on buying- but keep in mind buying a house is a long term commitment. So think about how you will find payments whilst in education and what happens if you can’t get a job after you finish studying (maybe there is a recession, etc.?)
Yeah it’s more about your own opinion more than advising, I think I’m going to buy it and sell it as soon as it gives me a good amount of return (even if I don’t gain, be like if I’ve lived for free because I get the same I paid, back). But I’m still considering stay where I am and finding a new flat mate to share in the city, and start to think again to buy when my focus will be 100% to work and make money and not to education. Thank you very much for your quick replies!
I think you are assuming that the price of property always goes up.. I wouldn’t be so sure about that. Use the land registry data and check what house appreciation has been in your area and then decide. Many factors into buying like affordability, interest rates going up etc. I would rather invest in the stock market, there is more capital appreciation there if you have spare cash.
Hi Arjun. Nice video and explanation. I am currently living in UK and rents are like super high beyond my budget for renting 2BHK. But with shared ownership scheme the same house is affordable w.r.t mortgage amount vs rent amount. What is your opinion on that? I do intend to stay longer in UK (8-10 years) but not going to stay too long (25 years).
I think it depends on what you do with that money. Don’t think of buying a house for just now but for your future needs, schools for your kids and other factors with work etc make a huge difference as I am finding out myself. I personally don’t think it’s a good decision to buy especially given how expensive buying a house is. Re shared ownership I would think twice before doing that the help to buy and shared ownership schemes seem attractive but you need to factor in how easy is it to sell or settle this. I’ve done videos on this as well.
Hey Arjun, what is the meaning of this statement seen in UK job ads : commonwealth citizens with right to work in UK , in nationalities eligible to work there ? Are Indians eligible ?
Hey Arjun, Another great video! Totally agree that a house you live in is not an investment. If you live in your house long enough, the gains will eventually average out. By the way, did you intentionally leave out the capital gain tax on sale of a property? Mathematically it is a loss but as per government you have made a profit and have to pay tax on it, further adding to your real losses.
Yep agree with that.
Yes capital gains tax is another factor. Technically unless you keep track of those expenses for 25 whole years people would have recorded this as a profit and had to pay capital gains taxes on this. Pretty painful in my opinion!
Glad you enjoyed it!
Hi Arjun, Thanks for the nice video. I quite disagree about the calculation while extrapolating it into the general scenario. Let's assume monthly mortgage value equals rent value or slightly high, at 25 years the savings that come from the rent option will be very low. But the house could sell more or less similar value and the cash in hand in 25 years will be high.
Thanks for your comment - this is just one scenario.
But Rent and mortgage are rarely the same. You can check this online on Zoopla or Rightmove.
If they are indeed the same then yes it absolutely makes sense for a person to buy. I shared my video based on my assumptions, one of which includes mortgage being higher than rent and the difference being put into the stock market.
There will always be multiple scenarios and it is difficult to model for all assumptions.
@@TheNimbleNomad Fully agree. Anyway, your video helps people to think twice before take a decision.
Something to think about 👍
Are you saying that house of 500k will yield 1400 a month in rent? I think that's not correct. In my area house of 500k will easily yield 2000 to 2300 per month.
Also why is housing appreciation at 2% in your calculation when historically it was at 4% inflation adjusted? Maybe I missed it.
The link to the spread sheet should be in the video description; you’re welcome to play around with it.
Rent yields are subjective and area/house dependent - I’ve used my house as a reference point.
many factors go into deciding what situation works for whom.. I’m not here to dictate what other people should be doing, I’m only presenting the data and facts as I see them.
For flat, the appreciation is 3% and for a house 4-5% right in UK ? 🤔
I’ve just done a 4% avg on all property. You can use the land registry data to see the e difference
@@TheNimbleNomad Apart from this in my view, in this case we can have 2 options
1.To live in UK for 10-15 yrs then shifting to home country or quitting there coz of financial freedom.
2. U have to live there for 25yrs+ and let the kids be educated and grown up as UK citizens
If the decision is 1, it is good to take a rented house; provided you have to reinvest the difference in mortgage and rent into stock market or mutual funds. Also taking a mortgage at your late 20s or even 30s is more like a burden. (Depends on the financial stability of the person)
If the choice is 2, then owning the house will be good rather than renting for sure, Period. Because at later point of time, there will be real estate boom and the land property may increase. Taking that into consideration owning the house will be good.
And I think u are from Indian origin so Index mutual funds gave 15% CAGR growth in the past. There are better funds as well with 20%+ growth.
I’m currently going through this whole dilemma myself. I have to educate my daughter, but finding a house to buy right now is like searching for a needle in a haystack.
The market is absolutely booming for property in the UK, people talk about buying a property for £600-700k, in my head this is a $1M. I have not even earned this kind of money in my lifetime yet.
To your point of argument, people are under the assumption that property prices only go up.. I disagree with this, when you have deflation and/or recessions then you can end up with negative equity where the bank is asking you to pay the negative equity difference or foreclose.
At the moment I like having flexibility, the schooling system is not so straightforward and I can move if I need to find a good school for my daughter.
@@TheNimbleNomad 🙌 Anyways, Good content brother!!
I am really thinking about buying a flat because I do not like to stay with flatmates anymore. I have a full time 20k per year and I am going to study 3 years full time at Uni to reach my goals. I cannot rent alone at 450 average in my area, but I could get a better quality flat for about 250 pcm. I have a decision in principle and all, but have some doubts. Would you suggest to keep renting or buy a flat if I plan to live there for about 4 years and then sell and move away? I already know that I do not plan to live here.
I think you need to future proof beyond 4 years. You may think 4 years is a long time but honestly it’s not when it comes to buying, you’ll barely be paying off any of the capital. Mortgages work where they front load the interest payment.. you only start paying the capital / principle in year 3 and 4 realistically
I can’t provide you advice on buying- but keep in mind buying a house is a long term commitment. So think about how you will find payments whilst in education and what happens if you can’t get a job after you finish studying (maybe there is a recession, etc.?)
Yeah it’s more about your own opinion more than advising, I think I’m going to buy it and sell it as soon as it gives me a good amount of return (even if I don’t gain, be like if I’ve lived for free because I get the same I paid, back). But I’m still considering stay where I am and finding a new flat mate to share in the city, and start to think again to buy when my focus will be 100% to work and make money and not to education. Thank you very much for your quick replies!
I think you are assuming that the price of property always goes up.. I wouldn’t be so sure about that. Use the land registry data and check what house appreciation has been in your area and then decide.
Many factors into buying like affordability, interest rates going up etc. I would rather invest in the stock market, there is more capital appreciation there if you have spare cash.
Hi Arjun. Nice video and explanation. I am currently living in UK and rents are like super high beyond my budget for renting 2BHK. But with shared ownership scheme the same house is affordable w.r.t mortgage amount vs rent amount. What is your opinion on that? I do intend to stay longer in UK (8-10 years) but not going to stay too long (25 years).
I think it depends on what you do with that money. Don’t think of buying a house for just now but for your future needs, schools for your kids and other factors with work etc make a huge difference as I am finding out myself.
I personally don’t think it’s a good decision to buy especially given how expensive buying a house is.
Re shared ownership I would think twice before doing that the help to buy and shared ownership schemes seem attractive but you need to factor in how easy is it to sell or settle this. I’ve done videos on this as well.
Hey Arjun, what is the meaning of this statement seen in UK job ads : commonwealth citizens with right to work in UK , in nationalities eligible to work there ? Are Indians eligible ?
You need to have a passport which allows you to live and work in the UK. This means citizens of British overseas territories typically.