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shadows of echoes of memories of songs
Don't shop me now
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beingjdc From: beingjdc Date: December 1st, 2008 09:19 pm (UTC) (Link)
Say I have £10,000 a year to divide between my housing costs and my savings.

If I rent for £400 a month, I am left with £5,200, on which I can only earn tax-free interest on £3,600. However If I pay a mortgage at interest of £400 a month, I can bung the remainder into overpayments, which will reduce my mortgage interest by the full amount that I would gain from tax-free savings.
gareth_rees From: gareth_rees Date: December 1st, 2008 09:32 pm (UTC) (Link)
I understand your example, but there is an obvious objection to this being an injustice: namely, that your example assumes that £400 rent gets you an equivalent amount of house to a mortgage costing £400 interest. This certainly isn't the case at the moment: houses are priced high relative to rents. Even in a non-bubble market, you'd expect the tax advantage of paying off a mortgage to be priced into the cost of houses.
beingjdc From: beingjdc Date: December 1st, 2008 10:00 pm (UTC) (Link)
They were priced high relative to rents until the Bank of England's latest insanity. Now, our rent is equivalent to a purchase price (at 5% which is available with a decent deposit - existing tracker customers paying less) of £296,000 - on a flat whose twin fetched only £285k last year.
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