Is Mortgage The Same As Rent

Lease Vs Rent: Commercial Real Estate

When you walk past a vacant storefront youll generally see a For Lease sign. In practice, this is the same as For Rent because the business owner will pay rent for the use of the commercial space, whether its office space, a warehouse or a storefront.

However, commercial leases differ based on what is included in the lease. Some commercial leases are all-inclusive. This means that the rent you pay each month to the landlord includes payments for things like your share of property taxes and insurance, plus your share of the cost of maintaining the interior and exterior of the commercial space. This is often called a gross lease or a full-service lease.

Other leases are not all-inclusive. These are called net leases. With a net lease you pay the landlord once a month for rent, plus your share of some of the common charges. Then you may be on your own to set up and pay for things like janitorial services and utilities. While full-service leases are more convenient for the renter, you may save money by finding your own provider for services like cleaning.

When evaluating a commercial lease its always a good idea to be clear on what is included in your monthly payment and what youll need to cover in separate payments, either to the landlord or to service providers. Its also important to be clear on the terms of your lease. For example, if overall taxes on the building increase does the landlord have the right to demand more money mid-lease?

Zoopla: Average Uk Property Price Hits Record Level

· Average British home worth record-breaking £242,000· Housing demand up 50% compared with recent New Year periods· Highest regional price growth in Wales for tenth month running

The average UK house price rose to a record £242,000 in December 2021, according to Zooplas house price index, out today.

The property portal says house price growth was 7.4% in the 12 months to December, and that the price of an average house has risen by £25,500 over the past two years.

It says UK housing demand in January is up by 50% compared with recent New Year periods.

Wales recorded the highest regional annual rate of house price growth for the tenth month in a row, up 11.3% to December. Bringing up the rear was London with growth of 2.6% over the same 12-month period.

Zoopla says that, with hybrid working from home and the office continuing to be the norm for many white-collar workers, the pandemic continues to shape the property market.

It added that the trend for increasing space has further to run, notably for three-bedroom houses outside the London area. Demand for this type of property is four times higher than the five-year average.

Geographically, Zoopla says suburbs remain in the highest demand with Thurrock in Essex and areas around Birmingham, Glasgow and East London proving the most popular.

With city workers slowly returning to offices, the property portal added that demand for flats is at its highest level for five years.

Rents increase at fastest rate on record

Does Rental Income Count When Applying For A Mortgage

Generally, rental income can be counted when youre applying for a mortgage or refinancing an investment property. However, like all other sources of income, it must be properly documented and meet specific qualifying guidelines.

According to Fannie Maes rental income guidelines one of the largest buyers of conforming loans in the U.S. the following criteria must be met:

• You must establish that the rental income is likely to continue
• The property must be a two- to four-unit principal residence property in which the borrower occupies one of the units, or a one- to four-unit investment property

Rental income from a commercial property owned by the borrower, for example, is acceptable if its not from the property being financed.

• Income from the borrowers principal residence, whether its from a stand-alone property or from a particular unit in a multiunit structure
• Income from vacation homes

Provided that your property falls in line with those stipulations, getting your rental income counted is mostly a matter of filling out the right forms and providing the lender with the proper documents. What youll need to provide depends on whether the property already has an established rental history.

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Rightmove: Uk Property Prices Hit Highest Annual Growth Rate For Six Years

• Average UK property prices grow at fastest rate since May 2016
• Average asking price at £341,019 in January 2022
• First-time buyer prices hit record £214,176

Average UK property prices grew at their fastest annual rate for nearly six years this January, according to the latest data from Rightmove.

The property portals house price index showed that average asking prices grew by 0.3% month-on-month, to stand at £341,019 in January 2022.

This contributed to a 7.6% rise in the overall annual growth rate for average house prices to January. Rightmove said the last time this figure was exceeded was when it reached 8.3% in May 2016.

The company added that first-time buyer asking prices reached a record level of £214,176 in January this year, a month-on-month increase of 1.4%.

According to Rightmove, the number of homes for sale per estate agency branch hit a record low of 12 properties in January, down two from the previous month.

Available homes continue to be snapped up at speed. The company said the average time to find a buyer in December 2021 was more than two weeks quicker than in the same month the previous year.

Tim Bannister, Rightmoves director of property data, said: New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market. Early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the new year weve ever recorded.

Update 7 September : Halifax Sees Record Average Uk Property Price At 263000

At a glance

• Average UK property price £262,954, highest on record
• Figure is £23,600 higher than June 2020
• Annual house price inflation eases to 7.1%

Halifax banks monthly house price index for August confirms that UK property prices are continuing to rise, although the rate of annual increase, at 7.1%, is down from the 7.6% recorded in July.

The month-on-month increase was 1.2%.

The bank says the average UK property price stands at £262,954, which is a record high. The previous peak was in May . Demand has been fuelled in recent months by changes to stamp duty rules, including the ending of the tax holiday in Wales and the tapering of relief in England.

You can find out more about stamp duty rates and rules here.

Russell Galley at Halifax said there are other significant factors driving house price inflation: Structural factors have driven record levels of buyer activity, such as the demand for more space amid greater home working.

These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.

Mr Galley added that economic conditions will continue to to support property prices: The macro-economic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels.

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November: Rightmove Full House As October Prices Hit Record Levels Across All Regions And Buyer Types In The Same Month

• Average asking prices in October up 1.8% to £344,445
• Full house with record price levels across all regions and buyer types
• Continued supply shortage pushing up prices

Asking prices of property coming to market increased by 1.8% in October on the previous month, marking the biggest seasonal jump since October 2015.

Last month also saw a full house for first time since March 2007, according to Rightmoves latest house price index. This means that price records were reached across all regions of Great Britain and for all sectors of buyers namely first-time, second-stepper and top-of-the-ladder.

The number of sales agreed was up 15.2% in September, versus 2019, which was the was the last normal market comparison, said Rightmove.

Director of property data, Tim Bannister, said: Competition for property for sale remains hot this autumn, with average prices jumping by almost £6,000 in the month.

Although more properties are coming to market, the level is still not enough to replenish the stock thats being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors.

He added that the full house is an extremely rare event, seen for the last time since March 2007.

Can You Afford The Monthly Mortgage Payments

The greatest difficulty in owning a home is not coming up with a down payment, its being able to afford the monthly mortgage payments. Mortgage payments must be paid each and every month without fail. If you buy more house than you can afford, you will struggle to make the payments. As our neighbours to the south have unfortunately demonstrated, it is easier to get a house then it is to keep it. Recently there have been more foreclosures in the U.S. than at any time in the past 40 years. The amazing thing is that 100% of the homeowners now in foreclosure once qualified for their mortgages. So the issue is not qualifying for a mortgage. It is being able to actually afford a mortgage along with the other costs of home ownership.

Also Check: Do You Need Mortgage Insurance With An Fha Loan

Update 16 August 2021 Rightmove House Price Index

At-a-glance

• Average asking price of properties coming to market down £1,076, a 0.3% dip
• Prices of larger properties slip by 0.8%
• Demand remains high for mass market properties

House asking prices fell for the first time in 2021, according to the latest data from property portal Rightmove.

The firm said the average price of property coming to market in August dipped by £1,076, a decrease of 0.3%.

Rightmove explained that the slight cooling was mainly driven by a 0.8% fall in the price of upper-end, four-bedroom-plus properties, a result of the tapered stamp duty holiday which comes to an end next month.

It added, however, that first-time buyer and second-stepper properties each less affected by the withdrawal of most stamp duty initiatives continued to rise in price by 0.6% and 0.3% respectively.

The portal said that overall demand from buyers remains strong and suggested this could prompt an Autumn bounce in both prices and seller activity.

Tim Bannister, Rightmoves director of property data, said: New sellers dropping their asking prices can ring economy alarm bells, especially when its the first time so far this year.

Its important to dig underneath the headline figures. We are in the holiday season which means that sellers have traditionally tempted distracted buyers with lower prices. Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays.

June: Rightmove Reports Record Average Property Price

• Average UK property worth record £368,814
• Prices rose 9.7% in year to June 2022
• Annual growth strongest in Wales at 15.3%

The average UK property rose in price by 9.7% to a record £368,814 in the year to June 2022, according to the latest house price index from Rightmove.

The property portal says average prices grew by 0.3%, or £1,113, in June, the fifth consecutive month that UK property values have increased.

But Rightmove added that the latest increase was the smallest since January this year and predicted that affordability constraints caused by a growing cost-of-living crisis, rising interest rates and strong inflationary headwinds will have a greater influence on market behaviour in the coming months.

The company says the prevailing economic climate, coupled with more properties coming onto the market, would likely lead to several month-on-month price falls during the second half of the year.

Rightmove predicted that annual house price growth by the end of the year would stand at about 5%.

Last week, the Bank of England raised interest rates to 1.25% in a bid to stave off runaway UK inflation. Consumer prices rose by 9% in the year to April 2022 and the expectation is that this figure will continue to increase in the coming months before levelling-off in 2023.

Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing.

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When Is Rental Income Accepted For Underwriting

If you already own the rental and can document the income that came from it, your income is considered real rather than projected by the lender. Real rental income will be considered by underwriters.

A bank could look at two years of your tax returns to see how much proven income has been generated from your leases.

For your personal tax returns to be sufficient per Fannie Mae youll need to file IRS Form 1040, Schedule E. If you file a business tax return, youd fill out the Rental Real Estate Income and Expenses of a Partnership or an S Corporation form, which is also known as IRS Form 8825.

Fannie Mae will also likely require that an appraisal report is conducted to estimate the propertys market value. If you have a one-unit rental property, this will require having an appraiser fill out a Single-Family Comparable Rent Schedule . For two- to four-unit properties, the appraiser should fill out Form 1025 the Small Residential Income Property Appraisal Report.

March: Nationwide Reports 143% Price Growth In Year To March

• Annual growth up 14.3% from 12.6% in February
• Average property now worth record £265,312
• Prices up by 21% on pre-pandemic levels

Nationwide building societys latest House Price Index says the price of a typical UK home is at a record high of £265,312, with prices increasing by over £33,000 in the past year.

It puts annual price growth at 14.3% in the year to March, notably higher than the 12.6% recorded in February, suggesting the traditional spring increase in demand for properties is well under way.

Prices are now 21% higher than before the pandemic struck in early 2020. Property values have been pushed higher as households seek accommodation suited to changing lifestyles, including more time spent working from home and new commuting routines.

Robert Gardner, Nationwides Chief Economist, said the pace of increase is the strongest since November 2004: The price of a typical UK home increased by over £33,000 in the past year.

The market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs. The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

The Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.

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What Is The Difference Between A Mortgage And A Lease

Mortgages are loans that are used to finance the purchase of a property. The property is used as collateral for the loan, and the borrower makes monthly payments until the loan is paid off.

On the other hand, leases are agreements between a landlord and a tenant. The tenant agrees to pay the landlord a set amount of money each month, and in exchange, the landlord agrees to provide the tenant with a place to live. The length of a lease can vary, but they typically last for one year. So which is better? It really depends on your situation.

Length Of The Rental/mortgage Agreement

Rental agreements can range from one month to multiple years, depending on the landlord and the tenants agreement. As a renter, you have the ability to negotiate the length of your lease to suit your needs and circumstances.

You also have some flexibility as a homebuyer, as your mortgage lasts as long as the term of your loan. While a 30-year mortgage loan is the most common, you can also choose to get a 20-year, 15-year, or 10-year mortgage loan. Some lenders also offer mortgage loans with different, customizable terms.

While its possible to get a shorter-term mortgage, Tobin Bossola, a top-selling Jacksonville real estate agent with more than 14 years of experience, advises against it. He explains that unless youre in a unique circumstance where you know youre buying well below your means, I would encourage someone to take a 30-year mortgage out and then make every effort to pay additional amounts monthly to equal about an extra mortgage payment a year, which does drastically reduce your thirty-year mortgage timeframe.

Being a renter gives you more flexibility to uproot and move, whether its across town or across the country. As a homeowner, you will have less flexibility to relocate. Mortgage agreements are also far more binding than rental lease agreements. You arent stuck forever as a homeowner, but rental leases are easier to end than a home is to sell.

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More Leveraged Properties = More Work

The more properties you own, the more work you have to do to manage those properties. And more leverage typically means owning more properties with thinner margins.

To illustrate with a simplified example, imagine you have $200,000 in cash. You want to invest that money in rental properties, and you have a choice: you can either buy one $200,000 rental in cash, or you can buy five rental properties with a 20% down payment on each.

For the sake of the example well assume the cash flow is the same, at $1,400/month. So, you can either earn $1,400/month from managing one property, or earn $1,400/month from managing five properties.

Which takes more work on your part? Which complicates your tax returns and accounting more?

The five leveraged properties, of course.

In real life, the math usually works out differently, with leverage improving your cash-on-cash returns. But you get the point: more properties require more work on your part.

Lets try one other example, tying it back to retirement. By the time you retire you own ten rental properties, that earn you $2,500/month. Youve built up some equity in them and realize that you could sell five of them and pay off the mortgages on the remaining five properties. By doing so, you cut the property management work in half, but boost your monthly cash flow to $3,000.

Less work, less debt, less risk, fewer headaches, and more cash flow: a retirees dream.