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  • FIRST POST
    • ellepotter
    • By ellepotter 7th Oct 17, 6:17 AM
    • 9Posts
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    ellepotter
    To buy or keep renting ?
    • #1
    • 7th Oct 17, 6:17 AM
    To buy or keep renting ? 7th Oct 17 at 6:17 AM
    Hi Folks,

    My father is going to be giving myself and my siblings a certain amount of money we can use as a deposit for a property or we can use the funds for our children's savings. At the moment we are unsure what is the best thing to do.

    We currently rent and if we were to buy this is the house we would want and we know our landlord would sell. As our annual income is not huge we could access shared equity from the Scottish government.

    Now it gets a little complex as my husband is in his early 60's and I am in my early 30's. Our youngest child is not yet one. The reality is I will potentially be left to pay the mortgage due to our vast age difference. As best as we can work out I would potentially be worse off on my own in the future, certainly as our children reach 16. My husband has minimal life insurance as a few health conditions put his premium sky high.

    Obviously we hope my husband is with us for another 30yrs but it might only be 10 yrs. I am also aware the older my husband gets the harder it will be to get a mortgage.

    I like the idea of investing in our own property as a long term investment for the children and the fact I have a home we could potentially improve over time, but the future is uncertain so maybe we are better to rent and split the money between the children for when they are older?

    Any thoughts and opinions would be welcome.

    x
    Last edited by ellepotter; 07-10-2017 at 6:22 AM.
Page 1
    • Mickygg
    • By Mickygg 7th Oct 17, 7:07 AM
    • 1,322 Posts
    • 1,037 Thanks
    Mickygg
    • #2
    • 7th Oct 17, 7:07 AM
    • #2
    • 7th Oct 17, 7:07 AM
    In this situation you would need to see a mortgage advisor to see what you can borrow due to your husbands age.
    I would suggest you would want a mortgage that you could cover on your own salary for when your husband stops working. This may mean you are unable to buy but it depends just how much you need to borrow verses how much you can.
    • Pixie5740
    • By Pixie5740 7th Oct 17, 8:37 AM
    • 11,001 Posts
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    Pixie5740
    • #3
    • 7th Oct 17, 8:37 AM
    • #3
    • 7th Oct 17, 8:37 AM
    As above, you really need to go and see a mortgage broker to find out if buying is even an option before making a decision.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Car1980
    • By Car1980 7th Oct 17, 9:06 AM
    • 215 Posts
    • 97 Thanks
    Car1980
    • #4
    • 7th Oct 17, 9:06 AM
    • #4
    • 7th Oct 17, 9:06 AM
    Presumably you’d be left paying the rent on your own though, which would more than any monthly mortgage payments.
    • bouicca21
    • By bouicca21 7th Oct 17, 9:09 AM
    • 3,149 Posts
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    bouicca21
    • #5
    • 7th Oct 17, 9:09 AM
    • #5
    • 7th Oct 17, 9:09 AM
    How would mortgage payments compare to the rent you already pay? Does your husband expect to get a private pension, with benefits for a widow and/or a lump sum? Is the house big enough that if the worst happened you could get a lodger?

    Renting is always insecure - and if your landlord would be willing to sell to you, he/she may well be willing to sell to someone else. So is buying if you can't afford the payments. The question you have to ask yourself is which option long term is the most insecure.
    • 00ec25
    • By 00ec25 7th Oct 17, 9:19 AM
    • 5,027 Posts
    • 4,373 Thanks
    00ec25
    • #6
    • 7th Oct 17, 9:19 AM
    • #6
    • 7th Oct 17, 9:19 AM
    As our annual income is not huge we could access shared equity from the Scottish government.
    Originally posted by ellepotter
    sorry know nothing about the Scottish system. I assume you would be unable to afford to buy 100% of the current property, so who would be the shared owner? Scottish Govt? What would be the terms of the rent they would charge for the bit they own?

    It is likely you will be a widow by the time your (current) youngest reaches their early 20's and thus leaving home? What would you expect your financial position to be by that time, still working? Still on low income? With/without widow's pension from your husband? bearing in mind a "typical" mortgage would be 25 - 30 years, and assuming you do indeed remain in that property for the rest of his life, will you be able to maintain any standard of living when you are alone?

    Without knowing your exact financial circumstances it is impossible to say which is better: money for the kids (with the risk you may need to spend it yourself in the future) or (shared) ownership that becomes unaffordable in the future and you lose your home.
    Last edited by 00ec25; 07-10-2017 at 9:38 AM.
    • Pixie5740
    • By Pixie5740 7th Oct 17, 9:29 AM
    • 11,001 Posts
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    Pixie5740
    • #7
    • 7th Oct 17, 9:29 AM
    • #7
    • 7th Oct 17, 9:29 AM
    I think that the OP means to use the LIFT scheme.

    http://www.gov.scot/Topics/Built-Environment/Housing/BuyingSelling/lift/FTBOMSEP

    However, one of the criteria is that the property is for sale on the open market which this property is not. Yes the landlord could put the property on the market but it is very rare for landlords in Scotland do to this with tenants in-situ unless the property is marketed for investors only and sold to an investor due to the house buying and selling process in Scotland.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • getmore4less
    • By getmore4less 7th Oct 17, 9:43 AM
    • 29,995 Posts
    • 17,927 Thanks
    getmore4less
    • #8
    • 7th Oct 17, 9:43 AM
    • #8
    • 7th Oct 17, 9:43 AM
    The real comparison to rent is the interest only + the costs of owning(g having to do own maintenance.)

    Any capital paid off is savings.

    if affordable even on very long terms(op could do 35y to 70) the OP is likely to be better off long term.

    viability and cashflow analysis will be needed.

    Most people stumble at the deposit hurdle looks like OP has that one covered.

    How much is the place worth and what is the current rent?
    Last edited by getmore4less; 07-10-2017 at 9:45 AM.
    • ellepotter
    • By ellepotter 7th Oct 17, 9:58 AM
    • 9 Posts
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    ellepotter
    • #9
    • 7th Oct 17, 9:58 AM
    • #9
    • 7th Oct 17, 9:58 AM
    Thank you for all the replies. A few points raised we had not considered.

    Mickygg and Pixie - We are currently engaging a broker to see what is possible mortgage wise.

    Car1980 and Bouicca - As it stands at the moment our rent would be comparable with mortgage repayments. This is mainly due to the fact we have been looking at 15 year terns because of my husband's age.

    My husband has no private pension just the full state one at 66. I believe I would get a short-term bereavement allowance for 18mths plus the life insurance which would only pay roughly two years off a mortgage. A lodger would be possible once a few children had moved out as we have a fair size house.

    00ed25 - As I understand it we would be the sole owners as the Scottish Government take an equity stake in the property. If we decided to sell in the future they get there share back plus profit if there is any. There is no rent or fees on the share we don’t own.

    Gosh this sounds really depressing but it is certainly possible I could be a widow before my youngest leaves home. Myself and my husband are self employed running our own business so I would see a small drop in my income in the long-term if anything happened to him. I would plan to keep our business going into retirement (health allowing) as its home based. Long term still a relatively low income.
    • ellepotter
    • By ellepotter 7th Oct 17, 10:03 AM
    • 9 Posts
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    ellepotter
    Pixie - Yes we queried the open market aspect. Apparently, they are happy with a Gumtree advert type of thing with the house saying under off as long as it shows the property details and price.
    • ellepotter
    • By ellepotter 7th Oct 17, 10:08 AM
    • 9 Posts
    • 0 Thanks
    ellepotter
    getmore4less - Our landlord has indicated a price between £175,000-180,000. Current rent £550. We would be looking to take a 60% stake.
    • ProDave
    • By ProDave 7th Oct 17, 10:58 AM
    • 317 Posts
    • 388 Thanks
    ProDave
    MSE's mortgage calculator https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results
    Says if you borrow £175K interest only the monthly interest payment would be £437 so LESS than your current rent.

    You won't be borrowing that much as you will deduct the deposit you have been gifted and whatever part share the SG take on.

    you say 60% stake, so that brings it down to £105K borrowed, again less the deposit you have That's £262 per month interest on interest only or £498 per month on a 25 year repayment.

    It's a no brainer. Buy it.

    In 25 years, when you are thinking of retiring, it will be all yours, no rent to pay in retirement.

    If you have been talking to the landlord about buying it, and then choose not to, there is the chance he may have got used to the idea of selling it, so if you don't buy it he may well choose to put it on the market.

    Let's hope the mortgage broker finds you a suitable mortgage offer.
    • ellepotter
    • By ellepotter 7th Oct 17, 11:53 AM
    • 9 Posts
    • 0 Thanks
    ellepotter
    ProDave - Yes of course you have a valid point regarding our landlord still wanting to sell it if we do not buy it. My only small reassurance is that we briefly mentioned the possibility buying it a year ago (at that point we had a tiny deposit which we will now spend on legal fees etc) and he has not indicated he would need to sell it if we do not buy it.

    Until the broker gets back to us I am unsure if we could do a joint mortgage of 25 years as I believe a lot of lenders cut of age is 75 yrs old. That would potentially give us a 15 year repayment mortgage making it more in line with what we pay on rent now.
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