To buy or keep renting ?

ellepotter · 7 October 2017 at 6:17AM

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

Mickygg · 7 October 2017 at 7:07AM

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 · 7 October 2017 at 8:37AM

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.

Car1980 · 7 October 2017 at 9:06AM

Presumably you’d be left paying the rent on your own though, which would more than any monthly mortgage payments.

bouicca21 · 7 October 2017 at 9:09AM

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 · 7 October 2017 at 9:19AM

ellepotter wrote: »

As our annual income is not huge we could access shared equity from the Scottish government.

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.

Pixie5740 · 7 October 2017 at 9:29AM

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.

getmore4less · 7 October 2017 at 9:43AM

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?

ellepotter · 7 October 2017 at 9:58AM

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 · 7 October 2017 at 10:03AM

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 · 7 October 2017 at 10:08AM

getmore4less - Our landlord has indicated a price between £175,000-180,000. Current rent £550. We would be looking to take a 60% stake.

PLEASE READ BEFORE POSTING

To buy or keep renting ?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free