Should I buy or rent?

lukl1983

Hi everyone,

My boyfriend and I are moving in together in August and at first we were planning on just renting a flat but given how house prices have dropped I'm wondering if perhaps we should look to buy. Neither of us have bought before so it would be our first step on the property ladder...

Any thoughts and advice welcome!

Many thanks
lucy

Idiophreak

I'm in a similar position, looking at moving in with the gf in June-time.

Not sure what we'll end up doing, we were gonna rent, but housing's almost *affordable* round here at the moment, so we are going to visit a place to buy in a couple of weeks...

JoeA81

If you have never lived together before then it would be advisable to rent for a period of time before buying. Get used to living with each other before making such a large financial commitment like buying a house. After living with him for 6 months it may completely change your view on what kind of property you might want to buy, let alone completely changing your view on him :rolleyes:

Cannon_Fodder

You'll need to save 10% deposit, minimum, if you want to buy.

More if you want a decent mortgage deal.

Good time to start looking, preparing, saving.

Idiophreak

Certain developments will pay your deposit etc for you at the mo, so it's not 100% true you need to have saved one.

It's probably wise to have saved it, but I don't think it's essential.

Mini_Bear

I agree with JoeA81 buyin a property with some1 is a huge financial commitment and many people dont realise its a giant millstone round your neck til its paid off. best rent first as prices will continue to drop and u can save a big deposit!

Idiophreak

Mini_Bear wrote: »

I agree with JoeA81 buyin a property with some1 is a huge financial commitment and many people dont realise its a giant millstone round your neck til its paid off. best rent first as prices will continue to drop and u can save a big deposit!

Saving a big deposit whilst forking out rent each month isn't going to be too easy for a lot of people though, is it....

I think I've worked out the GF and I would be able to save £200-300 a month MAX if we rented - so to get to 10% on a 150k property (2 bed flat round here) it would take 5 or 6 years.

You're right that a mortgage is a great weight around your neck - so I think I'd rather have it paid off 6 years earlier tbh...

Cannon_Fodder

You may be lucky to find a 5-10% deposit offered, but what rate/fee will your lender want for the 90-95% mortgage? Also, bear in mind the possibility that rates will shoot up by the time a 2 or 3 year deal expires...

Plus, many lenders will require a 20-50% deposit for a new build.

http://www!!!!plus.co.uk/News/2009/02/homebuilder_fury_as_hbos_hikes_deposit_requirements.html
http://www.guardian.co.uk/money/2009/feb/01/banks-mortgages

If they are prepared to gift that amount of deposit, great.

More likely, they will do a 75/25 ownership scheme, where you have to pay the 25% in five/ten years or similar.

Shop around. Hammer them down on price, as these large deposits are because the lenders think new build prices are coming down by that amount.

Idiophreak

Cannon_Fodder wrote: »

You may be lucky to find a 5-10% deposit offered, but what rate/fee will your lender want for the 90-95% mortgage? Also, bear in mind the possibility that rates will shoot up by the time a 2 or 3 year deal expires...

All true - but (at the risk of talking old-school ) it's a foot on the ladder, I guess - and if you can get a foot on for a reasonable cost (we're looking around a 2.8 x multiplier, I think) you can start thinking longer-term about things.

Anyway, we just thought we'd go and see what they have to say...We're both young professionals with relatively high income, we wouldn't mind buying, we wouldn't mind renting...So I guess the ball's in their court, a bit. If they can sell it to me that we could buy for similar money to renting, I'm quite up for that...If not, we're in no rush