Owning a house: your views?

northantsandy

After my divorce, I did the 'normal' thing and bought somewhere else.

I can cover the mortgage, but I've been looking around. I can rent a property well beyond my purchasing power but for a few hundred less per month than I pay out per month in mortgage.

A couple of interest rate payments would see me completely stuffed so I'm considering getting rid of the mortgage and renting.

Everyone has had the knee-jerk don't do that you need to be on the property ladder. Why? In Germany everyone rents and thinks nothing of shoving an expensive kitchen in themselves.

I am erring on the quality of life would be better without the mortgage - what is your view on the buying v renting debate?

Jay1b

It depends how old you are really. Could you afford to rent this big flash house when your retired at 65? Or would you have to move to a much smaller place?

Do you have kids? Wouldnt it be nice to leave them something?

Buy......

northantsandy

I'm 36 and earn a good wage but can't even save at the moment....

homer_j_3

have you reviewed your expenditure recently? You may be able to save a few hundred £ per month on a remortgage, review of life policies and insurances (both home and car). Have you looked on the debt free wannabe thread to look at reducing your monthly outgoings as much as possible to provide that bit extre breathing space in your monthly expenditure?

I understand what you are saying and the reasons you are saying but Jay1b makes a valid point and I would guess that if you could create an extra few hundred £ per month then you would be perfectly happy to continue paying your mortgage debt rather than a landlord and not seeing any return for it.

jockettuk

trouble with renting is that unless your very lucky and get a council house or longterm let then most rentals are short term ie 6 or 12 months, do you want to be moving around every few months yrs. like said before can you afford the rents when your older when infact your morgage could be paid off and you rent morgage free.. im getting divorced and im buying again as i want the stability it brings the choice i can have and also knowing that i have something to leave for my daughter.

reformedspender

I have very mixed feelings about home ownership too. We rent but are currently saving for a deposit. The problem with renting is that you don't feel like the house is really yours and don't want to invest in the garden, decorating and so on.

However, a few years ago my parents sold the home I grew up in, largely because they couldn't keep a property of that size going anymore. They scrimped and saved all their lives to own that house and forgoed holidays and other things in order to keep it going. They even got themselves horribly in debt after my father lost his job and they couldn't keep up with the mortgage. I can't help but think that it's just not worth it and I am finding it hard to shackle myself to mortgage as well.

In terms of leaving something to your family, well, once again family experience leaves me wondering whether any of that will happen in the future anyway. My grandparents home was sold and all their savings depleted in order to pay for their care home costs. They were very tight-fisted all their lives and kept everything they earned in the bank. Their £30,000 life savings have gone now and their £122,000 home was sold - my mum and her brother will inherit just £10,000 each - if they are lucky (excluding funeral expenses).

I think having a home to call your home is important, but I am afraid of becoming a slave to it.

Prudent

What kind of mortgage do you have? Have you considered an interest only mortgage? It is a lot cheaper than repayment and may save the couple of hundred pounds you want. At the end you will not have paid off the mortgage (and as renting you will have no house that you own outright). However you may well make some money -perhaps good money- on capital growth.

I found myself on my own at 36 and like you found the whole mortgage thing scary at first. I went to the opposite extreme and saved excessively to pay off mortgage as I had a child and wanted a secure home for her (see post I have just done on this).

cattie

I've been in the situation of becoming ill, consequently losing my job & facing the fear of not being able to keep up the mortgage payments & losing my home. How desperately I wished that I'd been renting a property, and having the security of knowing that my rent would be paid for.

I was lucky in that I survived only by taking in a couple of students as lodgers, which helped pay the mortgage. It wasnt an ideal situation, especially as I was actually sleeping on an airbed in the lounge, but at least it was an opportunity to make the house help pay for itself.

I've since felt that renting can have huge advantages over having a mortgage & the associated costs of maintaining the property, especially if you are a single person with nobody to fall back on should hard times come.

But the advantage of property owning over renting is choice. The fact that you can move if you want to & chose where to go & what type of property you want to live in. And you have the freedom to take in a lodger or two should you decide you need to.

exil

The difference between mortgage and renting can be summed up below.

Say you're aged 30. Couple with 2 kids.

Option 1. Rent. 3 bed semi - £700 a month (North of England). That is, £8,400 a year.

You are in the house for 25 yrs (you then move to a flat). Assume inflation is 3%
and your rent will rise that amount each year. Total rent paid will be about £340,000.

Option 2. Buy. 150,000 (again in the North). Deposit, 30,000. You will lose
the interest on this over the 25 yrs. 5%, £36,000 altogether.
Mortgage. 120,000. 6%. £800 a month. £9,600 a year, over 25 years. £230,000.
Paying over the odds to shorten the period will reduce this amount.

Total paid £266,000. Saving - £74,000.

With Option 2 you now have a house, and can live rent free. You can downsize and take the capital gain (assuming house price inflation is above general inflation, this could be substantial) and invest it. Or leave it to yr kids: or use it to pay care fees in a home of yr choice, rather than what the council choose

You can also remortgage to fund home improvements, children's education,
whatever.

Option 1 - you're already £74,000 poorer than with option 2 and you STILL have to pay rent until you head for the crem.

Of course this all depends on how rents and mortgage interest rates, and inflation,
changes over the years. Mortgaging is higher risk as Income Support payments are rather mean should you face a long period out of work (redundancy, illness). However - this means you sell the house, and go into rented accom - so you're in a way no worse off than if you'd rented from the word go.

On the other hand - if you're single, have no intention of leaving a penny to relatives,
would rather save money now than in the future, renting could still be ideal.

northantsandy

I'm facing bankruptcy and am in -ve equity. My mortgage payment/insurance is over 1000 pcm. I can just about afford the place if I don't want a life and if interest rates go up I am truly stuffed.

Whether I shove the mortgage into the bankruptcy or not, in the future my lending rate will always be higher.

I feel I have no quality of life: I have no disposable income, I have no savings. My job is a 100 mile round trip away and I've been doing it for 6 weeks having been unemployed for 9 months and the insurance companire refusing to pay out. If I let the house go I can have a clear break, can rent closer to work and basically save £600pcm.

At the moment I want a life after 14mths of divorce and redundancy and keeping the house won't allow me to have one and then I'd still be at risk of losing it all if interest rates go up...

mummytofour

Sand if that is the case then sell the house, maybe at another time in your life you will buy again, maybe you will marry again who knows, from the info you have said I would agree that right now renting seems like a good option. I only ever see renting as a short term thing as having been homeless in the past I NEVER EVER want to go there again.

Good luck, sounds like you need a new start.

Vxx