Would you buy if mortgage payment is 2x rent?

SailorSam

In the past i would never have thought that renting would be a better deal, you are after all throwing money into an empty well. If you buy your house it's not just a home but an investment for the future, something that you can pass onto your children. After all when you grow old the house should be paid for and you'll not have the worries of paying rent from a small pension.

However as i get older i see the downside, i don't have children so it's others who will benefit. When i get to pension age, if i was renting, i'd receive extra benefit so wouldn't have that worry. If i have to go into a care home my house may need to be sold to pay the fees, the person next door who may be a tenant would have his fees paid for.
It's similar to the small personal pension that i paid into, at some point in the future this is going to prevent me getting additional benefits on top of my pension.

So i wonder now if i hadn't bought my home, just as if i hadn't paid into that pension, if i'd used that money for extra holidays or even nights out in the pub, would i have been better off in the future.
Spend now, to hell with the future.

Mr_Matey

amalis wrote: »

Mr.Matey, good point.

Our interests payment would be just a little bit more than the rent.

The next question: is that a fixed rate, and if so for how long? As you probably know, interest rates are very low right now. How much hurt would it cause if they rose?

Rents may also change after a year or two of course.

I'd consider buying, but only if the circumstances are right for you, i.e.
* Have the deposit sorted
* Plan on living there a while, say 5 yrs

Oh also, the repayments are after your deposit has been knocked off the purchase price (i.e. only the mortgage). If you were renting this money would be earning you interest.

LeeSouthEast

It depends on what "2x" is. If rent is £100 and a mortgage would be £200, then realistically I'd consider buying. If rent is £750 but the mortgage will be £1500, then it doesn't make sense.

It's still twice the cost, but the sums involved are far greater.

amalis

Mr_Matey wrote: »

The next question: is that a fixed rate, and if so for how long? As you probably know, interest rates are very low right now. How much hurt would it cause if they rose?

Rents may also change after a year or two of course.

I'd consider buying, but only if the circumstances are right for you, i.e.
* Have the deposit sorted
* Plan on living there a while, say 5 yrs

Oh also, the repayments are after your deposit has been knocked off the purchase price (i.e. only the mortgage). If you were renting this money would be earning you interest.

fixed for 5 yrs. After 5 years i hope that our salaries would be higher, so shouldnt make a lot of damage. I know that it is impossible to be sure about anything, but that is the plan.
We have deposit ready and probably will stay for 5 eyars at that place.But after sone tiem we would have to sell the house, because now it is just 1 bed what we are looking into, which is great for us now. But if in 3-5 years the baby will come, we would have to get a bigger place

amalis

LeeSouthEast wrote: »

It depends on what "2x" is. If rent is £100 and a mortgage would be £200, then realistically I'd consider buying. If rent is £750 but the mortgage will be £1500, then it doesn't make sense.

It's still twice the cost, but the sums involved are far greater.

yeah, about right.
Its is 900 rent and 1500 mortgage. + bills

Mr_Matey

I'd probably rent for now, save and hold out for a bigger place if you're planning a family in 3-5 years, but that's just me.

Your plan also sounds ok.

amalis

Mr_Matey wrote: »

I'd probably rent for now, save and hold out for a bigger place if you're planning a family in 3-5 years, but that's just me.

.

I am afraid that prices will go up and even with bigger deposit we still will be able to buy only 1 bed :eek:

SailorSam

Particularly important at the moment with high unemployment if you wanted to move house to a different area where prospects are better, it is much easier if you are in rented property than if you have to sell your house and look for another to buy.
The same could be said when you want to retire to a hotter climate, Spain; Greece or sunny Wales.

Mr_Matey

amalis wrote: »

I am afraid that prices will go up and even with bigger deposit we still will be able to buy only 1 bed :eek:

That old chestnut. That fear is what got a lot of young people into negative equity.

Prices may rise, prices may fall. On the other side of the coin, if they fall maybe you can afford a nice 3-bedder with your larger deposit in a few years.

Buying's not a bad option, like I said, especially if these worries are going to keep you up at night...

DVardysShadow

amalis wrote: »

The eternal question: buying vs renting.
I would like to hear what people think about the situation when mortgage payment would be almost twice as renting (equal conditions, size and district). Would you still consider buying?

Thx!

That is only half the question. You can lose and gain equity by buying, neither happens when you rent. The equity changes can wipe out the differences between buying and renting, either way.