What would you do?? BUy or rent? Advice please?

fingermouse_2

Hi I hope you can help?
We are a couple in our mid life and we sold our house last year looking to downsize. We have approx £120k to spend on a property which in this area can get either a terrace or a semi. We have been renting for a year now and rent is £500 monthly.
The thing is my partner is absolutely convinced that house prices are going to crash any time now whereas I am not so sure......He feels that interest rises are coming and that will really move things along............e.g.house prices DOWN..........
I don't see house prices going up but I am not convinced that there is going to be much of a drop either........and I am feeling that the renting option is really dead money now............
He really feels we should wait for 1-2 more years before buying whereas I am starting to feel we should buy sooner (next 6 months)
Its tricky to discuss this because he is SO SURE ..just wanted to check out other peoples reaction here...do you think that we are wasting money or should we wait...............................
PS we were in the market when the last crash happened in early 90's and so we know that house prices do fluctuate........
What do you all think?? Hope you can help........

molotov_3

Its anyone's guess whether property will go up or down, really hard to tell, though I personally dont think another BIG crash will happen again, just adjustments here and there. IMO renting is dead money (as you said) at least if you have a house you are building up some more equity, whilst housing prices increase. Not sure of the benefit of waiting, personally.

roswell

its a gamble either way .... renting for the next 2 years could be great especialy if you can move to a property with cheaper rent and the housing market does crash, if it doesnt and the rent goes up you may have been better off buying.

interest rates globaly are going up so no reason why we should be imune to rises just depends how much of a rise there is

Fat_Boy

Just out of interest, when do the BoE meet again to discuss interest rates?

ManAtHome

BoE only met last week to hold rates, so another month... (ps just checked, will be 6th July)

But hang on a bit, you must be getting interest from the £120k to offset the (allegedly) 'dead money'?

meanmachine_2

There was a piece in yesterday's Mail *spit* that suggested we're heading back to more "normal" inflation rates of 5% and interest rates around the 7% mark.

If that were to happen there really would have to be a crash, otherwise no one could afford to buy anything.

But who knows? Six months ago the experts were predicting interest rate falls.

You guys seem savvy. And at least you have that equity cushion, unlike poor old FTBers so I really don't see how you guys can lose either way.

500 quid isn't a lot to be paying in rent. On the other hand, it's money that isn't whittling away any mortgage, should you have one.

fingermouse_2

ManAtHome wrote:

BoE only met last week to hold rates, so another month... (ps just checked, will be 6th July)

But hang on a bit, you must be getting interest from the £120k to offset the (allegedly) 'dead money'?

Yes we are getting some interest, not loads but it is offsetting the cost of renting a bit. We are seeing a bit of a movement in the prices around here, not going upwards, just dipping a bit. I suppose it's the concern if the prices do go up and we are left behind. I realise how lucky we are to have the cushion, it's after 20 years of paying a mortgage and getting out when the prices were at their highest. We were caught in the negative equity of the 90's so we got out while we could and have tried to get out of the mortgage trap while we could. Its the fact of us being self employed, relying on the work coming in, getting older and reealising pensions were not going to cover us, we reckoned getting out of the trap of mortgage repayments would free us. It has but it's just knowing when to buy again that's the trick.

Careful_girl

Finger mouse have a look at the last thread to discuss this this week called Is it the right time to buy?? Lots of ideas there and lots of differing views. Also me and magnolia paint!
CG

ManAtHome

After tax, you should only be a few quid short of the rent (see the Savings and Investments board if you're not). If you think at worst (in your situation) that prices will be flat, you don't ned to be in that much of a hurry and can afford to throw in the odd "you must be joking" offer. IMHO interest rates are more likely to go up than down in the next year or so - you may even start making a profit on renting. Unless you specifically MUST live in a particular place, I wouldn't be panicking just yet...