Cheap renting v's staying on the property ladder

ooobedoo

I am in a situation where I will be able to move in with my dh,ds and when born my dd to a very cheap rental. The rent including water rates and council tax will be £300. Currently we are paying £100 a month in council tax in our own house, £600 in mortgage, £376 in a car loan (that finishes in Dec. It is my intention to get off the property ladder. Move in and live in this cheap rental for 9 yrs. During this time we of been able to have taken the 50k equity from the house, put into a high interest savings account, save what we pay at the moment for mortgage and car loan per month. So that in 9rs we can put down a much larger deposit.

I would like any input with regard to this.

F_T_Buyer

Sounds like a good plan, but 9 years is a long time. I'd go with that plan, and review it in a few years, property will probably be a lot cheaper then - which might be the time to jump back on the 'ladder'.

ooobedoo

Thank goodness, my family think that we are barking for even thinking of getting off the ladder. We need a larger house, there are two adults and one child at the moment and there isn't enough room..add a baby to this and I think we will have to be shoehorned into bed soon.

The house will be at a good standard, we have all our own funishings. I think it will be ace, as then we can start to save, rather than just pay mases of interest on a house.

I just wanted some other points of view.

manhattan

i agree with FT buyer
jump back in when prices are reasonable again.
use the interest from your equity to pay the rent etc,if i was in your position i would do the same.

manhattan

sorry forgot to say that we are FTB,and are renting cheaply,and our savings interest money pays over half the rent each month.

if we were house owners,we would sell to rent!

clutton_2

hello, not quite sure i get this ""I am in a situation where I will be able to move in with my dh,ds and when born my dd to a very cheap rental"" - can you explain what you mean pls ?

meanmachine_2

It depends on whether you think house prices are going to go up, down or sideways.

Interest on 50K won't be that great - probably around 2.5K tops.

If you're a low rate tax payer, you'll get around 3.6% interest, so you'll need house prices to rise slower than that.

I'd suggest it's possible that prices could keep rising, but only in line with wages - around 4%, which would leave you worse off.

Also, by the end of 9 yrs, you'll have paid off more of your mortgage, I'm presuming.

Don't know - it's a tough call.

martyn4764

clutton wrote:

""I am in a situation where I will be able to move in with my dh,ds and when born my dd to a very cheap rental"" - can you explain what you mean pls ?

dh= dear husband
ds= dear son
dd= dear daughter

I could, however, be wrong...

lynzpower

We are doing the same, albeit I own a Shared ownership 2 bed flat, and Im selling to rent with my OH. Maths look like with the interest on the equity, cheaper outgoings and of course not having to pay life insurance, buildings insurance etc, somewhere in the region of 450pcm. And then of course the interest on the interest & the savings.

It makes perfect sense to me. Even if in 3 years if we want to buy again, we will have saved money in the short term that will go towards a large deposit in the new place. If we do choose to buy again. then we will buy the cheapest thing we can with a high deposit and thus trying to avoid as much mortgage interest as possible.

ooobedoo

Would I be able to keep my life insurance even if we sell the house???

lynzpower

Depends what sort you have. I have the one that the mortgage co pays off the mortgage if I kark it. Not muhc point in that if you dont have a mortgage. But if you have a cover for your dependants ( i didnt have a prtner or anything when i bought this place, so I havent gont one of these) then Im sure you can keep that