Would you buy now?

When_is_the_reset?

Davesnave wrote: »

I spend a lot of time on the 'other' board. Usually, when the pictures come out and the sneering starts, someone's feeling insecure.

When I rented last year, I felt very insecure. Now I own outright. The two experiences are very different. While I was very happy in my twenties, when I previously rented, as an older person I found it much more stressful.

Horses for courses. The differential between renting and owning probably isn't as wide as many may think, but if you can provide respectable links to show how owning leaves one worse off over a decent period - say 20 years - I'd like to see them.

Have a look at the calcs here: -

http://www.moneyweek.com/investments/property/the-great-british-property-myth-14052.aspx

It is defintely not so cut and dried as it appears - especially in a flat market.

There is a simple paragraph at the end of this 2007 Times article -

http://property.timesonline.co.uk/tol/life_and_style/property/article2875417.ece

Quote
"Owning v renting
This five-bedroom family home near Sevenoaks, Kent, is for sale through Savills for £750,000, but its owner is considering letting it instead. So, which would be the cheaper way of living there?
Theresa Wallace, the agency’s head of lettings, says the house would probably rent out for about £30,000 a year. Apart from council tax, utility bills and contents insurance, that is all a tenant would have to pay.
Buying would be considerably more expensive. Borrow the full £750,000 on an interest-only mortgage, at a rate of 5.75%, and your annual repayments will be £43,125. Then there are extras such as maintenance and wear and tear (perhaps another £3,000 a year) and an average £280 for buildings insurance. There is also 4% stamp duty when you buy: given that people move on average every seven years, this effectively adds another £4,286 a year.
All of which makes a total bill of £50,691 – or £20,000 more than renting. So, is buying still worth it? It is all down to capital gains. If the value of the property goes up by at least 2.7% a year – as it has done every year for the past decade or so – then a buyer will be in pocket. If you think prices will rise more modestly, or drop, it makes sense to rent instead." Unquote




Everyones circumstances are different and if buying suits you then you should go for it.


I just don't agree with people stating categorically that buying is the best way - it isn't for many people.


Encouraging other people to get into debt and lose them money without showing a balanced view is wrong.


Do your own research and use your own brains - too many people haven't over the past 10 years and now face disaster.

sonastin

To the OP - I think you should start looking for somewhere to buy now. But as you are in no rush and as your OH isn't yet completely on board, you are in the fortunate position that you don't need to make any compromises. As and when you find the perfect house that has everything that you want, you'll be well placed to buy it and it will probably be somewhere near the bottom of the market. If prices start to unexpectedly rise again, you can start weighing up what's really important and compromise a bit if needs be.

As for the renting v buying debate, for me its a really long term investment. I look at the differences over not just 20 years, but more like 40 years. For me, a rent free retirement combined with the freedom to choose as and when to carry out the maintenance more than makes up for the cost and responsibility of maintaining my house in the interim. During the period of the mortgage the rent v mortgage sums can be pretty well balanced, but once you own that house it becomes a no brainer!

twirlypinky

unless you're thinking of selling the property in the next ten years, then it's not really important to worry about prices. Okay, so you might by one now and then prices fall a bit more afterwards. Unless you're planning to move again it doesn't really matter.

I totally understand that you need a permanent home. Since i left my exH in 2007 i've been floating about in various rented places and spare rooms - a permanent home for myself and my belongings would be a dream come true right now! I'm living with my boyfriend now, but my belongings are still elsewhere - very frustrating indeed!

garbaldisham

When_is_the_reset? wrote: »

A non-furnished tenant brings their own carpets? :rotfl:

We did in our last rental - it was stone or parquet floored throughout. We supplied our own rugs.

Someone who doesn't change a bathroom or kitchen in 25 years :rotfl:

OK, I'll give you bathroom refit - if you DIY can easily come in under a grand, so that's £40 a year. Kitchen - depends how good the units are. My mother had an admittedly expensive fitted kitchen in 1977, and sold the house last year with the same units still in immaculate shape. But again, being generous, say you replace the door and drawer fronts - a few hundred quid. Say another £40 pa on average. White goods? Say £100 a year.

Someone who doesn't change worn out carpets in 25 years :rotfl:

Not if they've got hardwood, parquet or laminate floors throughout - and rugs are cheap. The only fitted carpeting we have in in the hallway, landing and stairs - and we look after it. Despite having teenagers it all looks OK.

Someone who doesn't decorate in 25 years :rotfl:

Decorated every room in our 3 bed house last month - we do so on average every couple of years - cost in total under £200. So £4 per week.

You are one serious money-saving expert - I salute you :T

I thank you

But do not want to stand too close to you.

At last we agree upon something.

And a parting thought - after 25 years, who's still paying out a grand a month just to live there?

FTBFun

The main benefit for me in buying was not having to deal with landlords. That's definitely worth paying for IMO.

(apologies to all the decent landlords here!).

strictwithmoney

Imelda

Your situation sounds familiar. In 2008, we were renting and most of our stuffs were in boxes, always feel very insecure Our 50% deposit in the savings account were eroding due to low interest rate

We just got so fed up with renting which was never a home, so during the time of Lebman Brothers collapse, we bought a 4-bed detached house with double garage for a huge price reduction in a great area and great schools :T Our mortgage is on DH's income only.

We are extremely happy with our purchase, home-sweet-home:j

You are in very good position to do a hard bargain.

Davesnave

When_is_the_reset? wrote: »

Have a look at the calcs here: -

http://www.moneyweek.com/investments/property/the-great-british-property-myth-14052.aspx

It is defintely not so cut and dried as it appears - especially in a flat market.

Everyones circumstances are different and if buying suits you then you should go for it.


I just don't agree with people stating categorically that buying is the best way - it isn't for many people.


Encouraging other people to get into debt and lose them money without showing a balanced view is wrong.


Do your own research and use your own brains - too many people haven't over the past 10 years and now face disaster.

Thanks for a reasoned argument. I think we can agree that the OP, who is the person in question here, does not sound like someone who is going to sleepwalk into unnecessary debt. There are also emotional reasons why she, and I, would not find indefinite renting pleasurable or 'worthwhile,' and that's a cost to consider too, albeit one that's immeasurable. So much hinges on lifestyle.

As I said 'The differential between renting and owning probably isn't as wide as many may think,' and you have shown that in some circumstances and time periods, renting and investing might give a better return, though the calculations and assumptions getting us there are pretty convoluted.

Then, of course, people have to do the investment bit, and I wonder how many do this as well as they might, or whether they succumb to buying too many 'posh frocks,' as mentioned in the Daisy Waugh article. A mortgage at least imposes some discipline on lives. I'm pretty content with the enforced saving it imposed on mine, anyway!

cashbackproblems

Yes. Rates are lowest they will ever be and i got some mortgage quotes recently (out of interest only!) and you can fix for 3 years at a decent rate. Prices are also quite good outside London and as long as your planning thinking of an investment/quick return (them days have gone) then you will see good rises again in the long term.

If I could afford to i would get my own place, instead i am wasting almost 40% of my income of rent/bills! I could afford a small bedsit but id rather wait a few years and buy a nice house.

cashbackproblems

Davesnave wrote: »

Thanks for a reasoned argument. I think we can agree that the OP, who is the person in question here, does not sound like someone who is going to sleepwalk into unnecessary debt. There are also emotional reasons why she, and I, would not find indefinite renting pleasurable or 'worthwhile,' and that's a cost to consider too, albeit one that's immeasurable. So much hinges on lifestyle.

As I said 'The differential between renting and owning probably isn't as wide as many may think,' and you have shown that in some circumstances and time periods, renting and investing might give a better return, though the calculations and assumptions getting us there are pretty convoluted.

Then, of course, people have to do the investment bit, and I wonder how many do this as well as they might, or whether they succumb to buying too many 'posh frocks,' as mentioned in the Daisy Waugh article. A mortgage at least imposes some discipline on lives. I'm pretty content with the enforced saving it imposed on mine, anyway!

As long as your staying and paying the mortgage for a few years how is the difference not that big?? With a mortgage your building up equity and on a good buy the house value is also increasing. With renting 100% of that money you will never see again. No brainer really.

Renting is only for short term or while you get enough for a deposit on your own place. I rent and hate it.

Davesnave

cashbackproblems wrote: »

As long as your staying and paying the mortgage for a few years how is the difference not that big?? With a mortgage your building up equity and on a good buy the house value is also increasing. With renting 100% of that money you will never see again. No brainer really.

Renting is only for short term or while you get enough for a deposit on your own place. I rent and hate it.

The argument is that renting is usually cheaper than a mortgage, especially when home improvement/maintenance is accounted for, so a renter can put the difference into investments and build up 'equity' in those.

Against that, is the fact that, historically, house prices have risen, so mortgagees recoup what they 'lose' in interest payments and maintenance/upgrading, usually with a good margin on top. However, if prices now stagnate, or fall for a long time due to a period of weak economic growth, that could change, and some folks may be in trouble if they have large mortgages they can't sustain.

The other poster provided an example of a time where a renter might have been better off than a home buyer, but the period had to be chosen carefully to 'prove' this and a few other assumptions needed to be made. One is that renters would actually invest the difference, and not just consume it.

Like you, I dislike renting and I need an owned home to run a specialist business, so it's a 'no brainer' for me too. However, as the next 20 years seem very unlikely to resemble the last two decades, there may be little relevance in the rear-view mirror approach we are all adopting here.