Stopping renting and getting on the property ladder

moosegirl

Any advise welcome please. We currently rent (me, husband and toddler) paying £685 per month. We 'fell off' the property ladder in 1999 and have been unable to get back on. I don't want to total the amount of rent we have paid over the last 7 years. We have no savings, are not high earners and could only get a mortage for about £70,000 not enough to buy a flat. The problem is apart from dead money each month that the rent increases, and if we have to move (who can tell with the landlord) we have to go back into the rental market again which means greater increases (i.e. the current market price for the house we're in is £800).
Any ideas gratefully received. I have tried shared ownership, social housing etc.

cattie

Why think of rent as dead money? It is paying for a roof over your head, so it provides an essential requirement for your family so it is working for you in that way & certainly not wasted. At least while you're renting if you hit hard times you'll qualify for help with the rent from HB. Alas no such help when you have a mortgage to fork out for every month, so there is always the risk of losing your home if you hit rough times.

By your own admission here you couldn't get a mortgage for an amount to allow you to buy a property, so why not defer thinking about buying your own property till your financial situation allows it?

You don't say why you 'fell off ' the property ladder, but if it was for financial reasons then this is all the more why you shouldn't be in a rush to jump back on untill you know it's really a viable option for you.

Currently you have no savings & you'll need money to be able to fork out for the legals involved in buying. Plus it's always wise to try to ensure you have enough money to see you through for at least 6 months should unemployment or serious illness strike. Bad things don't just happen to other people sadly.

deb_buffy

We have a scheme around here called shared equity(dont know if thats spelt right) where you can buy a % of a house and the council own the rest so u say own 50% with a mortage of £50k and u rent the rest from the council at around 150 a month i think it works out as, then as time goes by they allow you to buy more of the house till you own 100% of it. is this something which you could do in your area?

lynzpower

OP, why was shared ownership a no go?

Although i do agree with cattie, if you have no money for this, then it cant be the right move, particularly with interest rates going the way they are

PoorDave

The OP says they've tried shared ownership already.

Renting is only "dead money" if you think everyone else is making money from property, and you're not. This just isn't true. Many people are getting huge mortgages in order to "keep up with the Jones's", which may cause them problems in the future.

House prices aren't rising like they used to, and a lot of the money people who "own" house pay out each month is on interest, which is also "dead money" if it's not getting you the chance to benefit from rising house prices.

How does your current rental stack up with your current income per month?

moosegirl

Thanks for the advice and also the positive comment on renting. I am worried what will happen with retirement as we will have to have pensions to cover the rent. Neither of us is likely to become great earners. We are lucky to have relatively small debts (about £1,000) but it is slowly increasing. I just feel a house would give us an asset. It's hard to live your life with a third person in your life. The landlord put the house up for sale last year then a few weeks later change his mind. We only have a lease from year to year. Anyway thanks, we'll keep plodding until things improve financially.
Re the shared ownership etc. we always seem to fall somewhere in the middle financially, earning to much for help but not enough to get by.
We fell off the ladder as we couldn't find a property, then rented didn't set a goal for buying again, spent the equity... I think we need a budget!

moosegirl

I think the proportion of rent to income is too high hence the reason we can't get a mortgage.

Gorgeous_George

Ask for a 2 years tenancy next time if you want security of tenure. Most LLs would snap your hands off.

Renting CAN be better than buying.



GG

mpsavuk

deb_buffy wrote:

We have a scheme around here called shared equity(dont know if thats spelt right) where you can buy a % of a house and the council own the rest so u say own 50% with a mortage of £50k and u rent the rest from the council at around 150 a month i think it works out as, then as time goes by they allow you to buy more of the house till you own 100% of it. is this something which you could do in your area?

So end up paying a mortgage and rent. Is this really a good idea?

Titan

mpsavuk wrote:

So end up paying a mortgage and rent. Is this really a good idea?

The rent is low and toguether with the mortgage it often amounts to considerably less than you'd pay for a similar house in rent. I have a friend that has been on this scheeme for some time now and she is delighted of how well it's gone...

Personally I am renting, I do not have the financial means to buy but because I share the house I live in I am managing to save a considerable amount of my income because I sincerely believe that property prices MUST go down in the not to distant future. I know it's not a popular thing to say but it is bound to happen as prices are well out of proportion with salaries an all the trics and gimiks that the financial institutions have put in place to encourage growth are coming to an end... unless 100 year private mortgages are invented...

So don't see rent money as "lost" money, it could be your best investment for the future!

Cheers

Titan

vellum

don't worry too much moosegirl, there is always hope at the end. renting is just a temporary situation that many people are stucked with. buying a house can cost a lot in a short run when compare to renting. you may feel missing the train for the property boom, many people missed it anyway. it is wiser not to jump at the tail of the train because you may get seriously injured. don't believe all these so-called independent reports saying the property market is rising and will keep on rising as if there is no limit. seller market is finishing when prices are in an unrealisitic proportion to the income of key runners of an economy, say nurses, teachers, policemen, etc.

keep a spending budget each month and stick with it no matter what, put aside as much as you could, even just 10 pounds a month, so when the time is right, you will have a small pot of cash to pay the first deposit at least, not to miss the train again.