Home Owning VS Renting ???

tkm_2

I am currently a home owner, but due to a relatively recent divorce, am now 4.5yrs into a 30yr mortgage at the age of 40

The house needs plenty doing to it due to the shoddy work of the previous owners, and its only going to get worse in time without the proper fundings.

On top of that, my current place really isn't big enough for the 3 of us as I would've hoped. Currently, I still have some equity in the place, but not sure for how long, but I'm never going to own a property unless I win the lottery!!

More and more, I've been thinking about renting and leaving all the hassle of the up-keep of the property to someone else & investing what equity I currently have.

My daughter will need to go into secondary school in 3yrs and my area doesn't have great secondary schools (yes, I know its far away but with the current housing market, I have to think about that if I was going to buy). We need more space & buying a 3 bedroom place in my area is expensive and I could only afford something that needed 'doing up', but without being able to afford to do it up!!

If I was renting, I'd be far more flexible about moving at a time that suited & into a property that was already well maintained.

I was interested to see what people's thoughts on the matter were?

Thanks

Hammyman

Yep, pretty much the same as I tell my mates who are daft enough to think about buying. You can rent a 3 bed house around here for the same price a mortgage would be on it but you'd only have to find £1000 deposit and not £25,000. In addition, no major repairs and if its not suitable, you move and no worrying about having to sell.

property.advert

I'd say keep your place. I'm moving at the moment and apart from buying stuff which is provided here but not in the new place, I'm looking at covering more than a month's worth of overlap on the rent for two properties. Then there are fees of around £300, removal costs of at least £300 and most likely another bill for around £500. It is at least £2000 of money down the drain. I am also moving because of schools.

If prices go up in the next three years which I quite believe they will, then you have more equity even if you do move to rented then. In the meanwhile you have security and no landlord giving you a couple of months to move out and saddling you with the expense of doing so. Things may also be better financially in a couple of years.

It sounds easy to move but it isn't and you often have to make severe compromises. Remember also that you only need to be in the property for schools on the cut off date, not before and not after, though you have to be careful.

voytovdwiof

Hammyman wrote: »

Yep, pretty much the same as I tell my mates who are daft enough to think about buying. You can rent a 3 bed house around here for the same price a mortgage would be on it but you'd only have to find £1000 deposit and not £25,000. In addition, no major repairs and if its not suitable, you move and no worrying about having to sell.

This of course ignores the long investment that home owning is. With a mortgage you're paying off a loan, after it's paid off you'll own the house and be able to make back whatever you invested, whereas rental is a one way spend, not an investment.

Personally I think renting is an excellent choice, but it's very different especially for someone with children.

Hammyman

voytovdwiof wrote: »

This of course ignores the long investment that home owning is. With a mortgage you're paying off a loan, after it's paid off you'll own the house and be able to make back whatever you invested, whereas rental is a one way spend, not an investment.

Personally I think renting is an excellent choice, but it's very different especially for someone with children.

The guy is 40. He'll be retired by the time the mortgage is paid off. The only thing that'll happen is that if he ends up having to go into care, the house would be sold to pay for it.

If he rented, by the time he retired, the same age as the mortgage would be paid off, he'd be entitled to HB/LHA so would be in exactly the same situation money wise but with no home to take off him.

And as for a home being an investment, it is but an expensive one. Heating needs replacing, there's £3000+ down the swannie whereas it'd cost you nothing in rented. We've just bought a house and are about to spend £1200 on replacing a sliding patio door and all the kitchen cupboard doors which didn't look like there was anything wrong with them in viewing.

And what about periods of unemployment, something that strongly needs to be considered for the next decade? He'd still need to pay the mortgage whereas all/most of the rent would be met by HB/LHA.

We bought our other house at the last time it was worth buying a house - pre 2001.

ukcarper

I would say that in the long term buying is better hammyman seems to forget that rents generally go up in line with inflation whereas mortgage payments don’t. If you are single or a couple you will only get LHA for a one bed flat so if you are in a house now you would not be in exactly the same position.

In the short term in might be worth renting you would have to compare rents to your mortgage payments and bear in mind that selling is quite expensive. Nobody knows what property prices will do over the next few years they could well fall which would be to your advantage if you sell and rent but then they could rise in which case you might find you can’t buy again.

sonastin

How do your pension provisions look? Will you have a decent enough income during retirement to pay rent on the standard of place you would like to live in? If not, I would suggest sticking with the home ownership path so that you can keep a decent roof over your head during your retirement.

Hammyman

ukcarper wrote: »

I would say that in the long term buying is better hammyman seems to forget that rents generally go up in line with inflation whereas mortgage payments don’t.

Correct. They can go up far faster. There's a lot of people who've seen a massive increase in mortgage payments now their deals have come to an end and a 2% is on the cards.

As for rents, in my county they've been fairly static for several years.

ukcarper

Lets say rent £500 inflation 3% rent will be £1046 in 25 years
Lets say mortgage payment now £500 at 4% if rate doubles to 8% mortgage will be £731.

For mortgages to increase to that inflation would have to be higher than 3%

lilac_rainbow

I think you need to just do what suits your personal situation best. Could you afford to sell and buy somewhere else with better schools? Or reduce your mortgage term by a couple of years so it's well and truly paid off before you retire? In some areas renting costs much more than a mortgage so could you afford to pay the rent in a different area?

On a practical side, this is not usually a great time of year to sell so you could give yourself a couple of months to think about it in more depth

Brallaqueen

I personally would never want to go back to renting.
There is just too much insecurity and risk in it for me- no guarantees that you can stay for any longer than the contract term, no way to know how a landlord will respond to urgent maintenance issues until they crop up, in most cases not able to treat it as your own home with regards to decor and refurbishment. Even the best landlords can be caught out by circumstance - having to move back/sell/get a higher rent.