Grrrr If I hear 'renting is throwing money away' from another interest only holder

earthmother

I can see this from both sides


Ten years ago, when I was 21, my OH (now husband) and I bought a house - we were lucky enough to get a repo at silly money (£25,000 for a 3 bed end townhouse anyone? Only needs some paper and paint) and so it was cheaper than renting at that point.

The repayment mortgage never went above £150 a month, even when the interest rates went up, and we had the freedom to do with the place exactly what we wanted.


But, two years ago, because of health issues, we were forced to reconsider our position. The house no longer fitted us, buying the right property was waaayyy out of our reach even with the now quite substantial equity we held, and so we sold up and moved into rented accommodation.

So now we pay £600 a month :eek:, but for that we don't have to worry about structural works or repairs, or buildings insurance, we're in the right house for our situation, we're in an area we could never afford to buy into (the mortgage on this place if sold today would be 2-3 times what rent we pay), with the kids heading into a series of schools with great records (unlike the ones they would have got where we were before), and should we ever need to reconsider our options again, it's just a matter of giving notice and deciding where we'd like to go next, rather than the stress and hassle of selling, buyers chains etc.


Unless we suddenly came into major money (we're talking only winner on mutli-roll-over lottery figures, which never happens does it), I cannot see us ever buying again.

But, at the same time, we still do feel a little guilty that we don't have anything solid now to pass on to our kids, and it can be annoying having to clear silly things like putting a fixed safety gate up with the landlord before we can go ahead, and not being able to buy the kids that much requested rabbit (no pets clause).

KleptisV

I'm so glad that this has been mentioned.

I currently live in an area I could not afford, and because we live right in the centre of town, we have been able to get rid of our car - saving us hundreds.

However, a colleague of mine recently told me how wasteful renting is, and how much better off we would be buying. I've heard this before, but it was stated with such conviction (and she's very money-savvy) that I began to seriously consider it.

Needless to say, I would have to do a 50/50 deal with a housing association, and we would be worse off each month.

Also, we have thoughts of one day living in London. Should we find jobs there we would be stuck commuting, maybe in a sales chain until we could sell a house we weren't even sure about buying!

I'll be taking Martin's advice on this one I think!

tomstickland

You have to do the sums for your own situation and balance the cost with what you want.
Personally it worked out better for me to buy, since my mortgage is the same as rent levels.

[Deleted User]

Current rent on room in grotty house share in London zone 3 - £520 pm (inc bills/council tax) - for myself only

2 bed terrace, London zone 6 (Hertfordshire) I just exchanged on, £670 mortgage + ~£70 bills (est.) + £110 council tax = £850 pm (est) - for myself and gf

Personally, I felt that renting was throwing money away, but i mainly bought a house because I wanted to 'settle down a bit'

fgaughan

only down side is 6 month contract with landlord.
After moving 3 times in 2 years we got fed up of it. 3 houses up for sale after living there a few months.
Also you dont get your deposit back once you have moved out so finding a deposit and a month rent after 5 months living there is a night mare.

ferdyb

OK I'm 64 years old. I have finished paying the mortgage and now I own the house, so have nothing to pay out each month except maintenance. Should I sell this and rent ? If I had rented all the time, would I still have the savings I have now ? I have no children who could benefit from being left the house or any money - but that's another story.

Kelinik

KleptisV wrote:

I'm so glad that this has been mentioned.

I currently live in an area I could not afford, and because we live right in the centre of town, we have been able to get rid of our car - saving us hundreds.

However, a colleague of mine recently told me how wasteful renting is, and how much better off we would be buying. I've heard this before, but it was stated with such conviction (and she's very money-savvy) that I began to seriously consider it.

Oh the amount of grief we got for renting! I'm so pleased to see a money expert saying that buying isn't always better as when we tried to argue our point we got told we were stupid kids that had no idea what we were talking about!!! :rolleyes: The fact that we couldn't have got a mortgage for anything more than a shoe box, that our rent included some bills and was smaller than our current mortgage repayments and that we lived in a lovely, well maintained 3 bed semi in a nice area with a drive that we couldn't afford to buy in a million years.

Funny how everyone but us is so much happier now we pay more for a run down terrace on an 'interesting' estate (have had vandals hit three times in the year we've lived here) and owe the bank £133,000! How I could have done with you and this advice a few years ago Martin. Oh well guess it'll be OK if I can get it done up and sell it.

SackYourBoss

Thanks for this post Martin. There is a lot of negative attitudes towards renting and pressure to buy even though prices have risen so astonishingly high in most areas.

We have a pretty good income but not enough to - responsibly - afford a mortgage on the house we have rented for four years. And we would be foolish to do so anyway. The house price has risen to well over £400,000 and is situated in an acre of land right on the riverside in a National Park, yet we pay rent of £625 a month.

There are plusses and minusses to renting - we don't have to pay maintenance but we could be given notice to leave, for instance.

The only way we would consider buying is prices dropped to a sensible level. We have created a marketplace of massive house prices and the real beneficiaries have been those who take a cut on a house sales (e.g. estate agents) mortgage lenders and multiple house owners. We view our "stance" as almost a moral duty because surely only by individuals, en masse, refusing to buy house (or any commodities) at inflated prices will the prices ever drop. There's no point in us complaining about house prices being too high and then going ahead and buying anyway...

Mc4ndy

Lots of people overpay their mortgages, either monthly or lump sums (inheritance etc) which massivly reduces the term AND total interest repaid.

I lived in a rented house for a while. I didn't like the kitchen, 90% of the carpets, wall paper, light fittings etc, but I wouldn't spend money on changing it because it wasn't mine.

When I eventually pay off my mortgage, I'll own a house which will be worth a fair amount of money. This will form part of my estate hopefully that can be passed down to my children (assuming I don't go crazy and need expensive care). If I rented all my life I'd never own the house, so would I have saved the equivalent in cash and have that as an assett instead of the property, or would I have spent it on other stuff?

inmypocketnottheirs

Kelinik wrote:

Oh the amount of grief we got for renting! I'm so pleased to see a money expert saying that buying isn't always better as when we tried to argue our point we got told we were stupid kids that had no idea what we were talking about!!! :rolleyes: ]

Even experts can be wrong!:eek: