buy or rent? maybe only in country for 1 to 2 years ???

deepmenace

Hi all,

Really good forum it looks like here, proper helpful.

I've never owned a house, am earning in the mid £20,000's and am fed up of renting ( throwing away money, etc, etc ).

My question is, with all the hassle and cost of buying and selling, is it worth buying a place, paying a mortgage, then selling up a year and half later ( i'm thinking of going travelling ).

It just seems to me that i'd rather be paying £500 a month mortgage then sell the place for a similar amount than £300 a month rent that i'll never see again. It's just a question of cost to me in fees, etc, etc in buying and then selling?

I'd really appriciate any help or a point in the right direction.

Thanks.

seraphina

You say you would expect to sell the place for roughly what you bought it for.

So, say you buy a place at £130 000 (number just for sake of argument).

Mortgage at £500 month for two years = £500 *12 *2 = £12 000
Rent at £300/month for two years = £300 * 12 * 2 = £7 200

Therefore you save £4800 over two years by not buying. That's before you consider mortgage arrangement fees, surveys, solicitors, furniture, wear and tear and house maintenance.

The £500/month mortgage vs £300/month rent only makes sense if you're banking on a rising house price, so you can sell it for more than you bought it for, making up for the extra you paid each month towards the mortgage rather than renting.

I would much rather rent and save the money for my travelling trip. Far less hassle to move into and out of a rented place, than to try and sell a place.

prudryden

No argument necessary. Rent!!! The mortgage you pay is basically only rent anyways until you start repaying part of the principal.

A_Nice_Englishman

It's not only rent that you'll never see again. You will never see the interest you pay on the mortgage again either.

Lets do the sums assuming you buy a property worth £100K with a 100% mortgage and sell it after 18 months.

Solicitor's cost when purchasing, say £600
Valuation fee, say £300
Mortgage interest, say £9000 (assuming 6% throughout)

Solicitor's costs when selling, say £400
Estate agent's costs when selling, say £1250

Total £11550
Add the costs of any repairs and maintanance that may be required.


18 month's rent £5400
All repairs and maintanance included

lynzpower

I agree, renting is significantly cheaper.

deepmenace

ok - so i'd have to make a significant amount on the re-sell to get any-thing like an effective rent-free couple of years.

so its either rent or make a very good/lucky purchase or get a house that needs a fair bit of hard graft and really put in the time?

thanks very much - that's cleared up a lot.

Sybarite

You could of course buy (my understanding is that you should look to have a house for at least 5 years to make ANY profit. As has been pointed out, you have to cover the cost of buying, & house prices are not going to rocket upward over the next few years as we're at the peak of the market) live in it for a few years and then rent it out while you travel, you'd have a property to come back to & the mortgage paid for the few years you're away.

You'd have to be careful & remember that if you're buying with this in mind you'd have to be more objective that buying a place as your own home, ie you'd have to go for a property with the maximum potential for occupancy, yield, etc not a more personal family space. You'd also have to consider what you'd do with your stuff while away - storage space isn't necessarily cheap.

Gorgeous_George

You would need a 4.6% mortgage for the interest free payments to be just £500.

Add in £1,300 for stamp duty and the risks associated with home-ownership and just maybe those who rent will realise that their landlord isn't the money grabbing ogre that many forum users see him for.



GG

prudryden

Gorgeous_George wrote:

You would need a 4.6% mortgage for the interest free payments to be just £500.

Add in £1,300 for stamp duty and the risks associated with home-ownership and just maybe those who rent will realise that their landlord isn't the money grabbing ogre that many forum users see him for.



GG

Are you sure we don't spend all that rental income on gold watches and diamond stick pins?

Sybarite

Mine (A single person) has over 300 properties - I like to think he has a dark secret life involving Thai Ladyboys & humiliation.