renting property verses buying

Nelliejg

Hi, Sorry if this thread has been covered before but I haven't posted on here before and haven't got time to trawl through the hundreds of posts, interesting though they are.

I would be grateful for all other peoples opinions on what my husband and I are thinking of doing.

We are currently living in a house which we have a mortgage on, we also have various credit cards,a loan and overdraft. We struggle to pay the monthly payments so consequently the ammount owing does not go down.

We are thinking of selling our house, paying off all our debts and mortgage, investing what is left ( about £70,000) and renting for a few years until our last child has finished school.In 5 years we will have an endowment policy maturing which will give us about £28, 000. We then plan to move to a cheaper area which we cannot do at the moment because of childrens commitments with college/ school e.t.c Doing this would mean that we would be debt free, have no worries about house maintenance, have money in the bank whcih we would earn interest on, and be ready to buy when we wanted in a few years.

On the other hand, we can stay where we are, our mortgage will be paid off in 5 years, except for about £5000 shortfall from our endowment, our loan will be paid off but we will still have the credit card debt as it is not likely to go down. We could stay here for a few years after that and pay off our credit cards, then sell the house and have slightly more equity than we would if we rented now. This takes into account the 25% we need to pay back to the housing associaton when we sell as it is a shared ownership scheme.

We would like a change of house as we have been through a lot here, nursing two children through long term illnesses
for a start but we can't afford to buy anything bigger in this area.

We need to take into account rates of interst on savings, verses rates we are paying for our debts and mortgages.

I love the idea of freedom from debt and no house maintenance worries but would be doing the right thing? I know my inlaws would see it as a step back but they have no idea of the awful debt we are in.

All ideas and advice welcome please.

thanks.

Daisies

What sort of condition is the house in, that you currently own? Is it likely to need a lot of maintenance over the next 5 years (eg new boiler, anything else major?). If it's going to cost a lot in maintenance then maybe it would be a good idea to rent for those 5 years and let the maintenance be someone else's problem! I bought my first house last year and seem to have spent a fortune in maintenance type stuff.

Have you read Martin's articles and other threads on here about credit card debt and budgeting/cutting down expenditure? If you can switch the balance to a lower deal that would make a lot of difference. And have you done things like switch utility suppliers to bring your bills down?

eileenfromplaistow

Even round here, renting a house would be more expensive than a mortgage (going by the ones in the paper), and it seems a shame to get so close to owning your house but missing out by 5 years.
What about (and I AM DEFINITELY NOT MEANING A CONSOLIDATION LOAN ala Carol Vordeman) a low rate personal bank loan for 5 years? That is, if your credit rating can take it Pay off the credit cards (and cut them up) and the overdraft, and keep to a budget. We all get a shock when we look at what we spend our money on, and the trivial things do add up.
However, if by posting you are implying that you have had enough of house ownership, then if selling would give peace of mind, go ahead.

Rick62

The other option might be to increase the mortgage to pay of the loans/credit cards etc. Whether this is a good option would depend on all your circumstances. You should speak to a local advisor, or maybe your local CAB.

Nelliejg

Thanks for all your replies. Our house is 11 years old, not built to a brilliant standard as it was built cheaply for the Rural housing trust but its not too bad.
We will if we stay here have to probably replace the bathroom, completely redecorate, do some work in the kitchen and replace some carpets and flooring in the next couple of years, but structurally there is nothing wrong with the house. We don't have boiler. But we will have to spend quite a bit.

We have already looked at all our finances, changed credit cards to 0% etc. following Martins advice. we have changed providers where we can, cut as many things down as possible and looked into more loans etc. We have looked at increasing the mortgage but its not really an option.
If we rented and paid off all our debts it would cost us about £200 a month less than all the payments we are making at the moment, but we have to balance out what we will gain in equity if we struggle on and stay here.

Thanks again for you replies, its really nice to have other peoples opinions on things, it helps to see things from another prospective.

We have a lot of thinking to do!