To buy or rent, that is the question!

jollyjohn123

Hey people,

Was telling a friend about my dilemma and she said it would be worth posting on here as are lots of good people here who will advise..

So I bought an investment property many years ago, it was purpose bought to rent out to my great aunt who was downsizing. She is very settled there and I am happy to leave it as the rent covers the mortgage interest and I can put a little aside each month.

I currently rent a room at a friends house, but the time has come when I want a whole place to myself. I am not interested in sharing or lodging anymore.

The question is do I buy another property or rent? The kind of property I would want is on the market for £120,000. To rent the same property is £600pcm.

I think I have enough for a deposit, so could buy, but I am wary of the commitment to owning 2 properties. If I lost my job then if I was renting I could give notice and move back to a friends/family. If I bought somewhere and lost my job how would I pay the 2nd mortgage. I am kind of leaning towards renting as I already own a property at the end of the day.

Well I would love to hear some opinions on this and whether I have or haven't thought about this properly!

MarkBargain

Unless your job is under real threat, I would consider buying. If you put down a £20,000 deposit, a flexible mortgage with Nationwide would cost a £99 fee then £555 a month for 25 years so it'd be a bit cheaper than renting plus of course after the mortgage the house would be yours. Having said that, I am not sure if you would have any trouble getting a mortgage when you already have one - could be a real sticking point.

LisaLou1982

Take out mortgage protection to cover the costs of a 2nd mortgage if you happen to lose your job.

If you can get a mortgage and have a decent deposit then why not?

Alternatively, if you were renting and lost your job you could apply for housing benefit

MarkBargain

I'd be a bit careful with PPI: https://www.moneysavingexpert.com/mortgages/payment-protection-insurance

jollyjohn123

Mark- I'm not sure if it will be a problem, the existing mortgage is a buy to let, I assume other people that own more than one property have buy to let's and then a normal residential mortgage for the place they live in?

Lisa -Hopefully it wouldn't come to that but I heard you can also claim a benefit payment to cover mortgage interest? I think the main concern if I lost my job would be the fact I already own the first property, I'm guessing this might mean I wouldn't get any benefits.

LisaLou1982

jollyjohn123 wrote: »

Mark- I'm not sure if it will be a problem, the existing mortgage is a buy to let, I assume other people that own more than one property have buy to let's and then a normal residential mortgage for the place they live in?

Lisa -Hopefully it wouldn't come to that but I heard you can also claim a benefit payment to cover mortgage interest? I think the main concern if I lost my job would be the fact I already own the first property, I'm guessing this might mean I wouldn't get any benefits.

Mark - PPI is only a problem if it is Mis-sold. Mortgage protection is a great product for some people. I should know, im sadly now in the position where im going to have to start claiming on it. I couldnt be happier with my decision to take it up - id be scuppered if i hadnt.

JollyJohn - You can claim benefit payment to cover the interest on a mortgage upto £100k which will pay after 13 weeks. Im not entirely sure how it would work regarding the first property - id have thought if you werent making any money off it then it might be dis-regarded but it might b worth posting on the benefits board for more info on that.

jollyjohn123

thanks guys i am still not sure, but seeing as i'm in a job that doesn't have great future prospects then i am leaning towards renting, at least i can get out of it in 2 months then. the only benefit of buying another place that i can see is house prices rising, but as i already have one property then that would rise anyway. i kind of feel its a bit greedy owning 2 places also, at the end of the day why do i need to do that?

jollyjohn123

well i've had a look and there seems to be more properties available to buy than rent, that meet my criteria. i would have expected the opposite!