Rent v Buying

skids78

My brother is buying a flat for us to rent off him. He doesnt require a mortgage so any rental income is extra cash and therefore charging us a fixed low rent of £750 per month for as long as required. He hopes to make a profit from selling the flat in around 10/15 years time.

We have started saving again for a deposit(ex home buyers who lost profit when we sold first flat) We can save up to 20% in around 4 years. So we would rent from him for 4 years until we can do this.

What my query is - Would we be best to continue renting on this low fixed amount for the 10 years that my brother wants to hold the flat for and save even more of a downpayment or would we be best to buy in 3 years and start paying off a mortgage?

Any help would be appreciated.

Thanks!

SecondTimeBuyer

If house prices stay flat (or drop) you are far better off renting than buying. However if house prices rise you could be chasing shadows! Another thing to consider is you want a longer mortgage (lower monthly payments) you will need to get it before you are 30-35. Just keep an eye on the markets and you will have to decide when the right time is for you.

skids78

Due to the house prices falling after buying in at the high end on our first flat - we left without any profit. We sold as we had a child and not enough space. We are starting from scratch and already 35 with a 2 year old daughter. We hope to be back on the market by 40. Is this reasonable? If we look at the costs of a mortage with a 20% deposit the monthly repayments would be about £1400 per month, as opposed to the rent of £750.

I guess checking the market to see whether or not the house prices rise is best but also - what about comparing interest on the mortgage as opposed to savings in say a S&S ISA?
If I were to save the extra £700 or so into a S&S ISA instead of getting a mortgage out in 3 years, would I save more than what I would pay off on my mortgage?

Sorry for all the questions...

SecondTimeBuyer

Pipunch wrote: »

Surely isn't it better to buy when the market value is low? :huh:

Sorry, my point was that if the OP buys now and houses prices drop they will be in a worse case than renting. But if they are renting a place and the house prices rise they will miss out on any gains.