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Rent or Buy Mid Term

Hi all, im looking for a little advice on answering question for my specific situation. I just can't seem to find anything which addresses me particularly. Thanks in advance for all your help. Here goes...

I had to move to a new city for work. I have kept my old flat with a 1.5% interest only mortgage costing £270 a month. That is now rented out for £800 + flat rate bills = £1100 a month. I pay the whole £1370 into my mortgage every month. I want to keep this property long term for several reasons.

In the new city I have rented a place for £850 + flat rate bills = £1200 a month. I rented because I had no deposit to buy. I rented this place particularly because I have new baby and here has a huge walled garden, its beside the park, beside my work. Its the basement floor of a mansion where 1 old lady lives and is perfect for what I want. I could not find or afford to buy a place like this (probably in the region of £1 million)

I have now bought an ex-council 2nd floor flat near me for £100k. Mortgage repayments are £350. Instead of moving in I have ended up renting this flat for £750 a month. I pay the whole £750 into the mortgage. This flat is not particularly nice and while I would live there alone, its not ideal for my family.

Given that my rent is £850, and that my rental property generates £750, I feel these sort of off set each other. I own something so its seems ok to keep renting this nice place.

I have my heart set on a detached cottage in the long run, and for that I need about £375k. My total potential capital right now is about 100k, and I don't want a big mortgage. If I'm lucky enough to keep my current income I should manage this in 3-5 years with a small mortgage.

My question is whether it makes financial sense to keep living in this rented property while renting out my other property. Possibly buying another similar one or two as I save....or whether I should bite the bullet and move into the little flat. I do count quality of life for my family as an important part of this equation.

My head hurts trying to do the maths on this one so thanks for any help you can offer.

Comments

  • dgtazzman
    dgtazzman Posts: 1,140 Forumite
    I know I'm not mystic Meg and can't tell which way the wind will blow in the future, but we're also headed towards buying and had planned on renting for another year or so, but recently more and more articles keep popping up that predict house prices will go up by around 20% over the next 5 years, due to a combination of the Help to Buy scheme and higher demand for housing. Gave me a bit of a scare and has gotten me calculating if we could possible manage to buy sooner...
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