Buy or Rent? some advice please!

ellesters

Hi there - I have a small dilemma and would welcome some fresh perspective.

We need to move to a larger property for a mixture of personal and business reasons in September this year. We already own a one bed flat which we don't intend to sell but which we could use to free up some capital to use as a deposit on another property. We currently have a £100k mortgage and could remortgage up to £210k. We would definitely be able to cover the increased borrowings on the flat through rental with about £200 monthly to spare (to build up a fund to cover voids, repairs etc.) so far so sensible.

Now here's the issues ... our current mortgage deal expires in a couple of weeks and I obviously don't want to go on SVR but do I organise to borrow the extra now knowing I won't use it until Sept thereby paying interest on it straight away? Or do we get our skates on to buy now even though we won't need the extra space until September? Does it even make sense to buy right now in this ridiculously insane market where getting another bedroom and a garden in our area is going to cost us £450,000? Would we be better off spending the same amount of money (approx £1600 per month) renting for 6 months to see what happens even though that's pretty problematic with a cat!

Financially there's no question that it would be a stretch for us either way but sometimes you just have to stretch don't you? Obviously I would try to fix for a period so that we wouldn't have the added worry of interest rates continuing to rise. My gut instinct says buy because renting has been problematic in the past but do not want to find myself financially strapped and saddled with neg equity in the event of crash.

Friendly advise welcome - been thinking about it all morning and it's doing my head in.

Thanks!

PosterBoy77

To me a few main points spring out. If you proceed to buy another bigger house, I would sell the flat you have to free up some cash. If the market carries on going up, you will get the benefit of growth in the bigger house you buy.

Renting out a flat can be time consuming - finding tenants and dealing with repairs etc.

I would suggest that nobody should over-stretch themselves unless their income is totally secure and you get a long-term fixed rate mortgage, so you know what your mortgage payments will be not just for two years but for ten years or more.

Renting a house for 1600pcm is likely to be much cheaper than the interest alone on a mortgage for a 450k house, so it may make sense to hedge your bets by renting and saving the extra you would have spent on mortgage payments for when you decide on exactly what you wish to buy.

Even without a property crash, buyers without a chain and who can bide their time can still get good reductions on asking prices.