advice wanted please! first time buyers/renters

Looouise

Hello everyone,
My boyfriend and I have been working full time for the past year to save up enough money to go back to uni as post grads and move in together. We had planned to rent, but a few people have mentioned the possibility of buying and its got me wondering what would be the best option. I have been reading Martin's blogs and have read about his frustration when people say 'renting is just throwing money away' - but is it??
As we will both be students, we won't actually have an income, and will of course have to use a parent to guarantee the mortgage. Would it be worth looking in to buying? or would people recommend us waiting until we are more financially stable?
we are looking to pay a rent of around £550 per month.

Apart from living away from home as undergrad students, this will be our first real "moving away". We are both 22.

Any advice would be most welcome!!

Thanks very much!

beingjdc

Looouise wrote: »

Hello everyone,
when people say 'renting is just throwing money away' - but is it??

Yes, but so is everything. You rent, you live there, you don't have the money any more. You buy food, you eat it, you don't have the money any more. It's "throwing money away" in the sense that buying milk is throwing money away when you could buy a cow...

Buying is usually worth it in the long run if you are planning to stay in the same place for a long time, because prices will on average tend to go up, but with interest rates where they are at the moment, and prices at what I think is close to a peak, I can't see it being cheaper.

Well, it's your decision and only you can know what's right for you, but there's my view!

franklee

Looouise wrote: »

Hello everyone,
I have been reading Martin's blogs and have read about his frustration when people say 'renting is just throwing money away' - but is it??
As we will both be students, we won't actually have an income, and will of course have to use a parent to guarantee the mortgage. Would it be worth looking in to buying?

Well I can understand Martin's frustration, mortgage interest payments, like rent, are just paying for "borrowing" something. Why not get a calculator out and work it out for yourself, here is one to start you off:

http://www.fool.co.uk/mortgages/CalculatorRepay.aspx

It's simple so long as you know how interest works which I assume you must bing a uni post grad student, but just in case: A large part of the monthly mortgage repayments will be the interest, this is the cost of borrowing the money, and does not go towards paying off the debt. Likewise you will get paid interest on your savings so don't forget you will be losing that income on any deposit you put in to buying a property.

It also costs quite a lot to buy or sell a house, you have solicitors fees, survey fees, stamp duty etc. etc. So if you buy and then sell again after a short time then the fees probably mean it isn't worth it.

That's without even mentioning that house prices can go down as well as up

My advice, enjoy being young while you still are and leave the property buying till later.

DaveyDave_3

The main thing is to go into this thing well informed. Do not be pressured into a mentality that you MUST buy at all costs. Renting is definitely not dead money. From what I've read, there's considerable uncertainty in the housing market at the moment what with increasing interest rates and with some saying that there may be a correction/crash. The fact is that the housing market has enjoyed an unprecedented rally over the last 6 years with many involved with speculation as their main motive. Personally, I'm waiting for a year or two to see what's going to happen to the market before considering buying. And remember, any money you can save whilst renting can be used to earn interest to offset against your rent which with increasing IRs is not a bad situation.

Regards,
Dave

m00m00

property prices in university towns are usually quite inflated too, due to them being particularly desirable for landlords to convert into multi occupancy dwellings.

izzybusy23

Looouise wrote: »

Hello everyone,
My boyfriend and I have been working full time for the past year to save up enough money to go back to uni as post grads and move in together. We had planned to rent, but a few people have mentioned the possibility of buying and its got me wondering what would be the best option. I have been reading Martin's blogs and have read about his frustration when people say 'renting is just throwing money away' - but is it??
As we will both be students, we won't actually have an income, and will of course have to use a parent to guarantee the mortgage. Would it be worth looking in to buying? or would people recommend us waiting until we are more financially stable?
we are looking to pay a rent of around £550 per month.

Apart from living away from home as undergrad students, this will be our first real "moving away". We are both 22.

Any advice would be most welcome!!

Thanks very much!

Renting is only 'dead money' in this climate if the mortage on the property you were renting was less than the rent. I would doubt it though at this moment in time as rents haven't risen no where near as house prices. Also with the rises suddently hitting people in the pockets and a slump in house offers being made, and with possible further interest rate rises, do you really want to jump into a mortgage when the possibility of a crash could be on the horizon??

I am a renter, have been for nearly 3 years. Every property I have rented has cost me less than if I had mortgaged it. Dead money, nope. Mortgage is dead money in the long run if houses crash and you find yourself in negative equity.

Edited to say, why not just rent for six to twelve months, see how you both get on for one, how your finances are doing and then look at the housing market objectively. Then you could decide what option is best for you.

lynzpower

what income would you have?

Looouise

Thanks to everyone for your advice.
Lynzpower - the point is, as students we wouldn't have any kind of substantial income (apart from part-time jobs). We have saved hard to cover the costs.
I think we may decide to wait until we are qualified and then look into buying when we are more financially stable.

Thanks again!