Continue to Rent or Buy

Power_and_Pride

Hi,

I'm fairly new to this forum but I understand you guys provide some great advice and help with a wide range of topics.

I currently rent a two-bed flat, paying £485.00 per month to a private landlord. I'm 21, and earn £25k a year. I own my own car, without finance and I owe nobody any money.

I have recently inherited some money, and was hoping to get some advice on if I should continue to rent and put the money in an ISA or savings account or if I should buy my own house outright without a mortgage?

I'm not entirely sure of the pro's and con's of either, so I'm hoping someone more savvy will be able to help me and point me in the right direction.

Thanks
PAP

chris198232

Nobody can tell you what's best for you, but I'd always buy! If you have a deposit then go for it but it depends on how much extra the mortgage is going yo cost you over renting.

Under £500 is cheap rent for a two bed, where would you be looking to buy? It's only likely you would get £70 - 90k ish mortgage, depending on your situation and bills.

dimbo61

We have no idea about what deposit you have or what you can buy in durham.
Big university city so guess city centre is not cheap.
You are only 21 and getting a property of your own is a great idea BUT there are other costs to buying and maintaining a home .
If you have a problem with the roof, boiler, windows you just ring the Landlord.
Buildings Insurance, repairs, etc
Will you want to stay in Durham long term ?

F1F93

Assuming you buy a house in Durham:

A 100K mortgage should be easily obtainable (halifax says they will lend 130K, MSE say up to 113K, Nationwide say 119K so 100K is quite conservative) and you'll be able to upsize - I've just had a quick search on zoopla and seen quite a few nice 3 bed semi's for about 110K-120K.

A 100K mortgage at 3.2% will be £485 a month. A quick google compare mortgage search shows that 3.2% should be fairly common unless your mortgage is fairly small.

Alternatively you could buy a flat of the same size and save some money on the mortgage.

I'd say buy.

Running_Horse

I bought about your age. It felt like a great achievement, but I also felt tied down for long periods when I could have been moving on. Only you can know how important your freedom to move is.

derbyshirenick

I got the impression that the OP has the cash to buy mortgage free.

I also assume if they have this amount its enough (guessing 100k+) to return enough in an ISA to at least offset a good amount of their rent. At this point it really does beg the question which is the best move. Either way I am guessing the rent is "free" as its covered by the ISA? and buying would be free as there would be no mortgage payments. The positive of renting under these assumptions is no obligations and no responsibility. At 21, I would be tempted to just live it up. 25k income with no/minimal rental outgoings is a nice place to be at that age. However... While your cash is in an ISA and you are taking the interest to cover your rent (guess on my part) that money is, over time depreciating as its a fixed total that is worth less in real terms as the years tick by. That is just theoretical though because no doubt you will buy before it depreciates significantly. With buying the house price will theoretically, on average caveat caveat caveat go up so long term it is probably more financially rewarding. You will have risk though, being sold a dud... unforeseen issues.

Swings and roundabouts at the end of the day. Go with your heart. Enjoy being 21. Life will soon vanish and these choices will really matter. At this point, going from the info you have given I think its a punt whatever way you go. As I say, what fits your lifestyle and desires is most likely more important right now.

Edit: It doesn't sound like you will but just don't **** it up the wall and spend it on 4k tvs. You are in a very very fortunate position, appreciate that and set yourself up for a nice life. Keeping that cash until the time is right for buying and being mortgage or near mortgage free for life is something most of the UK can only dream of. You will be £5-800 better off per month than most people of your generation.

Note: the reason I go on is I know somebody in pretty much the same boat and they are just totally oblivious to how fortunate they are and just moan all day about how poor they are. This is a 60k household income with no mortgage, no children, no debt. It drives me mad but thats totally OT so *shuts up*.

Mallotum_X

If you can afford it and still be able to save some money for other things then go for it.

Ultimately you need to weigh up what works for you but having the freedom of your own place and no landlord counts for a lot. If you can stretch to a small house rather than a flat then have a look at what's available as well.

I was 25 when bought my first place so a bit older but 13 yeats later I have no regrets

jamie11

I can only say that if you have the right long term frame of mind then buying will help you plan a comfortable life. But never sell it until you're in your dotage.

The place should always be able to provide you with an income even if you don't live there yourself.

Don't skimp on insurance though.