Buy or rent?

cmonkey

Hi all,

I've been living in the UK for a bit more than a year. I'm here with my wife and we're currently renting a 1 bedroom flat in Wandsworth, and are paying £800pcm. Our plan is to stay in the UK for some years (something between 10 to 15 years). Then, retire in South America. This £800pcm is not expensive comparing to the market value of Wandsworth 1 bedroom flats. We're paying a good value for the flat and location.

What I'm trying to understand is if I could use this £800pcm more wisely. Would a mortagage be a better deal than renting, for these 10 to 15 years?

I checked the ads and to buy a flat we'd need something around the value of £160k to £190k value.

We don't have much money to start a mortgage, because we'll be using our savings to pay for a postgraduate course for my wife. At best we'd have around £10k to start. And we could pay around £1000 to £1200 monthly for a mortgage. Do you think it would be possible and worthwhile?

I appreciate any thoughts on this issue. What I'm basically trying to find out is if it's better to start a mortgage than rent, considering the values and the time period that I mentioned.

Thanks!

BTman

I think you need a crystal Ball...

Nobody knows the answer to your question, if they claim to they are just guessing. It all depends on what house prices and many other economic factors will do over the next 10-15 years.

peachespeaches

Are you happy where you are? Thats the most important factor. Can you afford to buy something halfway decent??

We are renting at the moment, we couldnt afford to buy a house like this in such a good area. It started out a temporary arrangement, but we love it so much we want to stay.

I find one of the big advantages of renting is no unexpected bills. Recently our guttering was leaking, so I just called the landlord. He had his property repairers round promptly, all guttering and fascias were replaced and they also checked out the flat roof extensions and treated a wasps nest while they were there. Im glad I didnt get landed with that bill! Plus when we moved here it was fully carpeted and curtained. Last time I moved I spent thousands on that.

If you like it where you are, I'd stay put. Our home before this one was in an awful location and we had a lot of trouble with antisocial behaviour. Now we have found a good spot we are reluctant to leave.

Gorgeous_George

Negatives of renting
1. Well, it is almost guaranteee that rents wil rise over the next 10-15 years. You could be paying more than £1200 per month for years 10 to 15.

2. You could be evicted if the LL chooses to sell and that would bring its own hassles.

3. It's not your own home so your freedom to modify the property is limited to what is reasonable

Positives of renting
1. Free to move at short notice. Moving would be cheap.

2. No maintenance costs.

3. HB could pay the rent if jobs go belly up or you suffer health issues.

There are plenty more positives and negatives to renting but I think it's better to focus on the more important ones.

Negatives of owning
1. Mortgage payments driven by wider economy. You have no control unless you fix for a long term.

2. All repairs/maintenance are your responsibility.

3. Moving is very expensive (a year's rent?) and stressful.

Positives of owning
1. Security of tenure.

2. Once the mortgage is cleared, you own your home.

3. Free to do what you want (subject to planning/building regs).

I own most of my home with Britannia Building Society owning the remainder. It will be mine before I am 50.

I also let a property and I am very lucky that I seem to have great tenants at present. It wasn't bought as a get rich quick scheme but to have some control over my parent's neighbours. That said, it pays for itself and I use any 'profits' to improve the house.

You must decide what you want. Over 15 years, I would expect prices to rise a little.

GG

meanmachine_2

According to findaproperty, the average price for a Wandsworth 1 bed is an insane £265K. (Why?! The town centre's a DUMP!)

Minus £10K in deposit, that gives you INTEREST ONLY payments of £1200pm.

If you think that's a fair price for renting off the bank, rather than a landlord, go for it.

Personally I'd stay where I am and save the difference - 400quid - each month, then take that with me to my retirement place.

Up to you - beari in mind though that rents do increase - although they've barely budged in London in 10 years, if my experience is anything to go by.

Rented in Balham in 1997 for 950pcm - same place now £1200pcm.