Better to buy or rent for 4-5 year period as first-time buyer?

achkas

Hi, in a year's time I will need to move to an area I'll stay for around 4-5 years due to work, near Potter's Bar, Luton, or any surrounding area within around 30 min drive of Hatfield.

I'm looking to either rent a house with a garden (seems to be around £1100-1200 in rent in the area) or buy one, as I work from home and would very much like a dog for companionship during the day while my fiance is out at work.

I've calculated that £1200 rent for 12 months for 4 years would be around £57,600 altogether.

However, if I were to get a 5% deposit for a £150,000 house (possibly under help to buy), then based on rough internet calculations (please let me know if these seem correct or not!) then according to Natwest I would have a £777.37 on a 2 year fixed rate mortgage, and potentially around £500 in stamp duty and maybe around £1000 for solicitor/surveys and so on. Altogether this would be £46,313 spent on the process altogether in 4 years.

Now as this is 10,000 cheaper than renting (if my calculations are correct), should I go the buying route? I'd be a first time buyer so any advice here about any costs I might not have anticipated would be really useful. Also, if I've paid £777.37 in monthly payments over four years with a £7500 deposit, how much money would I be able to release from the house after a sale after five years?

Presumably this money gained back from a sale of the house would further introduce quite a big gulf in spending between 57,600 for renting and the overall cost of buying/selling this house, even if I made no profit whatsoever. For anyone willing to advise me, how much money would I be likely to get back from my deposit and mortgage after a resale?

Another factor is due to my self-employment and working from home I can claim a large cost of living as a business expense, reducing costs either for renting and I presume mortgaging.

I'd considered for quite a while just renting indefinitely until later in life, but an upturn in my business and doing these sums made me realize today I might be able to start out on the property ladder - I just want to ensure this is all worth it and that I haven't been stupid in my calculations.

Thanks in advance for any advice!

Voyager2002

Most people in your situation would buy, assuming that you are indeed eligible for the sort of mortgage that you are considering.

One thing you need to be aware of: if you work from a rented home then part of your rent becomes an allowable expense for tax purposes. If you do the same when you are buying your home, if at a later stage you sell your tax position becomes more complicated and potentially expensive.

amnblog

Have you checked today's prices in Hatfield versus 2010?


Nationwide's figures suggest the £150,000 house would have been £105,000 5 years ago.


I make that £750 per month as the cost of delay.

somethingcorporate

I would suggest strongly consider buying.

You could be forced to live in 4 different houses if renting (even if you were a model tenant) whereas buying would give you certainty of tenure.

martinsurrey

somethingcorporate wrote: »

I would suggest strongly consider buying.

You could be forced to live in 4 different houses if renting (even if you were a model tenant) whereas buying would give you certainty of tenure.

add onto that, the fees of renting, the rent increases and the ability to paint your own house, and buying is IMO the best option.

OP, if its a 25 year mortgage for £112,500 (75% of £150k) at 3%, after 5 years you'll have paid off £16,300 of capital, so if you sold the house for what you paid for it, you would get this back on top of the deposit you paid.

Yorkie1

Also bear in mind that it can be very hard to find a tenancy if you have a pet - and, if you have to move during your time there, you need to find a LL happy to rent to you each time you move.

Thrugelmir

Perhaps you may stay longer in the area than 4-5 years.

Daerve

Buy all day long for me.

ViolaLass

I'd be inclined to buy too, but just for balance, have you considered maintenance costs for the property? We had to redo the roof almost as soon as we'd moved in, this year we've changed the boiler and we know we need to do the windows and back door soon. We wouldn't have had to pay for any of that if we had been renting (equally, we wouldn't have had the choice to make these things happen, either).

lizards

Buy.

We're now being basically forced into buying (thankfully we had JUST saved up enough deposit+fees, we could not have done it even a week sooner) as our landlord is selling up. We were told 2.5 years ago it would be a very long term let, but he changed his mind. There is nowhere else to rent within miles - if we didn't have our deposit together and the bank thankfully has underwritten our mortgage subject to valuation, we would be in big trouble right now.

The uncertainty of renting is truly horrible. And you never feel like it's your own place. We were homeowners before (long story involving NRAM) and it is such a relief to call a place your own. We'd never have rented if we'd had a choice, so if you have a choice, buy every time!

If you choose a relatively modern house and get a good survey back, the overheads won't be too bad anyway. Hardly spent anything on our last house in 9 years and the landlords of our current place have hardly spent anything on it in 2.5 years either.

amnblog

Everyone is saying 'buy'.


Would you expect any other view on a mortgage forum?