Buy or stay secured tenant??

Sam_16

Hoping I can get some opinions. At the minute I have a secure tenancy with a Housing Association in N.Ireland. Basically meaning I can stay as long as I wish providing rent payments are not missed. It's a 7 year old 3 bed semi in nice area with rent and rates of £480 per month.
Have been considering purchasing a home as my feelings were I will not see any of my rent back and thought buying might give something back to my sons when I'm gone. I have saved £7000 towards deposit and my parents will gift me £4000. Property I've seen is 3 bed townhouse with sunroom in lovely area and is £143500. I was wanting to purchase through co ownership 50/50 split and have a broker for advice. I've paid the site reservation fee and am basically having second thoughts.

What would you do in my shoes? Staying in secured tenancy always gives me the security that if for any reason I could not work I may be able to get help with rent payments obviously with a mortgage I can't. Really don't want to do the wrong thing just so that "I'm a homeowner" as I do have 2 sons to think about if it all goes wrong.

AnotherJoe

Your rent is £480. What would the mortgage payments be? Also with a 50/50 split don't you pay rental amount as well ? In any case, what would total outgoings be? Plus you have the expenses of being a homeowner?

Once you add all that up, might you be better off with HA? If so, why not just save the difference? That could go to your sons, which I presume is some considerable time away? Plus that money might be needed for future eventualities such as retirement ?

getmore4less

Buying 1/2 a house

Rent on the other 1/2 but probably responsible for 100% of the maintenance.

Any other ongoing fees? service, ground rents etc.

you start paying the rates.

How much is left to rent the money?

Sam_16

Mortgage will be around £280 pm on a 5 year fix, co ownership rent £149 pm and rates approx £70pm. Service charge £175 per annum. Co ownership rents increase 2% yearly but also so does my HA rent.

Main points for buying was a nice house that will give something back to my sons. My HA is nice needs some renovations if I were to stay here I would use my deposit for new kitchen and bathrooms etc.

siamesebengal

Seems like it'd be worth considering buying - you can still get help on the shared ownership rent were you unable to work. Work out what the full cost looks like - even if you don't own you saving will mean you can pass something on.

HappyMJ

Sam_16 wrote: »

Mortgage will be around £280 pm on a 5 year fix, co ownership rent £149 pm and rates approx £70pm. Service charge £175 per annum. Co ownership rents increase 2% yearly but also so does my HA rent.

Main points for buying was a nice house that will give something back to my sons. My HA is nice needs some renovations if I were to stay here I would use my deposit for new kitchen and bathrooms etc.

That's more expensive than renting so I'd continue to rent

£280 plus £149 plus £70 plus (£175/12) is £513 and you're currently paying £480. You haven't taken into account maintenance costs. You have to maintain the boiler as an owner of the property.

As you say the rent will be paid in full if you were to lose your income or retire. You can still pass on your £7,000 in savings and any other assets you've accrued.

So....I would rent.

I imagine the mortgage is an introductory rate over the next 5 years. What's the payment at the SVR after the introductory period has expired? How many years on the lease? You need to extend before 80 years are remaining to get the best deal. That will cost thousands.

Sam_16

Although buying is working out a bit more I thought it would be better as I would see something back and if the house gains value it would be a good thing.

My worry is that secured tenancy will not be guaranteed forever. David Cameron spoke about this changing and that tenancy would only be possible while it was still needed. So what would happen when my dos grown up would I be forced to downsize?

I appreciate what you are saying regarding maintenance costs. At present I do pay for small maintenance in my house at the minute. I know I don't have to but when it comes to things like roof boiler etc I've never really had those costs before. It's such a hard decision especially because I'm not in a position where I need to buy a property to put a roof over our head.

Sam_16

SVR after fix is 4.74. Property is freehold no lease.

Another factor which was pushing me towards buying if I stay renting my rent will never decrease only increase so even in retirement I have that cost. If I own surely payments will decrease over time? Worst case scenario I stay 50/50 split my rent should still be cheaper.

siamesebengal

If Happy's sums are right then buying looks attractive - you'll definitely be paying off more than £33 in capital a month, (depending on your interest rate, probably £100-180 a month) so if house prices stay flat you'll be ahead after a year or so - depending on moving costs - and you can get a new fix after the initial fix is up - no need to ever pay the SVR. Also yes, it removes the uncertainty around eliminating secure tenancies.

Sam_16

Thanks so much that's what I thought not much difference in cost per month and having the added security that it's mine. Also hopefully setting an example for my boys. I'm hoping my earnings only increase so my worst case scenario is I'll own half. It's also a new build so hoping boiler and roof costs won't be a factor for a while giving me enough time to add to my savings again.

csgohan4

Don't forget to factor in insurance, building maintenance, no crying to a LL if the boiler breaks down.


Also don't forget the property can also go down in value in the future as has happened in Ireland.