Buy House or Rent + Invest

enthusiasticsaver

Surely if you are renting what spare cash can you invest? Only the deposit as often rent is more than a mortgage with low rates. I have taken the view that diversifying is the best way to go with investments so none of our investments are in property as we are already heavily overexposed as we have our own property and I have a third share in a second home. Consequently investments are in multi asset funds (ex property) or cash.

phillw

ruperts wrote: »

If you calculate the amount of interest you'd pay on a mortgage over say three years, add on buying and selling fees and then make that sum your 3-year renting budget, you can then invest the remainder that would have gone towards paying down the mortgage and be no worse off.

You can do that calculation over 3 years, but there is no way you can predict whether at the end of it you'll be better or worse off. Investments can go up or down as well as house prices. Don't forget to include the fees for buying and selling your investments, which you'll likely have to do regularly and also the time you'll need to manage your investments. Especially with the uncertainties of brexit.

Buying a house and investing is pretty much the same thing, but you can live in a house while you're investing in it.

Relationships are way more likely to fail than the housing market. If you buy a house and then decide to move in together, then you can always rent it out when it looks like you might stay permanently. It will save you from the "I would leave him, but it would mean staying with my dad as I cant afford to buy now" conundrum.

My advice would be that if you can get a mortgage then definitely do it. Finding the right property for your budget of course is a harder decision. I bought a house near to my girlfriend and within a couple of months we had split up. Fortunately I chose the location for other reasons. My only regret is that I didn't buy sooner.

Eco_Miser

jimjames wrote: »

Originally Posted by Eco Miser
Those studies about a house being a poor investment - they may be right in financial terms, but buying a home is more than an investment, it's prepaying a lifetime's rent at a massive discount.

I agree if it is a place you are living in. I'm not so sure if it's a pure investment property which seems to be the default option for many people who come into money rather than looking at a balanced portfolio.

I agree about a pure investment, but i took the OP to be asking about buying a home for themselves.

smiddle3

To answer a few of the questions above, I am 32, full-time employed in education sector and yes the purpose of potentially buying a house would be for myself to live in first and foremost. I don't have any other savings/investments apart from what I pay into my teachers pension so I want to, where possible, make sure the next big financial decision I make is not a complete failure like most have been to date. My new partner has their own house but is in negative equity on it and still has their ex partner on the mortgage. They are also in quite a bit of consumer debt (how much I don't know) so the prospect of us living together seems quite a way off. So my though process is either a) put a deposit down on my own house in an area close by to where I work and where my partner lives (5 miles between the two) and get back on the property ladder, b) stay at my dads for a little bit longer (how long I don't know - feels like I've been there too long already), save up a bigger deposit for further down the line or c) rent somewhere now and look at putting my savings to work in investments (thinking that it could be 5+ years potentially before me and my partner might look at buying a place together). Am I missing anything? And what are peoples thoughts on the above?

justme111

Would depend on what you could afford now , what you could afford after saving more, how your relationship with your dad with all the nuances. Do the numbers. Do not take into account for now options that include your girlfriend.

markwilkinson

Ignore the girlfriend future for now, that will or won't fall into place, over time. For a little while I always extolled the virtues of renting, it offers a certain amount of freedom and no mortgage millstone. Met someone in the early 2000's who fundamentally disagreed and said rather than being a millstone, it actually quite liberating, as provided you keep up the mortgage payments no one is moving you on against your wishes. I now agree with this. This is our place, we can change the internals if we wish, we can have pets, if we wanted, etc. I would consider trying to find a place that suits you a,d getting back on the ladder.

jdw2000

smiddle3 wrote: »

My new partner has their own house but is in negative equity on it and still has their ex partner on the mortgage. They are also in quite a bit of consumer debt (how much I don't know)

Personally speaking, before I think about committing to a partner, I want to know what their finances are like. It's right up there with STDs as to what I demand to know. For all you know, she's up to her neck in £30K consumer debt - as well as being in negative equity on her property. And even when her property is out of negative equity, it sounds like she is only entitled to half of whatever profit there is.

darkidoe

smiddle3 wrote: »

Hi All,

I split up with my ex-partner in spring last year and we (finally) sold the house we shared together due it being unaffordable for either of us to take on on our own (one of many financial mistakes I have made over the past few years!) in December.

Luckily, we sold at a small profit so I came out with my deposit plus a little bit extra (roughly 10k). I have moved back in with my dad temporarily whilst I figure out what to do next. My initial thought, and the advice everyone has been giving me, was to stay here for a good few months, save up as much as possible and look at putting a deposit down on my own place. I am currently putting away around £750 per month in high interest bank accounts.

However, I started seeing someone new about 3 months ago who lives about 10 miles away from me. They have a house of their own as well as child from a previous relationship and are pretty 'rooted' where they are with things like childcare, schools etc. Whilst I know it is early days as far our relationship is concerned, it has got me thinking about whether buying my own place and rooting myself in a particular place in the near future is the best course of action or whether I should look at renting for the short (and possibly) long-term.

I have been weighing up the pros and cons of both as well as reading up on saving and investing and I have read a lot of people's (mainly Americans I must add) opinions saying that, in terms of an investment, buying a house ranks as possibly the worst type (illiquid, lack of diversification etc).

Therefore, long-winded I know, my question is simply: has anyone had experience of being in a similar situation or simply just weighed up the choice between buying a house or renting and investing spare cash and how did you come to a decision?

Thanks in advance

I am in the camp of renting over buying for it's flexibility and ease and personal hatred of any form of debt. However, I would consider buying as a primary residence if I were to be staying in it for at least 2-3 years and perhaps keep it as an investment after. I wouldn't buy-to-let as an investment. If I can see myself living the an area for the next 10 years, then definitely I would plan to buy.

atush

Stay with your dad for a bit and save up for a deposit