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I have a sizable deposit... but should I rent or buy right now?
BoredPerson
Posts: 6 Forumite
I need a place to live in soon. Some info about myself:
I'm young professional with no SO and kids although they might come into my picture later on. I may move out of the city/country or need to upsize within 3-5 years or so.
I've just found a property near where my mum lives. It's around £55k. It's not nice property nor is it in nice area but then I've lived in this area for a while and I know my way around. The property is in good condition, but obviously I will take a survey if I get to the buying stage.
Anyway, what's cheaper - buy a house but I might have to sell it within 3-5 years...
...or, rent a property for 3-5 years and decide whether to buy a house or move out of the city/country.
Can anyone summarise the costs of buying a property as a cash-buyer and maintenance costs that would have been covered if I rented instead?
So far, I have calculated the following:
Rent:
£600 a month for 3-5 years
Total: £21k to £36k
Buy:
Legal: £1k
Homebuyer survey: £300
Maintenance: ???
Insurance: £200 a year
Total: £1900+ to £2300+
So, it sounds like a no brainer to go for the buy route but I see so many people advising against buying a property unless you're willing to live in them for at least 7 years. I must be missing something significant.
Anyone?
Edit: To clarify that the sizeable deposit is for buying a house in 3-5 year's time, not now. I can afford to buy the £55k property outright.
I'm young professional with no SO and kids although they might come into my picture later on. I may move out of the city/country or need to upsize within 3-5 years or so.
I've just found a property near where my mum lives. It's around £55k. It's not nice property nor is it in nice area but then I've lived in this area for a while and I know my way around. The property is in good condition, but obviously I will take a survey if I get to the buying stage.
Anyway, what's cheaper - buy a house but I might have to sell it within 3-5 years...
...or, rent a property for 3-5 years and decide whether to buy a house or move out of the city/country.
Can anyone summarise the costs of buying a property as a cash-buyer and maintenance costs that would have been covered if I rented instead?
So far, I have calculated the following:
Rent:
£600 a month for 3-5 years
Total: £21k to £36k
Buy:
Legal: £1k
Homebuyer survey: £300
Maintenance: ???
Insurance: £200 a year
Total: £1900+ to £2300+
So, it sounds like a no brainer to go for the buy route but I see so many people advising against buying a property unless you're willing to live in them for at least 7 years. I must be missing something significant.
Anyone?
Edit: To clarify that the sizeable deposit is for buying a house in 3-5 year's time, not now. I can afford to buy the £55k property outright.
0
Comments
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I don't know where the seven year figure came from.
I'd buy it. Even if house prices fall, you're in a better position. The rungs on the ladder have just moved closer when you want to move on.
The exception might be if it's a studio or one bedroom flat - can be difficult to shift even in the best of markets. Or it had a load of urgent maintenance requirements."Real knowledge is to know the extent of one's ignorance" - Confucius0 -
I personally wouldn't buy a crap house in a crap area...0
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I dont think you are comparing like for like. A 55K property would not command a £600 rent.“Quis custodiet ipsos custodes?”
Juvenal, The Sixteen Satires0 -
So basically you re asking if Trump will go on an investment spree, overheating the economy and accelerating FED rate hike, forcing other economy to follow? Even so Bank of England might have issue of her own with unknown Brexit consequences. No one knows what will be the inflation, the interest rate and the consequences on houses prices in 3 years.0
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What is the rental rents in the area you want to buy? £600 sounds a bit steep if it's in a poor area."It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
Don't forget your responsibilities as a Landlord, the legal and tax implications.
Do you know about gas safety checks? repair responsibilities? what if you needed to evict someone, you could be without rent for a few months and also pay court costs. What if the boiler broke, it's a 2k job easily.
What is the rental rents in the area you want to buy? £600 sounds a bit steep if it's in a poor area.
I don't think they're planning on renting it out - they're planning on living in it for 3 - 5 years and then upsizing.
ThI re asking if they should rent or buy now....
Stashbuster - 2014 98/100 - 2015 175/200 - 2016 501 / 500 2017 - 200 / 500 2018 3 / 500
:T:T0 -
Your comparison is flawed.
1. You need to account for the returns you could have got by saving/investing the £55000 - losing that is part of the "cost" of buying.
2. If you're moving in 3-5 years in both scenarios, you need to add the cost of selling the house. (EA fees, more legals)
3. You need to compare like for like, as davemorton said. Otherwise, you're ignoring the "cost" of living in a worse property for 3-5 years.0 -
I think you need to be prepared to stay longer in more expensive properties due to the stamp duty and higher legal and mortgage costs.
You don't have stamp duty or mortgage costs and its a very low priced property so you wouldn't have to stay long to recoup your money, especially as you'd be saving on the rent.0 -
marliepanda wrote: »I personally wouldn't buy a crap house in a crap area...
me neither
If you can only afford to live in a crap house, in a carp area, I think I'd rent,
so that I can move on in a hurry when my finances improve without being stuck with a house that no-one wants to buy
tim0 -
What would you classify as a sizable deposit??? £50k??
I would never buy in a crap area. Why not rent a room in a house, save up even more money, THEN look at buying somewhere.Should've = Should HAVE (not 'of')
Would've = Would HAVE (not 'of')
No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)0
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