Should I rent or buy?

jules9

Many thanks. Your views and time are much appreciated.
I am not new to the market, perhaps i should have made that clear in my opening post.
I have owned a home for the past 20 years. Regrettably getting divorced and will need to find flat/small house, hence my query about rent or buy in current market.
I will have around £200k and really think that I would prefer to buy in many ways, I think renting is in a way pouring money down the drain. Maybe im wrong and i can understand why millions rent.
My concern is the current market and whether buying now is a wise move rather than in say a years time. Its a real dilemna and one that I really appreciate your advice on.
Anyone else just starting out on the divorce path please feel free to pm.

jyonda

So your question is really.....

I have 200 grand... I need somewhere to live.... Should I re-invest it in property at this time or rent a property and take the interest from the bank?

I'd stick the money in the bank. On a personal level, you have to readjust your life and your needs or desires may be different in a years time so renting offers flexibility too.

Good luck and all the best

WTF?_2

kissingthepink wrote: »

I do realise that prices cannot keep rising forever, and that every market has its peaks and troughs, but who knows exactly when the market has peaked? Is it not possible that the inflationary scenario you depict could happen. Interest rates may have peaked I keep hearing and the govt pumped £10 billion into the banking system last month. Would this not assist inflation and cause LIBOR to drop which could result in cheaper mortgages, which would help in boosting house prices further?

Pumping more money into the economy causes inflation to increase. There's only so much real value in the economy and if you have lots of currency chasing that value, the currency is inherently 'worth' less.

Five pounds will always be five pounds - but what that five pounds gets you is the issue.

The problem is - will wages rise to compensate for the lower 'value' of money? Will interest rates compensate savers for how much value their savings are losing? The answer is invariably no.

On the other hand, cretins who borrowed way beyond their means will be bailed out, to an extent, if they can ride out the storm.

hooray. :rolleyes:

misterflipster

We are in a bit of a different situation. We rent a housing asscociation buingalow. My wife is disabled, in a wheelchair and needs adaptions. Were not allowed to buy our proeprty because it is adapted. However, to buy a similar bungalow I would need a mortgate of about 5 to 7 times my salary which makes it out of the question. However, were not dissapointed by this. With renting from housing association / council especially up here in the north east, most of the council and housing assc proerties are better built that the new built private property, our estate has undergone a multi million pound modernisation program with complete rewiring, new kitchen, new bathroom, new windows, new doors both inside and out and you got to choose which style you wanted as well. Weve got no repairs to worry about, no hefty maintenance charges for central heating gas boilers, no need to pay for plumbers, electricians or anything like that as it is all covered in our rent. We dont have any children to leave our property to so I really dont want to buy and let the government get its greedy hands on the place when we shuffle off this motal coil. My opinion is this. If you can buy and cofortabley afford it then do so, if you are struggling to buy and if it means you dont have a life and your just working to keep the mortage up then rent and have a life like what a lot of other countries to. You only get one chance in life, grasp it with both hands and enjoy it. Youre a long time dead

beingjdc

kissingthepink wrote: »

The problem with this savings plan is the tax element. You are giving at least 20% of ithe interest away, or a staggering 40% if you are a higher rate tax payer.

Yes - if I were a higher rate taxpayer with a significant deposit I would probably buy - it's possible to get a reasonable tax-free return on savings though - few people are paying more than £300 a month more than the interest at the start of a mortgage, and that will soon be the cash ISA limit. Then you can have bonds in a stocks ISA, NSI index-linked certificates, even a few (hides from MSE Martin) premium bonds.

beingjdc

pinkshoes wrote: »

Try not to generalise, as there's lots of areas where rents are extortionate, it's much cheaper to buy, but the houses rarely come onto the market... (hence keeping demand in that particular street high).

My mortgage interest is around £830, and my rent would have been £875, plus I have the security of no longer being kicked out of my own home, and each year my mortgage payments stay roughly the same, wheras my rent was going up.

I'm just not sure where these places are any more. Perhaps in small villages where there is no rental supply at all. But I've had reason to look at the housing market across London, in Yorkshire, in the South-West and in the East Midlands, and it's cheaper to rent.

Are you accounting for the 'opportunity cost' of the lost interest on your deposit in that calculation above, or is it a 100% mortgage?