Buying a house to save on rent

getmore4less

Start with the basics. 
Rent
How much does a place cost
Gross yield for a landlord will give a clue, anything over 4% cheaper to buy, under 4% it starts to get closer to not as the yield goes down. 
Is renting the money and maintenance going to be cheaper than rent. 
The capital part of the mortgage is savings/debt reduction. 

5 years is probably long enough to cover the costs. 

Many people go bigger than needed and get a lodger that can make a massive difference to the balance.

helen20201

MovingForwards said:

Is this you wanting to buy and live in your own home, whilst saving and building equity to move up the property ladder, or leave the country and have a new life somewhere else?
If so, I don't see why you wouldn't buy a home now, not everyone gets their first home as the one they see themselves living in forever, especially if it will take another 5 years to save up on top of however many years you have already been saving.

Thank you!
My intention is to move abroad after 5 years. 

grumiofoundation

helen20201 said:

MovingForwards said:

Is this you wanting to buy and live in your own home, whilst saving and building equity to move up the property ladder, or leave the country and have a new life somewhere else?
If so, I don't see why you wouldn't buy a home now, not everyone gets their first home as the one they see themselves living in forever, especially if it will take another 5 years to save up on top of however many years you have already been saving.

Thank you!
My intention is to move abroad after 5 years. 

Would this be impacted by buying a house (as in would you have to sell the property before the move?) and what happens if the property doesn’t seek for 6+ months (can probably be mitigated partly by buying in a popular area). 

P. S. This then removes the UK first time buyer benefits (lifetime ISA and first time buyer stamp duty relief) from the equation I posted previously. 

Do you know the country you would move to? Probably worth looking at their rules regarding FTBs, second homes etc 

pjcox2005

I'd personally do the calculation of interest v rent to see what the difference is, and then assuming interest is lower see how many months it takes to recoup the purchase costs as a result. You then get an idea on saving and can weigh up separately the risk of house prices falling and or maintenance costs.

The other point is how likely a move abroad in 5 years will be. Is 5 years a rough guess and you can flex for example if you didn't want to sell at a loss, or is it set in stone. Could it actually come a lot earlier if you've got a specific reason for moving abroad or are other live circumstances likely to change in near future (e.g. change of location for job, or moving in with a partner).

5 years sounds plenty to buy outright if the interest is lower than rent, but I probably would think differently if it's actually more likely to be two years - never mind potential cost the hassle of buying and selling a property in that space would put me off but that's a personal preference.

pinkshoes

I bought at the peak in 2007 and sold 5 years later at a £10k loss due to relationship breaking down.

But...jf you compare interest payments on the mortgage, buying/selling costs and the loss in value vs what I would have paid out in rent for a 2 bed property, then I actually ended up breaking even, probably slightly in profit if anything!

It wasn't the money though - it was having my OWN home that I could do what I wanted with. I actually liked the responsibility of maintaining it and not having to get a landlord to agree to everything. 

So it depends on what area, how much we're talking about, if prices have dropped much already, whether you can make money from renting out a spare room etc... Do the heart vs head calculation too.