Rent or buy calculator

jstanley

Please can anyone recommend a reliable rent or buy calculator for someone thinking of buying their first home in London?

grumiofoundation

Very simple calculator here simply comparing rent vs interest:
https://www.allagents.co.uk/calculator/mortgage-rent/


I don't know of any comprehensive calculators, the issue is there are so many factors to include that any calculation can easily end up being either too basic or too complicated. 

And various factors - such as future house prices increases, interest rate increases cannot be (accurately) predicted. 

Obviously personal factors also can't be made into a 'number' to fit into a calculator (e.g. chances of wanting to leave London for job elsewhere, chances of meeting a partner and wanting to buy/move in together).

Would also depend on the scenarios you are looking at comparing (comparing purely financially)

Scenario 1) -  Buying Property A now or in X years buying the same property (in this scenario generally makes sense to buy as house prices generally go up, and only reason not to buy is if you think Property A will drop in value). 

Scenario 2) - Buying Property A now and then looking to sell property A in the future and buy Property B versus
renting for X years and then buying Property B


For scenario 2) over X years

Compare - doesn't include any increase in house price which you could estimate and add onto any profit from equation below

Profit/Loss from buying = ([Annual cost of rent ]*X) - ([annual interest paid on mortgage]*X) - (annual interest/returns on deposit*X) - (cost of buying and selling A) - (LISA bonus*X) - (loss of FTB SDLT relief). 


The final 2 terms may be zero:
- LISA bonus up up to £1000 per tax year is only applicable if you a) have a LISA and b) Property B would be worth 450k or less.
- FTB stamp duty relief (worth up to 5000) only applicable 

Cost of buying/selling includes solicitor fees (x 2), survey, any SDLT, mortgage fees

Ignored any maintenance costs which would be (almost certainly) higher from owning than renting.


If you would use help to buy equity loan this would also need to be considered. 

I am sure I have missed out other factors....

getmore4less

At the basic level this tends to be a one way move from being a renter to an owner occupier.

(some get forced back the other way through circumstance some by choice)


The short term decision is the time right to make the move.

generally comes down to if renting is significantly cheaper than owning consider staying rented for a bit longer


Keeping it simple you work with interest only as capital payments are just saving/equity building


Is renting the money cheaper than renting the property


Owning comes with cost currently covered by your landlord so adding those is it still cheaper.


There will be a bunch of buying costs so those need to be factored in.



Then its down to soft factors like you are looking to settle down no longer need the flexibility to move quickly can get a place you won't need to move from for a while to spread the overheads of buying.


Long term it won't matter buying will win,  timing the switch is hard as the cycle is long and peoples ideal time to make the switch does not always line up with a lower  points in the cycle.