48 years old - Should we continue renting or buy?

Carterme73

Hi,
My husband and I are 48 years old and are looking at buying a house together. we currently rent. My husband has previously been bankrupt and has had a house repossessed but my credit is clear. The house price will be around £250,000 and we currently pay £700 per month rent.
Have we left it too late, and would we be better off to just keep saving to maybe buy a lesser price retirement bungalow when the time comes to settle down and not pay the interest now on a mortgage? 
I'm really not sure what to do

Slithery

How much deposit do you have saved? What's your combined income?

princeofpounds

No-one can given you a clear answer because it depends upon the future directions of variables like house prices, interest rates and rents. However, most people have historically ended up better off over decades owning rather than renting. There is also some specific attraction to high security of tenure and the possibility of not having to pay for accommodation (excluding running and maintenance costs) in retirement if you pay the mortgage off in time.

There's no reason you can't buy at 48, although you may have to compromise on the length of mortgages you have access to.

A mortgage calculator is a useful tool for seeing what may be achievable. Bear in mind that a mortgage repayment is composed of two parts - one is the interest cost (which is more comparable to rent) and the other is principal repayment (which can be viewed as a kind of savings program effectively - you are paying down your debt and saving on future interest). So don't compare total payment to your rent directly, although it does matter for affordability in terms of monthly cashflow of course!

https://www.moneyadviceservice.org.uk/en/tools/mortgage-calculator 

There's a huge amount more to say, so if you have any questions on your mind or in reaction to any replies you get, put them up.

Carterme73

We've got £15,000 and our combined income is £100,000 per year Slithery

Carterme73

Actually Slithery, I think £80,000 is more in line as I'm cutting my hours a bit.

princeofpounds

Carterme73 said:

We've got £15,000 and our combined income is £100,000 per year Slithery

Your combined income multiple (2.5x) is ok. Your cash deposit is a bit low. Ideally you want to have minimum 10% (25k) plus extra money for fees, surveys etc. Mortgages on a 5% deposit are sometimes possible but can be significantly more expensive.

Any chance you can save hard or get some extra work for a year or two to get an extra 10-15k?

moneysavinghero

Rent of £700 is low for an income of £80,000. You should be able to save up a decent deposit fairly quickly.

AdrianC

Carterme73 said:

My husband has previously been bankrupt and has had a house repossessed but my credit is clear.

How long ago?

That will be key in determining whether they want to go near him or not.

The house price will be around £250,000 and we currently pay £700 per month rent.

Carterme73 said:

We've got £15,000 and our combined income is ... £80,000

There should be no issue with earnings multiple - but you need to save more.
90% LtV would need £25k savings (plus legals, fees, SDLT, etc), and a £225k mortgage.
85% would require £37.5k savings (again, plus...) and a £212.5k mortgage - and would be easier to get, at a lower interest rate.
£212.5k over 25 years at 2.5% would be a little shy of a grand a month going out - a bit of an increase on your rent, plus you will be responsible for the costs of maintaining and insuring it, unlike now.

If your £100k income until now has been roughly evenly split between you, then you should be seeing north of £6k/month after tax. £700 rent... but only £15k saved? Where's the rest going...? How will that pan out when you're getting a grand a month less coming in?

Carterme73

Thank you all.
Yes, we can now save more of a deposit. I've looked at the calculator and for a £250,000 mortgage we will be paying £1303 per month so this is £600 more than what we are currently paying.
My thoughts are that we will have to take a mortgage out for a 20 year period, because of our age. If when we are 65 we decide to sell for whatever reason, with the scale of repayments and interest payments, will we actually be worse off?

Redwino222

How would you be worse off?  You would have nearly paid the mortgage off by that stage - only three years left on a twenty year mortgage

moneysavinghero

No you would not be worse off. Your house will almost certainly worth a lot more in 18 years that it does now. Your mortgage will be almost all paid off. You would just use some of the proceeds from the sale to pay what off what little of the mortgage remains.