Renting vs mortgage

user67340348

I've recently started looking into mortgages and would like to make sure I'm not missing anything

I've been renting the last 8 years, and been through a bunch of different landlords / letting agents. I've found that nearly all of them (with the exception of 1 or 2) have been a bunch of clueless, money-grabbing con-artists and it's making me think I'll just buy my own place instead.

I've always been put off mortgages as I thought I'd need an unimaginable amount of money saved for a deposit... but I looked into it today and seems I may only need like a £6K deposit, and then be able to take out a mortgage for around £60–£70K

And then Ive worked out I could get a pretty modern flat to myself for around £300–400 a month (in the north of england)

Am I missing something? I'm starting to wonder why I've rented all these years, as mortgages don't look like quite as much hassle as I'd always imagined

AdrianC

10% equity, 90% LtV mortgage... Yes, if you're looking at £60-70k flats, that's about £6-7k...

But what will that actually buy you? Is that the sort of property (and area) where you're living now? If so, that may explain your landlords... Lower-end properties in lower-end areas tend to get lower-end landlords...

Assuming you're earning above minimum wage, and your credit record's not a mess, and the flat you're looking at is mortgageable, that should be realistic.
Don't forget to take the service charge and maintenance costs for the property into account.
But can you be a bit more ambitious? Would spending more get you better value?

user67340348

AdrianC said:

10% equity, 90% LtV mortgage... Yes, if you're looking at £60-70k flats, that's about £6-7k...

But what will that actually buy you? Is that the sort of property (and area) where you're living now? If so, that may explain your landlords... Lower-end properties in lower-end areas tend to get lower-end landlords...

Assuming you're earning above minimum wage, and your credit record's not a mess, and the flat you're looking at is mortgageable, that should be realistic.
Don't forget to take the service charge and maintenance costs for the property into account.
But can you be a bit more ambitious? Would spending more get you better value?

Thanks!

Some flats I've had have been lower-end properties / areas, but also some haven't been. I did once have a fairly pricey city-centre apartment and the letting agent for that one was an absolute joke... what an experience that was.

I'm thinking of getting a city-centre flat but also considering moving somewhere further out, perhaps somewhere a little more rural (without being in the middle of nowhere).

Would maintenance costs come in the form of a monthly charge like with a service charge? Or do you just mean the cost of repairs etc when something breaks

Thanks again for the info

MovingForwards

If you're not the type of person who likes moving around, doesn't sound like you do, then research your areas and find a home. 

There's a few of us who opted for small budgets, in areas where property prices are not eye watering.

I was an older FTB and purchased a budget FTB property, didn't want to borrow the maximum I could as it wouldn't get me anything better; if anything I would have been in a worse location and I feel really safe where I am.

I picked out a figure I would be happy borrowing (3.3x my income) plus my 15% deposit, opened up Rightmove and started looking to see what I could get for my money. I had to move further away from work / friends as my income wouldn't be enough for a £180k property any way, definitely wasn't enough to get me a mortgage for what I really wanted (smallholding).

Completed just over a year ago, moved in a few days later and set about turning it into a smaller version of my dream. I also make overpayments as I want the mortgage cleared way before it's 23 year term is up. I've no plans to move, my lifestyle is what it is, my income won't change enough to afford that smallholding, nor do I want that size mortgage even if I could get it.

theartfullodger

Buying is usually better then renting until interest rates shoot up.

I had a (for then ) large mortgage when Bank of England interest rates hit 17% under Thatcher.  That was painful.

Artful: Another clueless con-artist landlord of the type you so kindly outlined.

AdrianC

user19860331 said:

Would maintenance costs come in the form of a monthly charge like with a service charge? Or do you just mean the cost of repairs etc when something breaks

Both.

Service charge covers your share of the building and the common areas.
Everything within the four walls is your problem.

paulj2021

Don’t forget if you can afford to buy a property with a spare bedroom, you can let lodgers rent it from you for a bit of extra (probably tax free) income, if you can stand sharing!

dimbo61

Modern flats may have cladding on the outside.
Service charges for the lifts, security, garden and general maintenance so all adds up.
Lenders not keen on 10% deposit on flats at the moment due to inflated property prices.
Are you buying at the top of the bubble ?
Could you save a little longer and get 15% deposit and buy a house

moneysavinghero

theartfullodger said:

Buying is usually better then renting until interest rates shoot up.

I had a (for then ) large mortgage when Bank of England interest rates hit 17% under Thatcher.  That was painful.

Artful: Another clueless con-artist landlord of the type you so kindly outlined.

But what people usually fail to mention when they talk about having to pay 17% interest rates is that high interest rates usually go hand in hand with high inflation. So as long as you can stay in work your mortgage is going to get paid down at a rapid rate.

Grumpy_chap

If you can buy, then buy.  Why rent and fill someone else's pension plan?
Take into account the comments from Adrian about the additional (and unexpected) costs that may arise and have a plan to respond to any such matters - you need to have (or build) an emergency fund quickly.  If you are looking for a flat, beware of potential cladding and major capital outlay issues - the conveyancing solicitor should be able to verify these risks as the process proceeds.
I suspect being over-leveraged and lack of emergency fund is what made some of the LL act like the bunch of clueless, money-grabbing con-artists you describe.

jimbog

theartfullodger said:

Buying is usually better then renting until interest rates shoot up.

One option to consider is a fixed rate mortgage