Buy home or wait for a few months

steve866

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If the interest element to the mortgage is also £1000 per month then you are no better off than renting and in fact could be worst off due to the additional costs of home ownership, unless the property appreciates in value. 

Comparing interest payments is a good tool, as even if the monthly mortgage payment total is higher than rent, buying could still be worthwhile as part of that payment is paying down the debt.

Martico

I agree, the interest payment is a useful benchmark. But, as above, you also need to factor in the less quantifiable maintenance costs of ownership. 

darksnake09

Thanks everyone !

RelievedSheff

Martico said:

I agree, the interest payment is a useful benchmark. But, as above, you also need to factor in the less quantifiable maintenance costs of ownership. 

Maintenance costs are very often over egged by those who would like to make renting seem like the better option.

We have been in our current house for just over four years now and the sum total of the maintenance required has been an annual boiler service to keep up the 10 year warranty on it.

grumbler

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

Mr.Generous

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

Grumbler, please stop telling these young people simple facts that make the choice clear, I need the rental income!!

steve866

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

I believe the post you quoted was making the same point as you? They said over 5 years they’d have paid 5 years of their mortgage off?

grumbler

steve866 said:

grumbler said:

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

If you pay £1000 p.m. over, say, 20 years (mortgage term), at the end you paid £240K and you own the house.

If you pay £1000 rent, you paid  £240K and own nothing.

Does this make no difference to you?

I believe the post you quoted was making the same point as you? They said over 5 years they’d have paid 5 years of their mortgage off?

Yes, on a second look their point seems to be the same. Why "This (my point) makes no sense" then?

MFWannabe

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

My apologies, it was the word savings that confused me 
I was had asleep when I read it 🤦‍♀️

badger09

RelievedSheff said:

Martico said:

I agree, the interest payment is a useful benchmark. But, as above, you also need to factor in the less quantifiable maintenance costs of ownership. 

Maintenance costs are very often over egged by those who would like to make renting seem like the better option.

We have been in our current house for just over four years now and the sum total of the maintenance required has been an annual boiler service to keep up the 10 year warranty on it.

But, to be fair😉, you bought a new build so you wouldn’t expect any expensive maintenance costs in the 1st few years. 

We, however, bought a 1970s bungalow much improved by previous owners, but still needing quite a lot of DG doors & windows replacing (rotting timber frames), new boiler within a couple of months, substantial re plumbing costs due to unidentifiable leaks buried in concrete floors etc etc We knew about the 1st 2, but the third is going to be both expensive & disruptive. 

Hopefully, unless buying a ‘doer upper’ most will not face such high costs in their first couple of years of ownership, but that’s not guaranteed.