Amount of rent paid

PasturesNew

I relocated 6 months ago.
I am single and on well well below average wages when working, so every penny counts.

I started off in a 'private hotel' at £30/night. (The sort of place that is one bad season or 1 new owner away from being a DSS hostel, but it was cheap and clean, just 70s decor and carpets).

Then I moved into a house-share for 2 months. Which didn't suit me due to drastically different lifestyles (I was 20 years older than the main renter): think - 6 boyfriends a week, nightly grunting, projectile alcohol-induced vomiting, bailiffs calling.

Next was the smallest/cheapest self-contained place that existed. Been there 3 months.

So far spent £3800 in just over 6 months including hotel bills, house share, credit checks, bond/deposit, 6 months' rent up front (as I wasn't working).

If I were to buy where I am currently renting, then the interest only + the service charge would cost me £10/month more than my rent.

I believe prices are going down and will do so for 5-6 years. And I don't know if I will be staying in this area or not. It's all about where the jobs are - and between deciding to move here to look for work and arriving, the market bombed for jobs. So taking a rest for now and will see how things are later in the year jobs/money wise

lynzpower

Weve just moved, but I'll use my previous places figures for this discussion.

We rented a 2 bed house in London for 758 pcm. My valuation of the place would have been 330 in todays market ( 350 in the "bouyant market)

So to start off with we would have to puty down 10% for arguments sake -

So 33k to put down, taking out a mortgage for 297k.

297k at 5.5% is

INTEREST ONLY- 1361.25
CAPITAL REPAYMENT-1805.49

on top of that dont forget that you have to pay has homeowner buildings insurance ( call that 250pa or over 25 years 6250) life cover ( my previous one was 35pcm so 1820pa, x 25 years 45.5k)

Onto that dont forget the money that is lost out call it the opportunity cost, that the money thats not in the bank earning. I am still working on how to project this over the long term with the savings weve made. We do save a fair amount ( and more now, our overheads are cheaper still!) but saying thbat theres no way we COULD have afforded to buy that house- the repayment is more than my whole salary pcm.

mcdelarich

We have been renting for nearly 3 years - paying £475 a month (3 bed semi), in the midlands - we are just going through the process of buying our own house and with a 15% deposit (£18,000) our mortgage is costing us £460 a month - that is on a repayment basis, not interest only - this is on a bigger house too!

neverdespairgirl

We rent for £1,000 a month, in central London. The interest-only part of a mortgage on a similar place would be £2,708 per month, so we are definintely doing the right thing financially for us.

moyilla

mcdelarich wrote: »

We have been renting for nearly 3 years - paying £475 a month (3 bed semi), in the midlands - we are just going through the process of buying our own house and with a 15% deposit (£18,000) our mortgage is costing us £460 a month - that is on a repayment basis, not interest only - this is on a bigger house too!

Wow, that's a great deal!! How big is the house you have bought? Sorry if too personal

saverram

hi,

i read all the posts with interest and i would like to say my story.

Currently we are renting a single bed room Apartment. when i last spoke to Coucil tax office he said a similar flat was sold for 188K, which i feel it way too high for a single bed apartment in cardiff.

if i am buying i will buy a house rather than a flat.

We are living here from April 2007 , with rent of 486 pounds ( we are offered 10 for the price of 12 rent ), of course it is a new build apartmet and it was tough for the company to attract tenants, though the apartments are 3 mins to city centre.

today i negotiated a deal with the management agent for rent starting from May 1st to April 31st. they agreed for 500 pounds per month till April 2008. i considered it as a good deal???? because we will have no moving costs and credit checks and other costs.

i would like to rent till middle of next year because we have some debts to pay off, to save for the deposit , to see how the house market will be next year and our job conditions, economy in the next year.

my other reasons for renting this property are we have no travel cost , i.e i cycle to work and DH walks to work , no insurances to pay etcc.

From my calculations i will be paying 6000/ year rentincluding water bills and i would like to buy a house in 140-150k ( 2 or 3 bed rooms atleast) next year i.e is approximately 3times our combined salary. the plac we would like to buy will have additional travel costs. If i consider a 150k mortgage for interst only of 6% i. e is around 9000 pounds. So i will be saving atleast 3000pounds+travel+ insurance.

Who knows i might get a better property next year with teh same money.

Regards
Saverram

IveSeenTheLight

saverram wrote: »

hi,

i read all the posts with interest and i would like to say my story.

Currently we are renting a single bed room Apartment. when i last spoke to Coucil tax office he said a similar flat was sold for 188K, which i feel it way too high for a single bed apartment in cardiff.

if i am buying i will buy a house rather than a flat.

We are living here from April 2007 , with rent of 486 pounds ( we are offered 10 for the price of 12 rent ), of course it is a new build apartmet and it was tough for the company to attract tenants, though the apartments are 3 mins to city centre.

today i negotiated a deal with the management agent for rent starting from May 1st to April 31st. they agreed for 500 pounds per month till April 2008. i considered it as a good deal???? because we will have no moving costs and credit checks and other costs.

i would like to rent till middle of next year because we have some debts to pay off, to save for the deposit , to see how the house market will be next year and our job conditions, economy in the next year.

my other reasons for renting this property are we have no travel cost , i.e i cycle to work and DH walks to work , no insurances to pay etcc.

From my calculations i will be paying 6000/ year rentincluding water bills and i would like to buy a house in 140-150k ( 2 or 3 bed rooms atleast) next year i.e is approximately 3times our combined salary. the plac we would like to buy will have additional travel costs. If i consider a 150k mortgage for interst only of 6% i. e is around 9000 pounds. So i will be saving atleast 3000pounds+travel+ insurance.

Who knows i might get a better property next year with teh same money.

Regards
Saverram

Hi Saverram,

Firstly, I wish you luck in your hope to get a house when the time and price is right for you.
It is hard to work out on your figures as you are largely comparing renting a 1 bed flat to buying a 2-3 bed house,
Of course I compliment you on being able to live in a small place while saving for a larger home. This is good money saving as opposed to you renting a 2-3 bed place.

As you market research is showing the recent property prices as 188K and your budget set to buy at 140 - 150K, you are looking for house prices to drop between 25 - 34%. If this happens by the time you are looking to buy (April 2008) then I'm sure you have made a very wise decision.

Out of interest, where did you live prior to April 2007?

According to http://www.nationwide.co.uk/hpi/historical/q4_2007.pdf
Cardiff property prices increased by 4% in 2007, however the prediction is for only a 1% drop in 2008. Of course this is only a prediction from one company and market sentiment could affect this differently.

Once again good luck

IveSeenTheLight

mcdelarich wrote: »

We have been renting for nearly 3 years - paying £475 a month (3 bed semi), in the midlands - we are just going through the process of buying our own house and with a 15% deposit (£18,000) our mortgage is costing us £460 a month - that is on a repayment basis, not interest only - this is on a bigger house too!

Congratulations, I am happy you have found a property you can buy on a repayment mortgage for around the same price as the rent you would pay.

You are maybe fortunate that you are in an area where the property prices are like this.
I have a rental flat which I bought with a 15% deposit and the rent I receive covers the mortgage, insurnce, factor fees etc and a bit more, so there are still properties out there, although maybe not in all areas

IveSeenTheLight

neverdespairgirl wrote: »

We rent for £1,000 a month, in central London. The interest-only part of a mortgage on a similar place would be £2,708 per month, so we are definintely doing the right thing financially for us.

I can see why if you are paying £1,000 rent for a property on interest only that would cost you £2,708 , that you are doing the right thing.

The prices in London really are completely different to the rest of the UK

Is this a short term option for you?

It would seem that you are renting a property valued at approx £540,000.

Are you looking to eventually buy a similar property with the mortgage payments to be the same as your rent? If so the peoperty needs to drop to approx £200,000 for interest only or effectively a 63% price drop

IveSeenTheLight

lynzpower wrote: »

Weve just moved, but I'll use my previous places figures for this discussion.


....but saying thbat theres no way we COULD have afforded to buy that house- the repayment is more than my whole salary pcm.

Hi Lynzpower,

Have you just bought a home? or are you still renting?
Looking at your post I feel so sorry for you as it would not appear that you could afford to buy a house.

If your still renting, then roughly I guess you are looking for a 50% house price reduction in order for a property to be the same as your rent.

Do you think the house price of that property will drop from 330K to 165K?