Amount of rent paid

merlinthehappypig

We have been renting for 10 months, but will be buying shortly.

For us, financially, there is no comparision with renting on a month to month basis and if money was the only consideration I would run a mile from buying at present.

We pay £900 a month rent on a house worth approximately £450000/£500000 on the open market. It's not a private landlord, a bit like the National Trust, so they won't need the same yields that a small investor would so you need to take these figures with a pinch of salt compared with your average tenant. I would expect to pay slightly more rent in a 'normal' situation.

At a rough guess the house would cost me about £2600 a month on a 100% mortgage so like for like there is no contest. On top of that I don't pay for buildings insurance or any maintenance. Against that I obviously can't do what I like with the house and it doesn't have any feeling of permanancy.

To put these figures into context we are likely to spend around £490000 when we buy.

I have around £370000 in deposit, but will need to borrow around £150000 to cover stamp duty, moving and legal costs and to ensure that I don't leave us totally skint.

That £150000 will cost me broadly the same as I pay in rent, plus I will need to pay buildings insurance, life insurance on the mortgage and meet any maintenance costs so I am already out of pocket.

Bear in mind that I will also lose the interest on the £370000, on which I have been getting around £1700 after tax a month. Add that up and I reckon that buying a broadly similar value of house to the one I am renting will cost me around £2000 a month extra.

Put like that I really need to be locked up for my own safety.

neverdespairgirl

IveSeenTheLight wrote: »

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

Yes, and this is central London, which is different from the rest of the city!

IveSeenTheLight wrote: »

Is this a short term option for you?

No - we've been living here for 10 years, from our 2nd year at uni, so I moved in when I was a 20 year old student, and I'm now a 30 year old with a son.

IveSeenTheLight wrote: »

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

£550,000 is the approx valuation, apparently.

IveSeenTheLight wrote: »

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

Yes. We have a large deposit (ITRO half the price). We pay under market rent, a bit, which won't last for ever. So prices don't need to drop quite that much.

IveSeenTheLight

neverdespairgirl wrote: »

Yes, and this is central London, which is different from the rest of the city!

London seems quite a scary place to be regarding property.
I know of a couple who earn more money renting out their property than they did working so they quit their jobs, rented out their property and started travelling the world.

neverdespairgirl wrote: »

No - we've been living here for 10 years, from our 2nd year at uni, so I moved in when I was a 20 year old student, and I'm now a 30 year old with a son.

Congrats on being a mum, my wife an I are planning to join that club.
It seems really scary that you have been renting for 10 years.
May I ask how much you have paid in rent over those 10 years?

I remember renting for 3 1.2 years and that seemed way too long.
I'm actually back renting now, but my company pays for that

neverdespairgirl wrote: »

£550,000 is the approx valuation, apparently.

Yes. We have a large deposit (ITRO half the price). We pay under market rent, a bit, which won't last for ever. So prices don't need to drop quite that much.

I'm happy for you. Well done. I hope you find a really good place for you and your family to live.

moneysavinmonkey

Have been renting since 2005 when i moved to the midlands..

initially paid 300pcm all inclusive of bills which to share a house with two other girls..

next I lived in a two bed flat with my OH total rent between us was £560

now I live in a 3bed semi for £695 (again split with my OH)- the house next door was recently bought for 240k so the interest portion of a mortgage would be over a grand.

OH + I are both on good salarys and have saved a fair bit over the last couple of years so we could probably afford to buy a smallish starter home (probably a flat though)... but we are renting a much nicer and larger property for a fraction of the price so we don't see the logic to it!

Phirefly

IveSeenTheLight wrote: »

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?

I didn't get the impression from Linzpower's post that she was lamenting her inability to afford to buy a house, or any desire to buy one. If anything, to me the post described a demonstration of financial savvy in securing the best possible accommodation in the most economically sensible way under the circumstances...

IveSeenTheLight

Phirefly wrote: »

I didn't get the impression from Linzpower's post that she was lamenting her inability to afford to buy a house, or any desire to buy one. If anything, to me the post described a demonstration of financial savvy in securing the best possible accommodation in the most economically sensible way under the circumstances...

I guess you didn'e read the part where she said

lynzpower wrote:

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

IveSeenTheLight

Phirefly wrote: »

I didn't get the impression from Linzpower's post that she was lamenting her inability to afford to buy a house, or any desire to buy one. If anything, to me the post described a demonstration of financial savvy in securing the best possible accommodation in the most economically sensible way under the circumstances...

I guess you didn't read the part where she said

lynzpower wrote:

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

Phirefly

I read it. She said she couldn't afford it, but thats not the same as wishing she could.

pinkshoes

We rented a small 1 bed flat in a horrible area with problem HA neighbours and paid £650 a month (not to mention lots in repairing smashed windscreens and vandelised cars!! but hey, the rent was cheap).

We decided to buy a year ago in a much nicer area, and a spacious apartment with 2 double bedrooms. Our mortgage interest now costs us £730/month, and to rent the same apartment would cost us £850/month, so buying was definitely the right decision.

King_Of_Fools

I am currently renting a 2 bed house for £600 per month. If I had a mortgage on the same type of house in my road I would be paying £1100 a month in interest. So I am currently saving £500 a month towards a bigger deposit.

Also I read that house prices have fallen 5% in the past month in Cambridge so in the last month alone I have got £11500 closer to buying my house!