Mortgage Vs Renting....HELP!!!

aimeed1

Hi there,

I am 23 and my boyfriend is 23, and we are currently saving up for a house together.
The problem is however that we are unsure whether we should rent or buy. Currently we have a combined income of £30,000, but after I finish my masters in two years we should have an income of £40,000 at the least.

There seem to be arguments to both sides.

Renting - The money you spends is lost forever, you are restricted in what you can do....but is cheaper than buying.

Buying - Investment for the future, gets us on the ladder before prices go up AGAIN.....but the mortgage repayments would stretch us.

Whats best????

Hillfly

Well it depends on where you rent/buy, what sort of lifestyle you want to live, what view you have of the current market etc etc.

My suspicion is many people will tell you not to buy at the moemnt as the market appears to be heading for a bit of a dip....but then you will ask when is the right time?

I guess that hasn't helped you much. You need to decide on why you want to own a house? Is an investment or simply you want a home that you 'own'? Also ask yourself how long youmight want to live in your first house. This may be crucial if prices fall a little and then you wish to move you might not be able to afford to.

Soo many considerations for you. Good luck either way.

dimbo61

you are saving ? for a deposit for your first house.
you need at least a 5% if not a 10% deposit and then all the money
that it costs to buy a home, solictor,survey,mortgage fees,stamp duty if you
pay over £125,000 ( 1% ) moving in costs etc.
In some parts of the country £125k will buy a nice modern 3 bed semi
and in central london/ south east it will not get you a caravan !!!
It all depends where you want to buy and what savings you have and
most important how you and your boyfriend live your lives ( out clubbing most weekends, smoking, nice new clothes, lots of take aways , holidays)
buying a home is very expensive and getting all the furniture and phone, broadband, tv licence, gas & electric, buildings & contents insurance,life assurance, council tax, carpets, curtains ETC
(If you want to get to know someone then go and live with them) is an
old saying. If you are at home with mum & dad then saving is easy.
renting is money lost for ever but if you rent for a short time and can save
as well then you will quickly find if you are happy with each other and
can then buy a house together ( and also have a lot of items bought for
the house !!) GOOD LUCK
Housing market quite at the moment so dont worry about house inflation.

aimeed1

If we do buy we could only afford a one bed flat, as we are near Bath, which can be expensive. This however would be okay for a few years, but like many people in 7 or 8 years we'll prob be looking to start a family and need a larger place. Should we just wait until then to but....although again downside 7 years of potential investment lost and at 30 would be first time buyers!!!

I'm told that lots of other countries don't place as big an emphasis on buying as this country does. I am willing to make sacrafices, but I don't want to work purelt to afford a house, but not be able to have a take-away or see a movie ever now and then.

Maybe i'll just live with my parents forever??

daveybuk

IMHO as soon as it's possible to buy without leaving yourself penniless in the process, then get on the property ladder as - over time - it seems unlikely property will be substantially cheaper, even if there are short terms slowdowns/falls in prices.

The best advice I ever heard was the old adage "buy to nest, not to invest". In other words, if you find a place you like then it's worth buying - but don't do it if your primary intention is to make money or bank on future increases in value.

That way you'll be a happy homeowner and not constantly pre-occupied with fluctuations in the market.

poppy10_2

daveybuk wrote: »

get on the property ladder as - over time - it seems unlikely property will be substantially cheaper, even if there are short terms slowdowns/falls in prices.

What's your evidence for this?

dan1979

How can he have 'evidence' for future events? Anyone who comments on what house prices will do is merely guessing and giving an opinion.

Chunks of the population or demand to own homes isn't going to vanish overnight. People are living longer and there's more people in the country, most of the new homes being built and one and two bed flats. Prices may dip but there's no reason for there to be a crash.

UK007BullDog

Dont speculate on the future. Everything could turn out different than you thought or expected. Even incomes are not guaranteed. Wait for the recession and your expected payrise could turn to half or even £nil.

Save up for a decent deposit and the associated costs, then buy what you can afford.

Voyager2002

aimeed1 wrote: »

Renting - The money you spends is lost forever, you are restricted in what you can do....but is cheaper than buying.

Buying - Investment for the future, gets us on the ladder before prices go up AGAIN.....but the mortgage repayments would stretch us.

Whats best????

Buying involves borrowing money, and paying interest on those borrowed funds. Interest is simply rent for someone else's money, and is lost for ever, just like rent for a home.

Remember that your lives may change in all sorts of ways, and so you may need to change where you live. Doing so is a lot cheaper and easier if you are renting than if you are buying.

I suggest that you continue to rent while you are happy, and only buy when you have an immediate reason to do so.

brightbuy

Some areas are better for renting and some for buying. By using a simple mortgage calculator you can work this out. There are areas in the country where a £30k salary x 3 will still buy you a house or flat. Most of these areas I predict will continue to grow and be sound investments for the future.

Right now if you have done your sums and a mortgage would make your monthly outgoings slightly stretched when compared to rental, I would enjoy yourself for a few years and rent. You’re only young!

If you want to get on the ladder, why not do your research and get a decent Buy To Let property in the meantime?

southernscouser

aimeed1 wrote: »

Hi there,

I am 23 and my boyfriend is 23, and we are currently saving up for a house together.
The problem is however that we are unsure whether we should rent or buy. Currently we have a combined income of £30,000, but after I finish my masters in two years we should have an income of £40,000 at the least.

There seem to be arguments to both sides.

Renting - The money you spends is lost forever, you are restricted in what you can do....but is cheaper than buying.

Buying - Investment for the future, gets us on the ladder before prices go up AGAIN.....but the mortgage repayments would stretch us.

Whats best????

Hi aimee. I'm in a similar predicament. But I don't have a boyfriend. Nor do I want one! :rotfl:

Anyway, you say with renting that you are restricted in what you do. I actually see the other side of the coin in that a mortgage is more restricting. With a mortgage you tie yourself to a 25 year contract. With renting it could be as little as 6 months. :think:

I like you would like to buy. But I simply can't afford it. Simple as. But by renting I'll be able to a) try and save for a deposit :rolleyes: and b) be able to afford to kit the house out with everything you'd need. I certainly wouldn't be able to afford to do it buying somewhere.

So if in a couple of years prices have or haven't changed I'll be in a stronger position.

But I'm certainly no expert.