Should I buy, or stay renting?

Northants_Simon

I have been renting for 10 long years due to various reasons including previous debts, loosing my job, starting a business.

I now have a sucessful business with a good income, I can get a mortgage for around 170k and have been offered an equity loan under the Government's Home Buy scheme. I'm married with 3 kids, our rented 3 bed house is too small and we'd like a 4 bed house.

We have seen a house we like for 200k, that is affordable taking into account our mortgage offer and the equity loan from the government scheme. The monthly payments will be slighly more than renting a similar house.

So should we buy?

Part of me says yes, we want to settle down and not have the fear of getting a couple of months notice that we have to move (as has previously happened with renting).

Part of me says no, prices are likely to drop and we don't want negative equity.

The government scheme turns the equity loan into a share in the house, if prices drop we owe less back. If they go up we owe more back. This protects us to about 15% drop in value.

I'm no youngster and see this as my last chance to buy and have a 25 year mortgage. The thought of renting forever is not appealing (and not much cheaper).

Alan_M_2

If the spectre of negative equity is going to play on your mind, then you're probably better of renting for the short term future.

However, if you're buying a family home in which you intend to stay for decades, then it might not be such a bad idea.

It all comes down to affordability and what your own emotional comfort zone is.

I'm in a reasonably similar position to you and could now comfortably afford a house, I've just held back a little due to what I think the impending drops in value will be.

I do live in Surrey though and from memory of the last downturn the market tends to be more volatile down here. I'm simply looking at this from getting more for my money rather buying the same house cheaper.

I'm hoping for a reasonable enough drop that means I'd be able to buy a detached rather a semi.

Northants_Simon

Renting is not great for me. I have my kids settled into their schools, should our landlord decide to sell the house we'd have to move on (again).

Also you get so many restrictions renting, like you can't have pets, you can't work from home (I'm self employed), you can't decorate how you would like. Not to mention having someone come and look around the house every six
months.

If we brought a house we would live in it for at least the next 10 to 20 years. I'm not looking at a house as an investment, rather as somewhere decent to live.

Looking at the figures, rent for a 4 bed deatched is £900 to £1000. Mortgage is about £1100. So for an extra hundred to two hundred you are actually owning the house. The way we see it is in 25 years time when I retire we'd still have to pay rent (which by then will no doubt be several times what it is today), if we buy we'd have our mortgage paid off and may or may not have equity in the house.