House prices might be low but mortgage deals are requiring such huge deposits it's ridiculous!
I was reading an article the other day that suggested the average first time buyer now has a 25% deposit, how on earth?!
Bike Forum
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To Buy Or Rent?
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Posted 2 years ago #
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Rent. You will have more money to do interesting stuff instead of spending it on your house. I bought my first place 3 years ago and haven't bought a new bike or anything good for my bike since.
Posted 2 years ago # -
renting might start looking better if interest rates go up and im certain they will after the election in may
for some they already are
Posted 2 years ago # -
It's not legal per se, but when I rented, each & every time, I sub-let rooms.
Non of the landlords were in the slightest bit worried.
This meant that my own rent on a £750pcm 2 bedroom house in Harrow worked out at about £150 for me.
I lived in what would have otherwise have been the dining room (yes, I did remove all the furniture). I also had 2x dogs and managed to save £40k+ over 4 years of living there.
It can be done.Posted 2 years ago # -
Renting can be seen as "dead money". But so is the interest you pay for on a mortgage.
My view with renting is that you have a lot of advantages. You can move fairly easily. If you split up, or one of you gets the sack, then you can cut your losses and move somewhere cheaper or with your parents very easily.
On the other hand, with a mortgage, you are tied to one location. If you need to move for work, it's a lot more stress. If you lose your job, you HAVE to make the mortgage payments or go broke. That can be a career ender in some professions. Do not view having a mortgage as owning your own home, because it isn't. The bank own your house, and you're paying them for the luxury of not turfing you out. I personally wouldn't enter into a mortgage with anyone I wasn't willing to marry and have a joint bank account with.
For what it's worth, an unrefurbished flat where I used to live costs £120k. The mortgage on that (based on 25 years, £120k purchase price and 5% rates) is nearly 40% more than I was paying my landlord, and the place had been done up, and he had to fix everything that broke.
My aim when I come to buy a house is to be able to put down a good deposit (around 25%), and to pay the mortgage off in 10 years. That will probably mean 10 years of not having huge disposable income, but the long term payoff is huge.
One option that can work out well is to get on the council house list, then RTB the property at a pretty hefty discount. However, it really depends on what the council estates around you are like, and what your moral standpoint on it is.
Posted 2 years ago # -
Just didnt really want to paying money not to get anything in return
For the future if at some point you want to buy a house, you should understand that you do that when you own a house too. Firstly on a mortgage some massive proportion of the amount you pay out is interest, which is just money thrown away to the bank. Then secondly, houses cost a lot in maintenance, which is included in rent, but obviously isn't included in a mortgage. Also, if you get into the position of having savings as a deposit, you will be earning interest on them, whereas when they are put into the house as a deposit, you no longer earn this.
Not to mention moving costs, which will be well into the thousands, the cost of deciding you want a fancier bathroom etc.
Oh and finally, by buying a house you are taking a gamble on prices, as if prices go down, you end up paying the bank more than the house is worth, and if prices go up, the next, bigger house you want to buy costs more, so you can lose out there too!
Joe
Posted 2 years ago # -
The most sensible comment above is that buying may be a good idea when things are stable. Specifically, economy, job, relationship. If these are unstable, renting is your friend.
Definitely work out your outgoings before you start looking, and be sure to include things you'd always do, like buying cd's or socialising. My basic outgoings on a 2 bed flat are about £1k a month, mortgage is only £650 of that.
Another option could be to stay at home for another 6-12 months, live like monks and save for a deposit. Then you could rent a place knowing you are part way towards a deposit. You will find it much harder to save when you're renting somewhere.
Posted 2 years ago # -
Then secondly, houses cost a lot in maintenance
Not always. I've been in for 18 months and spent nothing on the flat really. Paid £100 ground rent and building insurance, and contributed about £400 towards repainting the block, which occurs every 7 years. The extra bullshit from renting, such as having to have unmetered water, was more costly. Of course, you WANT to spend a bit because you can on things like redecoration.
Posted 2 years ago # -
One advantage in buying is your initial investment is usually making money.
My property in the Watford area has doubled in value in 8 years and I've not done anything to it to.Rent and work towards buying.
Posted 2 years ago # -
We'll buy someday but the friends of ours who have bought in the last few years have either a)Lived at home for free, b) Lived like monks and had no life for 18 months and had savings already or c) Lived at home for free and parents helped with deposit.
They all have re-payments of at least £200 a month more than our rent!
The options above aren't available to us but some of the responses above have enlightened me in regards to the pro's of renting so thanks for that.
Posted 2 years ago # -
Completely agree with the responses stating renting is not always 'dead' money when you factor interest payments etc..
With the mortgage market the way it is at the moment despite a base rate of .5% you are still talking 7% odd interest with a low deposit (if you can find one at 95% LTV) I really do think the most sensible option would be to rent and save.
Imo base rates may by the end of the year start rising, but I expect mortgages to stay roughly the same in terms of affordability.
We have friends at the moment who have saved a 20% deposit and were about to buy there first house, they worked out that if they had a 30% deposit they would save £250k over the life of the mortgage. To that end they have decided to continue renting for a further 3 years.
Posted 2 years ago # -
Yep at this point in time if you are buying or re-mortgaging I would say get the best fix you can the interest on Fixed term deals isn’t great at the but the odds are the banks will track interest rate changes and in 12 months a fixed rate deal will be much more, some banks seem keen to push trackers and variables at the minute and who can blame them they are there to make money, but if you’re a total mug they probably seem like a great deal at the minute, they won’t in 2 years time though…
Posted 2 years ago # -
another for renting. once interest has been added to your total spend you'll have paid around twice what the sticker says.
and find somewhere unfurnished, you can cobble together furniture for much less than the rent equivalent of a furnished place.
Posted 2 years ago # -
I'm renting but I'm living in an area that I could never afford to buy a house in. I look at it this way I'm single no kids or ever plan to have kids so if I brought a house who do I leave it to the tax man?
Posted 2 years ago #
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