Buying or Renting - Help needed.

Shep_Cobain

Shep_Cobain

Shep_Cobain

Soldato
Joined
26 Feb 2007
Posts
3,322
Location
Blackpool
Hi guys,

So me and my girlfriend recently got engaged and we want our own place to start a family.

Now then, we both live at my dads house and happily pay him board on a monthly basis (not a lot) but want our own place now as we feel the time is right.

We don't know whether or not to save up for a deposit and then look at buying a house or to rent and save for a deposit in the mean time (the latter will obviously take longer but we will still have our own place).

The house prices in our area are between £90,000 - £150,000 for a nice First Time Buyer home (£90k being a 2 bed terrace in a less desirable location).

At the moment i have 1 year left of training in my current job and then i will be on £24,000 - £28,000 a year (at the moment i'm on £15,400 + bonus each year (£1k - £2k) and i attend college/university one day a week). My girlfriend is on ~£12.5k and is always on the look out for something better.

We currently have a car on lease from Citroen which we can rightfully terminate as of now. We have £2.5k saved up and we are thinking of terminating the leased vehicle and buying a second hand run around. The only other outgoings are our mobiles (in my name) £70 a month for both and my loan which is £159 for 3 more years.

I was wondering what is our best option and if we decided to rent are there any benifits we could claim to help us?

Thanks,

Shep.
 
shep_no_platinum said:
Hi guys,

So me and my girlfriend recently got engaged and we want our own place to start a family.
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Wait until you can afford it.

Now then, we both live at my dads house and happily pay him board on a monthly basis (not a lot) but want our own place now as we feel the time is right.
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The time is right when you have a big enough deposit and can comfortably afford the mortgage required to buy somewhere suitable.
 
Stay put and save, the time clearly isnt right as you have just £2500 saved up. You should also clear that loan before bothering to save anything further, and put those savings into it too.
 
Definitely do that, there is no point having that savings pot and a little £159 loan, just clear it off and start from scratch.
 
If you rent you just throw money away. If your going to get a property then try get debt free as much as possible starting from now and then put some money down for a mortgage.

I was renting for 4 years, which cost me around 19K. I look back and I realise how stupid I was. I am now saving around 1K a month for a mortgage.
 
Jez said:
Definitely do that, there is no point having that savings pot and a little £159 loan, just clear it off and start from scratch.
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Yeh we both figured that before we do anything terminate the £160 a month to Citroen and that loan is to go. That way we just have our phone bill each month and thats it.

But we arent to sure if renting is best at the moment as mortgages are crap at the moment. We have some friend who have a 2 year old child and a dog and they are on £24,000 between them and rent comfortably and still have a social life. They also have a car leased from Citroen.
 
I bet they dont save much/anything though so will be stuck in that situation forever, or until they do something about it.
 
shep_no_platinum said:
At the moment i have 1 year left of training in my current job and then i will be on £24,000 - £28,000 a year (at the moment i'm on £15,400 + bonus each year (£1k - £2k) and i attend college/university one day a week). My girlfriend is on ~£12.5k and is always on the look out for something better.
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I'd seriously consider waiting a year before buying - the housing market doesn't appear to be shooting up any time soon if anything it seems to be stagnant or falling a bit. A big jump in your income fairly soon gives you more options when looking for a house. Save some more towards a deposit over the next year.

Renting for a year could be an option but you'll save less towards the deposit and you'll maybe have an overlap where you're paying money for rent and mortgage - you'll not always be able to complete exactly as you come to the end of your tenancy agreement.
 
mrbell1984 said:
If you rent you just throw money away.
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Overly simplistic view tbh...

What happens to the interest portion of your mortgage - do you get to see that again...

As per the other poster's example in a falling market renting in the short term can work out better.
 
You are in an ideal position to save up a deposit by staying put, clear your loan and get rid of the car then put nearly as much as you can towards your deposit. Even in a year you'll be looking at 20%+ deposit for a decent mortgage rate.

Assuming you'll be on 28k then they will normally give you 3.5x your combined salaries so you'll be looking at being able to buy up to £140,000 so you'll need a deposit of around £28,000.

If you rent by the time you take your rent, bills etc you'll be saving peanuts so however much you want your own pad realise how lucky you are to get cheap board and use the opportunity to save up as much as you can.
 
MattU said:
I bought a house 4 years ago, it's lost 35k in value and mortgage interest has cost 36k, so um.. yeah.
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Ditto... it was 6 years ago, bought, it went up a bit, then tanked.... lost40k in value, and about 35k in interest.... then there is the few thousand for stamp duty,solicitor fees etc, add in maintenence for the property...

It isn't always a good idea to buy.... renting may seem like dead money, but don't forget interest payments, fees, and maintence... you may be better off renting, saving up and getting a smaller mortgage later on
 
MattU said:
I bought a house 4 years ago, it's lost 35k in value and mortgage interest has cost 36k, so um.. yeah.
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it's only lost £36k in value if you sold it, same as if the house had gone up in value by £36k would only matter if you sold it. as it is, your mortgage payment is a constant and you have to take the rough with the smooth.
 
cm1179 said:
it's only lost £36k in value if you sold it, same as if the house had gone up in value by £36k would only matter if you sold it. as it is, your mortgage payment is a constant and you have to take the rough with the smooth.
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If he'd rented for 4 years and bought now he'd be 36k better off...

He's just illustrating that renting isn't always throwing money away - if you've got the option to do either and you make a conscious choice to take one course of action over the other then you're simply taking a long or short view on the property market.

HSBC a few years ago sold their HQ in London, rented it back and then later bought it back for a lower price...

Renting isn't always a waste of money...
 
Windle said:
Assuming you'll be on 28k then they will normally give you 3.5x your combined salaries so you'll be looking at being able to buy up to £140,000 so you'll need a deposit of around £28,000.
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In some instances he could get away with half of that - examples being where the developer puts up some of the deposit either as a loan or simply giving away equity or the governments first time buyer scheme. IIRC he might be able to get 10% of it lent by them, then putting up 10% himself would still be eligible for the 80% LTV deals he'd have got had he had a 20% deposit to start with - or at least something along those lines - OP should certainly research it.
 
cm1179 said:
it's only lost £36k in value if you sold it, same as if the house had gone up in value by £36k would only matter if you sold it. as it is, your mortgage payment is a constant and you have to take the rough with the smooth.
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That is a very simplistic and flawed way to look at things, regardless of what the money is invested in, £36k is £36k.
 
dowie said:
Overly simplistic view tbh...

What happens to the interest portion of your mortgage - do you get to see that again...

As per the other poster's example in a falling market renting in the short term can work out better.
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dowie said:
If he'd rented for 4 years and bought now he'd be 36k better off...

He's just illustrating that renting isn't always throwing money away - if you've got the option to do either and you make a conscious choice to take one course of action over the other then you're simply taking a long or short view on the property market.

HSBC a few years ago sold their HQ in London, rented it back and then later bought it back for a lower price...

Renting isn't always a waste of money...
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Getting a mortgage isn't a short term reason why people go into the housing market. Normally people want to own one for life ensuring their mortgage is payed off as quick as possible.

People who rent it's like putting money into a fire as they get non of it back. Atleast people who mortgage get all of it back and if it does go into negative equity the won't loose out on what the renting will loose out. The mortgaged house still has a resale value.
 
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