Associate
- Joined
- 1 Sep 2009
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It doesn't cost that much to rent a 1 or 2 bed flat. You could be enjoying your youth and independence and all the while saving for a deposit on a house of your own.
Rent, Buy, Shared Ownership or stay with parents?
- Thread starter DiscoDave
- Start date
I had a mortgage adviser in the office the other day by chance and picked his brains as I'm in a similar situation.
He told me shared ownership as good as the Government like to make it out to be isn't really that appealing in the long run. Yes you can "buy" a place with a lower deposit than needed for a mortgage, but in the long run the fact you are paying a mortgage and still paying rent on the remaining part makes it worse off that just paying a single mortgage payment. On top of that with a lot of them being associated to new builds there are maintenance costs on top which also add up.
He told me shared ownership as good as the Government like to make it out to be isn't really that appealing in the long run. Yes you can "buy" a place with a lower deposit than needed for a mortgage, but in the long run the fact you are paying a mortgage and still paying rent on the remaining part makes it worse off that just paying a single mortgage payment. On top of that with a lot of them being associated to new builds there are maintenance costs on top which also add up.
Man of Honour
I'd be embarrassed to live with my parents and not offer them money for the use I have of electricity and gas. He's earning a good wage, good on him for contributing to the household. You can't scrounge off your parents all your life.
As for the OP, £500 a month will work out to another £6k by the end of the year giving you £11k saved - which unfortunately is not enough these days for a deposit
Though who knows what the banks will be like in a year's time. Some people have had 100% or close to 100% mortgages in the past... don't think those times will be back for a while if at all! 
Personally, I couldn't live at home for long periods of time, I'm too independent and like things my way. I'd give living with a friend and people of my own age ago, you should still be able to save up, and have a decent life. Furthermore, it's likely to be more fun, get to meet more people potentially, and makes bringing girls home more simple
If you're really comfy at home and you can stomach it then stay - you know your parents and your situation better than we do! However, you're young, you should be enjoying life and freedom a bit more!
Yeah, because buying a place with a standard mortgage in the city was clearly the only option I've listed.
I'd be embarrassed to live with my parents and not offer them money for the use I have of electricity and gas. He's earning a good wage, good on him for contributing to the household. You can't scrounge off your parents all your life.
As for the OP, £500 a month will work out to another £6k by the end of the year giving you £11k saved - which unfortunately is not enough these days for a deposit
Personally, I couldn't live at home for long periods of time, I'm too independent and like things my way. I'd give living with a friend and people of my own age ago, you should still be able to save up, and have a decent life. Furthermore, it's likely to be more fun, get to meet more people potentially, and makes bringing girls home more simple
If you're really comfy at home and you can stomach it then stay - you know your parents and your situation better than we do! However, you're young, you should be enjoying life and freedom a bit more!
Thanks dude,
I think I'm going to have a chat with someone at my bank and get some advice on my options (short and long term). If the housing game is really as difficult to get in as people have said, I may have to resort to either staying at home or renting with a friend until I meet the special lady, combine savings and get a place (obviously quite a few years off)...
Meeting with the aforementioned friend after work today to discuss and have a look at some flats, will see how I feel after that
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Soldato
Rent with a friend first off, it'll allow you the best of both worlds costing less in rent, moving closer to town which means you can save a little as well.
Rent agreements only need to be 6months, so if it doesn't work out leave the option open for you to move back with your parents. Then you can look to renting on your own in the future.
I wouldn't advise buying a place as your first move away from your parents, get comfortable moving away from your parents and get a bit of independence through renting first (and keep saving)
Rent agreements only need to be 6months, so if it doesn't work out leave the option open for you to move back with your parents. Then you can look to renting on your own in the future.
I wouldn't advise buying a place as your first move away from your parents, get comfortable moving away from your parents and get a bit of independence through renting first (and keep saving)
If you haven't, rent with a friend, its good experience, then rent on your own, see how you do. In the mean time, find a nice lady to move into with afterwards. Would be able to afford a better mortgage with a partner, who hopefully can help you with the deposit as well. And yes, keep saving for the latter.
What do you think interest is?
When you pay a mortgage each month, only a small fraction is paying off the principal of the loan and is being converted in to capital. Buying versus renting is not something you can make a blanket statement for though - different areas have different markets and thus what works in one area may not be apt advice in another. As always, do the sums and work out which is better for you.
Man of Honour
I really feel for younger people today and more and more younger people are living with their parents longer. I dare say my older two will soon be in this awkward predicament and we are already thinking of extending the home now.
Way back, banks would lend roughly around 2.5 x your annual income but with such a demand on mortgages, banks changed their outlook and saw the value of property as collateral and not the individuals salary for guarantee. This of course then lifted the cap on borrowing and mortgages spiralled out o control to a point that mortgages a far beyond any realistic salary.
The problem is two fold, I love my kids to bits but there will be a day when I'm older when I shall want my house to ourselves.
Long term they are an investment.. When I think I only pay £230 per month for a 4 bedroom dettached comapred to next door who pay rent for the same property around £1,400 pm. I'd say that was a damn good investment when I bought the house in 1997.
Way back, banks would lend roughly around 2.5 x your annual income but with such a demand on mortgages, banks changed their outlook and saw the value of property as collateral and not the individuals salary for guarantee. This of course then lifted the cap on borrowing and mortgages spiralled out o control to a point that mortgages a far beyond any realistic salary.
The problem is two fold, I love my kids to bits but there will be a day when I'm older when I shall want my house to ourselves.
Long term they are an investment.. When I think I only pay £230 per month for a 4 bedroom dettached comapred to next door who pay rent for the same property around £1,400 pm. I'd say that was a damn good investment when I bought the house in 1997.
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Absolutely agree with Huddy, renting is just wasting money, and while a mortgage does that to a degree, at least its not throwing away all of it, if in the end you end up with a house. I would dearly love to get one as soon as possible, but on my sallary, it was impossible when I looked a year ago or so. And here in HK the prices are ridiculous! Can't wait to go back to UK, but will need a few years saving up for a deposit
How much was your property in 1997? Your property is probably example of a very good investment because you've had massive capital appreciation (possibly even well above average) because of the massive property bubble.
If your neighbour next door is currently renting for ~£1400, then based on a 5% rental yield the property is worth ~£350k. Mortgage on £350k would be a lot more than £1400 per month. The difference between renting and having that mortgage could be saved (e.g. placed in some kind of tracker) or placed in a basic ISA. Over a long period of time, compound interest on a decent savings fund would likely equal the capital appreciation on most properties, the only difference is - with your savings fund, you haven't tied yourself down and you haven't set yourself up for 25 years of indebtedness.
It's horses for courses, but as said do the sums and see what works out best for you. Renting where I am allows me to live in a £400k property for £1350 a month.
In other areas, rental yields are much higher so having a mortgage makes a lot more sense.
I stayed with my parents and saved up a deposit. Like others have said 5k as a deposit won't get you a shoe box anywhere in this country. I think either saving for a year or two or renting with a friend(s) is probably the best thing depending on what comes out cheaper with travel expenses, taxes, bills etc.
Man of Honour
True but this is why I said longer term investment. Sure a £350k house is going to cost more on a mortgage than renting but even a £350k house today will be worth a lot more in ten years time say. At some point, the the mortgage becomes cheaper and the interest is reduced. The problem is when people move on and increase their mortgages.. We never did, opting to stay put. In ten years time, we'll have no mortgage and zero outlay for accommodation.
You also have the additional benefit of the collateral.
Renting on the otherhand, you are in the hand of the owner, they decide to sell. You're out, which is what happened to us. It's never your home.
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I would stay at home and save up.
I've consdiered renting with the missus because I'd like to move out. If I start renting though it's going to take much longer to save up for a mortgage deposit, and the rental money is pretty much wasted.
Fortunately where I live you can get a nice 3 bedroom house for ~£120K or so.
I've consdiered renting with the missus because I'd like to move out. If I start renting though it's going to take much longer to save up for a mortgage deposit, and the rental money is pretty much wasted.
Fortunately where I live you can get a nice 3 bedroom house for ~£120K or so.
The sensible guy in me would say stay at home and save up for a deposit, but I ignored my own advice.
I realised it would take me forever to get a decent deposit and I'd rather enjoy my 20's renting with friends in a city centre rather than stay at home saving every penny.
I might regret it in a few years time but the social side has to be a big consideration, you're still young but more and more of the people in your age group will soon be settling down and you may find that once you have your own home nobody will be interested in going out any more.
There is more to life than owning property.
I realised it would take me forever to get a decent deposit and I'd rather enjoy my 20's renting with friends in a city centre rather than stay at home saving every penny.
I might regret it in a few years time but the social side has to be a big consideration, you're still young but more and more of the people in your age group will soon be settling down and you may find that once you have your own home nobody will be interested in going out any more.
There is more to life than owning property.
Associate
Try a share, if it sucks go back to your parents.
Room in a shared property of similar people. Cheaper and still fun
I'd go with this option....and save as much as you can as fast as you can.
Seems to be a very British opinion though that you should go out and buy rather than rent.
I've been told that in Europe the average age of home ownership is something like the mid 40s, especially in Germany, everyone in their 20s-30s just rents.
I've been told that in Europe the average age of home ownership is something like the mid 40s, especially in Germany, everyone in their 20s-30s just rents.
I was having the same thoughts as you, however, luckily for me, I had them 10 years ago when I was 15 and began saving for my deposit when I was 16 which allowed me to buy a property on my own last year with a £35k deposit.
I've thought long and hard about this as most of my friends are in the same position as you. The bottom line is, you have to make sacrifices at some point in your life, I did mine while I was young and am in a pretty good position now. You need to decide whether you want to make those sacrifices now so that you are better off in the future, or whether you want to be better off now and not so much in the future.
Other than that, it's either find a way to earn a lot more money or win the lottery.
I've thought long and hard about this as most of my friends are in the same position as you. The bottom line is, you have to make sacrifices at some point in your life, I did mine while I was young and am in a pretty good position now. You need to decide whether you want to make those sacrifices now so that you are better off in the future, or whether you want to be better off now and not so much in the future.
Other than that, it's either find a way to earn a lot more money or win the lottery.