Rent or buy - decisions
Discussion
The other point to consider OP is that while you might want a city centre flat in Manchester now, in 3/4 years you might have a missus, want to start a family etc. and move out to the suburbs. Then the £3/4k in fees you'd incure buying a place would equate to an extra £1k per year you've owned the property, os factor that into your calculations. You seem to be coming down on the side of renting nad keeping your options open, and that sounds like the right decision to me.
You really need to review your specific requirements. If you are prepared to rent for a few years while establishing where you're going to settle, and seeing what the market does (unlikely to rise steeply at all in the next 2 - 3 years), then rent a place that's a bit more of a compromise than the sort of place you'd buy.
That way you'd keep the rent low and wouldnt have to find all the fees associated with buying and selling, maintenance, and the massive interest on a mortgage. By making this compromise you can hopefully get a property for less than what the mortgage payments would be, and can save a small amount. During this time you can also watch the market and perhaps find a good bargain and be able to move on it when it comes up.
If buying, go to the bank and see what they'd lend you. get an idea of the payments, including life assurance, buildings insurance, and the mortgage fees, and then add in the stamp duty etc to get a realistic price of what it will cost to buy. That way you'll have a price point you can aim for, then compare what rent on a similar property would cost.
One thing when buying, dont buy a property on or near the stamp duty increase mark. For example, a £250k house will not have risen in value over the past few years, and is unlikely to over the next few, simply because the £265k it might be worth will always get knocked down to £250k (I know this from experience). There may be a few exceptions, but dont bank on exceptions, the majority of estate agents will tell you to market at £250k for a sale. This essentially means your property wont rise without a large rise in house prices. Get something that has some headroom to go up even with a small house price recovery.
That way you'd keep the rent low and wouldnt have to find all the fees associated with buying and selling, maintenance, and the massive interest on a mortgage. By making this compromise you can hopefully get a property for less than what the mortgage payments would be, and can save a small amount. During this time you can also watch the market and perhaps find a good bargain and be able to move on it when it comes up.
If buying, go to the bank and see what they'd lend you. get an idea of the payments, including life assurance, buildings insurance, and the mortgage fees, and then add in the stamp duty etc to get a realistic price of what it will cost to buy. That way you'll have a price point you can aim for, then compare what rent on a similar property would cost.
One thing when buying, dont buy a property on or near the stamp duty increase mark. For example, a £250k house will not have risen in value over the past few years, and is unlikely to over the next few, simply because the £265k it might be worth will always get knocked down to £250k (I know this from experience). There may be a few exceptions, but dont bank on exceptions, the majority of estate agents will tell you to market at £250k for a sale. This essentially means your property wont rise without a large rise in house prices. Get something that has some headroom to go up even with a small house price recovery.
Deva Link said:
Well, yes, but what's going to happen in the next 13 years?
OK, no-one knows for sure, but based on what's happened in the last few years it appears to be unlikley that the market will be absolutely decimated.
I suggest a bigger risk, in terms of consequences for individuals, is that the market could pick up, and once it starts rolling it could pick up rapidly. For people at the margins of owning their own property, it wouldn't take much for the market to move away from them.
If they talk of not being out this recession/slump till 2018 (and thats in the media,) ,then it would be really far fetched to think prices would rise over the next decade , infact I cant think of any variable that would cause prices to rise i the Northwest. esp after the vast growth in house prices till 2007 was part of the blame of the credit crunch.OK, no-one knows for sure, but based on what's happened in the last few years it appears to be unlikley that the market will be absolutely decimated.
I suggest a bigger risk, in terms of consequences for individuals, is that the market could pick up, and once it starts rolling it could pick up rapidly. For people at the margins of owning their own property, it wouldn't take much for the market to move away from them.
jonny70 said:
If they talk of not being out this recession/slump till 2018 (and thats in the media,) ,then it would be really far fetched to think prices would rise over the next decade , infact I cant think of any variable that would cause prices to rise i the Northwest. esp after the vast growth in house prices till 2007 was part of the blame of the credit crunch.
I think chances are you're right and I certainly wouldn't advocate anyone buying unless they were pretty settled for the long-term or they were buying a place that could be easily let.Rents are forecast to continue rising in the North West though. That has two effects; obviously it costs renters more, but it also helps put a floor under house prices.
Sit tight. Play the "what happens if..." game and you will soon realise that with no short term net gains to be had over the next few years in property (IMO) you are better off renting and having the flexibility to get married, buy with a partner, or leave the country for a job offer etc etc. At your age so much of your circumstance can change - if you are open to it.
Honestly don't know what I would do in your circumstances. I've always traditionally been of the 'must buy' mind set however right now, with a stagnant market for the foreseeable future there is perhaps no real urgency to do so.
Clearly you're capable of saving diligently so if you do buy, I think the idea of an offset mortgage is actually an excellent one. It gives you access to your savings if an emergency should arise but in the mean time it maximises your capital repayment vs interest ratio when paying your mortgage back.
Anyway, there are people far better qualifies than me to offer financial advice on here but there is one positive of owning your own place which I don't think has been mentioned on here as yet, and that is that it is your own place! You can do whatever you like to it. Fancy some decking in the garden? Maybe want to paint the lounge in gloss pink? The choice is your's. That would mean a lot to me though of course it comes with the downside that it has to be paid for out your own pocket.
Another thing worthy of mention is that if you do buy a place, I would seriously consider going straight for 3+ bedroom house rather than a swanky flat. The reason I say this is that it is one of my big regrets that when I bought my first place 7 years ago, I bought a two bed flat because I just thought it was cooler than all the sensible 3 bed houses I'd looked at. The houses would have cost barely any more at the time. Fast forward seven years to today and I'm now married with a daughter and my property portfolio consists of two 2 bedroom flats. Neither use nor ornament. It means that we are now selling one of the flats to purchase a 3+ bedroom house which will sap away the better part of £10k in costs. If I'd bought a house in the first place, there'd be no need to move now and I could have rented an extra room out to a mate.
Clearly you're capable of saving diligently so if you do buy, I think the idea of an offset mortgage is actually an excellent one. It gives you access to your savings if an emergency should arise but in the mean time it maximises your capital repayment vs interest ratio when paying your mortgage back.
Anyway, there are people far better qualifies than me to offer financial advice on here but there is one positive of owning your own place which I don't think has been mentioned on here as yet, and that is that it is your own place! You can do whatever you like to it. Fancy some decking in the garden? Maybe want to paint the lounge in gloss pink? The choice is your's. That would mean a lot to me though of course it comes with the downside that it has to be paid for out your own pocket.
Another thing worthy of mention is that if you do buy a place, I would seriously consider going straight for 3+ bedroom house rather than a swanky flat. The reason I say this is that it is one of my big regrets that when I bought my first place 7 years ago, I bought a two bed flat because I just thought it was cooler than all the sensible 3 bed houses I'd looked at. The houses would have cost barely any more at the time. Fast forward seven years to today and I'm now married with a daughter and my property portfolio consists of two 2 bedroom flats. Neither use nor ornament. It means that we are now selling one of the flats to purchase a 3+ bedroom house which will sap away the better part of £10k in costs. If I'd bought a house in the first place, there'd be no need to move now and I could have rented an extra room out to a mate.
Gad-Westy said:
...and that is that it is your own place! You can do whatever you like to it....
...Another thing worthy of mention is that if you do buy a place, I would seriously consider going straight for 3+ bedroom house rather than a swanky flat....
Even more of a reason to buy a house INSTEAD of a flat is the 1st part of your post - most flats are leasehold so you can't do whatever you want with it (in fact you don't own it). ...Another thing worthy of mention is that if you do buy a place, I would seriously consider going straight for 3+ bedroom house rather than a swanky flat....
Rent if you:
* Are not sure where you will be in the next few years
* Rental yields are quite low (renting is inexpensive compared to buying)
* Want to live in a flat rather than a house for the time being
* Have better things to do with your money
Buy if you:
* Have enough funds to allow for a comfortable deposit and emergency fund + the income to cover the payments easily
* Are quite sure you want to settle and live in the area
* Rental yields are high (this seems true in many parts of the North)
* Want to live in a house not a flat (that you can later extend or modify to suit your needs)
Otherwise lots of good posts. Do take your time not to rush into anything.
* Are not sure where you will be in the next few years
* Rental yields are quite low (renting is inexpensive compared to buying)
* Want to live in a flat rather than a house for the time being
* Have better things to do with your money
Buy if you:
* Have enough funds to allow for a comfortable deposit and emergency fund + the income to cover the payments easily
* Are quite sure you want to settle and live in the area
* Rental yields are high (this seems true in many parts of the North)
* Want to live in a house not a flat (that you can later extend or modify to suit your needs)
Otherwise lots of good posts. Do take your time not to rush into anything.
Soovy said:
crankedup said:
Put a deposit down and start to buy your own property. Let a room to a pal and lower your monthly cost.
Suddenly gone a bit capitalist, have we, comrade?
Soovy said:
furtive said:
Soovy said:
Again I say, I pay £400 a week for a £650,000 flat - that is FAR FAR FAR cheaper than an interest only mortgage, and I have zero costs.
What about if you include capital growth?As an example, I bought my house near where you live for £160k and sold it 11 years later for £445k. If I had rented over the same period I would not have that £285k of capital now.
crankedup said:
Always been a capitalist, like many people though always acknowledge that in a capitalistic society there will always be people who are unable to manage their lives adequately. Either through poor health, financial or just plain bad luck. That is where my Socialist POV tends to surface, what I call a balance between self enrichment and fairness.
A Veuve Clicquot Socialist eh? 
Back to topic, the cash spent on Rent is equivalent to the Interest on mortgage .. in Soovy's example.
Soovy said:
BUY £30K WORTH OF PREMIUM BONDS.
Money Saving Expert said:
With £30,000 in Premium Bonds, if you have average luck1 you would expect to win roughly:
- £400 over 1 year
- £1500 over 5 year(s)
- £2500 over 10 year(s)
You get a better return on other investments, unless it is the gambling aspect you are after.- £400 over 1 year
- £1500 over 5 year(s)
- £2500 over 10 year(s)
o/p what type of property are you looking at and for how much? also how much is the rent on similar property compared to a mortgage with your deposit?
Im in a similar position to you but unfortunately not close to your deposit! also living 40 miles outside London in bucks where rent prices generally match those of a mortgage repayment. Also being in a similar position i know alot less than most on here so feel free to pick/flame my points but my brain would be thinking like this:
1) a possible risky property such as one from an auction, sold as seen etc and normally cant be viewed before, lots of work probably need but chance to buy a real bargain. Fact you live with parents means you can work on the property for lets say a year? not saying it will be 100% perfect by then but ideally halfway there and something you can work on at weekends etc, even better if a parent or mates are handy at DIY or in the trade
2) repossession, as above but probably not as much work needed but wont be such a bargain
3) if you rent for say a few years as some are suggesting, what if you then go to buy and the market is still abit flat, do you still rent even though in that time period you have spent on rent lets say £500pcm X 12 =£6000, over 3 years thats 18k on rent! do it again for another few years and im sure you get my point
40k is a lot of money and this is probably the most stressful thing you will do and biggest debt of your life (if you buy) dont rush into but at the moment it seems time is on our side, threads like this are pretty interesting for hearings people opinions/knowledge
Im in a similar position to you but unfortunately not close to your deposit! also living 40 miles outside London in bucks where rent prices generally match those of a mortgage repayment. Also being in a similar position i know alot less than most on here so feel free to pick/flame my points but my brain would be thinking like this:
1) a possible risky property such as one from an auction, sold as seen etc and normally cant be viewed before, lots of work probably need but chance to buy a real bargain. Fact you live with parents means you can work on the property for lets say a year? not saying it will be 100% perfect by then but ideally halfway there and something you can work on at weekends etc, even better if a parent or mates are handy at DIY or in the trade
2) repossession, as above but probably not as much work needed but wont be such a bargain
3) if you rent for say a few years as some are suggesting, what if you then go to buy and the market is still abit flat, do you still rent even though in that time period you have spent on rent lets say £500pcm X 12 =£6000, over 3 years thats 18k on rent! do it again for another few years and im sure you get my point
40k is a lot of money and this is probably the most stressful thing you will do and biggest debt of your life (if you buy) dont rush into but at the moment it seems time is on our side, threads like this are pretty interesting for hearings people opinions/knowledge
FlossyThePig said:
Soovy said:
BUY £30K WORTH OF PREMIUM BONDS.
Money Saving Expert said:
With £30,000 in Premium Bonds, if you have average luck1 you would expect to win roughly:
- £400 over 1 year
- £1500 over 5 year(s)
- £2500 over 10 year(s)
You get a better return on other investments, unless it is the gambling aspect you are after.- £400 over 1 year
- £1500 over 5 year(s)
- £2500 over 10 year(s)
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