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    To buy or to rent?

    I'm after a bit of advice.

    Basically, I've pretty much been kicked out of my flat, which my Dad owns. I earn enough to support myself anyway so it's time to move on. I have two choices.

    Rent - I've seen a couple of OK flats I could rent for ~£400 a month. They're both pretty grotty though and need a lot of work. One of my mates would be living with me and contributing towards rent, bills, etc.

    Buy - I'm on a decent salary, probably enough to get a mortgage, and I have perhaps £6000 or so I could put down as a deposit. There's a really nice house I'm looking at, which has just been done up and need literally nothing doing to it, around £100k though. I have a meeting at the bank tomorrow about a mortgage. Again my mate will come and live with me, and pay £100 a month for a room or so and contribute towards bills.

    What would be the best route to go down? Renting seems like dead money to me, but buying seems a big commitment since I'm only just 20. Any advice?

    45 Comments

    No contest, buy.

    makess you more responsible....buy

    6k deposit on 100k? Good luck. Also you'll have trouble getting a mortgage that allows subletting.

    if you are lucky enough to be able to get a mortgage in this day i would defo buy-like you said renting is dead money , buying a house is an investment x good luck at the bank tomo x

    Banned

    Shengis;7616307

    6k deposit on 100k? Good luck. Also you'll have trouble getting a … 6k deposit on 100k? Good luck. Also you'll have trouble getting a mortgage that allows subletting.


    renting a room isnt sub-letting though is it? I do agree I find it hard to see how anyone can get a mortgage with only a 6% deposit.

    its tax free income too (up to about £5K I think).

    Banned

    make sure you have a proper contract with your `mate` and a rent book , in event of unemployment etc -should he ever want to claim rent allowance. also should you fall out and need to evict.
    buying is best . good luck : )

    Personally - i'd rent. makes things easier if you will be sharing.
    At 20 having a house is too much commitment IMO

    csiman;7616365

    renting a room isnt sub-letting though is it? I do agree I find it hard … renting a room isnt sub-letting though is it? I do agree I find it hard to see how anyone can get a mortgage with only a 6% deposit.its tax free income too (up to about £5K I think).



    What would you call it?

    "I do agree I find it hard to see how anyone can get a mortgage with only a 6% deposit."

    Shouldn't be a prob as long as you have a substantial income to support repayments, I think a good time to buy but only my opinion, good luck you sound like you have already thought it out. :thumbsup:

    Banned

    `lodger` you get £4,250 tax free

    The renting deal is called

    Room for rent.
    Its backed by the government.

    direct.gov.uk/en/…804

    £4250.00 tax free

    Original Poster

    I wouldn't describe my income as substantial. Probably about £25k for this year. Should rise next year with a bit of luck when I've finished University. I read a link, pretty sure it was on here about letting a room for £4250 tax free or something.

    I guess I'll have to pop along to the bank tomorrow and see what they say :).

    BabySmurfette;7616411

    Personally - i'd rent. makes things easier if you will be sharing.At 20 … Personally - i'd rent. makes things easier if you will be sharing.At 20 having a house is too much commitment IMO



    really ? IMO the sooner/the younger you can buy the better, last thing you want is a 25/35 year mortage at 30 hanging round your neck.

    Shengis;7616413

    What would you call it?



    It's called a lodger!

    glam-R;7616312

    if you are lucky enough to be able to get a mortgage in this day i would … if you are lucky enough to be able to get a mortgage in this day i would defo buy-like you said renting is dead money , buying a house is an investment x good luck at the bank tomo x



    Renting isn't dead money, it's not as simple as that. The financing cost of the mortgage needs to be subtracted - that's the "dead money".

    bigwheels;7616445

    The renting deal is calledRoom for rent.Its backed by the … The renting deal is calledRoom for rent.Its backed by the government.http://www.direct.gov.uk/en/moneytaxandbenefits/taxes/taxonpropertyandrentalincome/dg_4017804£4250.00 tax free



    From the link : If you're a mortgage payer it's best to check whether taking in a lodger is within your mortgage lender's and insurer's terms and conditions.

    And you can bet it won't be. They get the last word as they own the property till the final payment is made. You could do it and not tell them of course:whistling:

    1. Its a buyers market so if the house you are looking at is on the market for 100k then make an offer at least 10% below(i wld go 15%). If house prices drop a little futher then it will only be aroubd this % margin so you are unlikely to end up in negative equity.

    2 read about 'loan to value' (www. which. co.uk / advice/mortgage-basics/loan-to-value/index.jsp) - go to which . co . uk and look up mortgage basics. Basically if you get the house for 100k and you have a 5k deposit then you will borrow 95k then your mortgage will be 95%ltv - some banks insist on a mimimum 75% ltv so for eg a 100k house on a 100k mortgage advance will require a 25k deposit(i think thats right!)

    3. so you will more or less be requiring a 95% ltv www. money. co.uk /mortgages / mortgage-details /Ipswich-Building-Society/Standard-LTV-95-ExC-Direct-Only.htm

    the biggest obstical will be your low deposit. Some lenders may offer you 95%ltv and hike the interest rate accordingly - shop around.....

    bought my first house at 20,am now nearly 30 and wouldnt have a chance in hell of of starting out now!! i for one say the younger you are the better , providing the resposibilities are fully understood

    pghstochaj;7616501

    Renting isn't dead money, it's not as simple as that. The financing cost … Renting isn't dead money, it's not as simple as that. The financing cost of the mortgage needs to be subtracted - that's the "dead money".



    not gonna argue with that!! but in the long run ??????????

    glam-R;7616568

    not gonna argue with that!! but in the long run ??????????



    In the long run it's exactly the same.

    glam-R;7616555

    bought my first house at 20,am now nearly 30 and wouldnt have a chance in … bought my first house at 20,am now nearly 30 and wouldnt have a chance in hell of of starting out now!! i for one say the younger you are the better , providing the resposibilities are fully understood



    :thumbsup:

    Depends how settled you are in your job, what are your possibilites of moving towns, meeting someone and moving to a bigger house? All these factor into buying a house. Sometimes the hassle of selling the house 5 years down the line with fees etc and possible no profit means you may as well have rented anyway!

    pghstochaj;7616581

    In the long run it's exactly the same.



    of course its not the same???? you rent all your life what you left with at the end???

    glam-R;7616607

    of course its not the same???? you rent all your life what you left with … of course its not the same???? you rent all your life what you left with at the end???



    The same as buying, a wooden box and 6 feet of dirt on top of it :lol:

    Banned

    glam-R;7616607

    of course its not the same???? you rent all your life what you left with … of course its not the same???? you rent all your life what you left with at the end???



    At the end of what? Your life?

    At that point i don't think I'd care:thumbsup:

    Shengis;7616620

    The same as buying, a wooden box and 6 feet of dirt on top of it :lol:



    ha ha yeah true but at least kids are sorted x

    glam-R;7616633

    ha ha yeah true but at least kids are sorted x



    Better off renting then, freeloading, no good *******!!! :lol: ;-)

    Original Poster

    BabySmurfette;7616596

    Depends how settled you are in your job, what are your possibilites of … Depends how settled you are in your job, what are your possibilites of moving towns, meeting someone and moving to a bigger house? All these factor into buying a house. Sometimes the hassle of selling the house 5 years down the line with fees etc and possible no profit means you may as well have rented anyway!



    I'd say I'm quite settled in my job, I started about 18 months ago and have been promoted twice. I have one year of Uni left in a nearby town, but I'm going to stay around here after finishing most likely. I lived in Manchester for 18 years so now I'm glad of a change where I am now.

    I'd say I'm pretty serious about buying and I've mulled it over for a few months.

    "I'd say I'm pretty serious about buying and I've mulled it over for a few months."

    do it

    glam-R;7616607

    of course its not the same???? you rent all your life what you left with … of course its not the same???? you rent all your life what you left with at the end???



    I am not sure you understand but then I might end up being patronising.

    People say that renting is dead money but then ignore that only a proportion of your mortgage pays off the loan, the rest of it is interest. Then you consider the costs of ownership and the "dead money" is even less.

    To put it into context, a £100,000 loan at today's interest rates on a 5% deposit will cost more than £200,000 over a 30 year period (£100,000 financing cost). If your average mortgage rate increases to 10%, this increases to £300,000.

    That's a massive mortgage cost, so at the end of it, if you had been renting at a reasonable price, you would have much larger savings.

    This is NOT to say that buying is silly. It is simply saying that the "dead money" is a lot less than you think.

    Go see an independant mortgage advisor and see what they say about your finances. That's step 1 :thumbsup:

    I think you will struggle with such low savings and an income of "around" £25k. You won't have a £5k deposit realistically, you will have various costs you perhaps haven't yet considered.

    pghstochaj;7616718

    That's a massive mortgage cost, so at the end of it, if you had been … That's a massive mortgage cost, so at the end of it, if you had been renting at a reasonable price, you would have much larger savings.



    Good luck with that one. Most places are on a BTL mortgage so the rent will be that + insurance cost + profit + maintenance. The rental market is in a word... ****.

    Why only 100 a month rent? Is it that cheap in Manc? Surrey is 400 just for a room. + bills. Or is it to stay with in the Lodger guidelines?

    pghstochaj;7616718

    I am not sure you understand but then I might end up being … I am not sure you understand but then I might end up being patronising.People say that renting is dead money but then ignore that only a proportion of your mortgage pays off the loan, the rest of it is interest. Then you consider the costs of ownership and the "dead money" is even less.To put it into context, a £100,000 loan at today's interest rates on a 5% deposit will cost more than £200,000 over a 30 year period (£100,000 financing cost). If your average mortgage rate increases to 10%, this increases to £300,000.That's a massive mortgage cost, so at the end of it, if you had been renting at a reasonable price, you would have much larger savings.This is NOT to say that buying is silly. It is simply saying that the "dead money" is a lot less than you think.



    well said ! dammed either way really! best thing to do is to throw as much money at the mortgage as poss,this way you are decreasing years and interest given away .= less dead money!

    As other people have already mentioned, there are the moving costs to consider- conveyancing and surveys can be quite pricey- google moving costs and there are quite a few websites that break it down nicely. Good luck whatever you decide xx

    If i was ina position to buy now, i would be, rather than renting. However, your deposit is a bit small at the moment, £5000 is nothing in the grand scheme of things. You're probably looking at needing 20%, so £20.000.

    How good a friend is your friend, do you trust him? Another option is shared ownership, he buys half and you buy half, can cause complications if there are any falling outs though.

    If you can get a mortgage I'd do it but to be honest I'd get a better lodger, £100 a month is taking the mick a bit.

    StudentJo;7617070

    If you can get a mortgage I'd do it but to be honest I'd get a better … If you can get a mortgage I'd do it but to be honest I'd get a better lodger, £100 a month is taking the mick a bit.


    I think that too, he was going to pay half the £400 rent + bills. £50 a week plus half of utility bills but not maintenance would be more like it. I got a mortgage when I was youngish, and over paid it at every chance I got, ditto 2nd & 3rd house. All paid off by the time I was 42 on a big house with land. No regrets, missed out on holidays and nice cars etc but I'm free! Bonus - met my husband, he moved in with me, we agreed I'd pay the mortgage he'd pay all the bills, that was about 50/50. When I'd finished the mortgage I packed up working full time, didn't need the money!
    Would your parent lend you a few k to add to your deposit?

    Original Poster

    Thanks for all the replies.

    The £100 from my lodger is fair given the circumstances, which I won't bore you with :).

    I shall wait and see what they say at the bank tomorrow. One thing I've thought of is renting for a year or so and saving in the meantime towards a deposit. The only thing is we'll no doubt have to spend a fair amount of money making the rented flat bearable.

    Will rep all replies (if not today then tomorrow as it won't let me rep them all in one day). Thanks!
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