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We rent a house much bigger than we could buy

(33 Posts)
puttyandslime Fri 10-Aug-18 23:14:43

Six months ago we made a life changing decision after years of being unhappy in a tiny flat, and moved into my dream home. I literally wouldn't change a single thing- I've never been so happy as I am here.
However it costs us a whopping £1850 a month.

We're in the strange position that if we were to buy somewhere, the most we could get at best is a 2 bed flat. Our area (outer London) is outrageously expensive and we definitely couldn't get a house for less than 300k.

I therefore have no intention whatsoever of moving. I want to stay here forever and ever. DH thinks, although he is in love with this house too, we should get on the housing market. But the thought of going back to a flat, or somewhere smaller than this, makes me feel sick.

Am I mad?

Should we buy? We are saving a grand a month, have 20k so far.

Singlenotsingle Fri 10-Aug-18 23:18:31

The problem is you've got no security. The landlord can decide on a whim that he wants to sell, and that's you out on the street with 2 months notice! Even if you've lived there for 20 years! You may want to stay forever and ever, but it doesn't work like that.

puttyandslime Fri 10-Aug-18 23:19:57

Oh yes you're right, and I agree. That's the worst part about renting.

However, our landlord is a trust- complicated and outing but it's a property on charity land. They will never sell because they can't so I feel very safe here. Plus they spent 40k doing it up ready for tenants!

Notcontent Fri 10-Aug-18 23:21:32

Can you move somewhere where you could buy a small house?

The problem is that you might not always be able to afford to rent a nice, big house - so that might not be a good long term strategy. Obviously some people are not in a position to buy, but if you are, then I would.

Mumoftwoyoungkids Fri 10-Aug-18 23:22:10

If you are paying nearly £2k in rent and saving £1k a month then presumably you have the capacity to pay a mortgage of about £3k a month?

Surely that would pay for a pretty nice house? (Quick google puts it at £500k mortgage even if rates go up to 5%.)

You will need a deposit though. You could save for another year and have £30k (and presumably be able to borrow enough for £270k mortgage) and get your house.

Or you could move somewhere cheaper and save quicker or save more.

Or save longer and have more deposit.

Personally I would always buy a home. I don’t mean “get on the property ladder” - I mean find yourself somewhere to live and live in it without caring about house prices.

NorthernSpirit Fri 10-Aug-18 23:27:15

I’m a BTL landlord. Renting is a complete waste of money. You are paying someone else’s mortgage, giving them a profit and the value of the property is probably going up circa 4% a year. Sunk cost.

Ohhbollix Fri 10-Aug-18 23:37:49

Your figures don't add up at all. If you have, presumably, £3k a month to spend on housing you would be able to afford to buy a large house (even in outer London). Why would you actively choose to rent a property?

MyBrexitUnicornDied Fri 10-Aug-18 23:41:47

I agree with your Dh. As a previous poster has said you are paying someone else’s mortgage.

You could buy small and look to move up the ladder in a few years.

iamacatlady Fri 10-Aug-18 23:42:07

Could you not buy a property to let out? You stay where you are whilst being on the property ladder.

I know it's not as straightforward as that but it's possible to do

Studyinghell Fri 10-Aug-18 23:51:54

Buy somewhere small that you don’t want to live in and rent that out. Stay renting your dream house. Win win, you’re on the property ladder and have a safety net. You might be paying somebody else mortgage, but somebody else is paying yours

Dragongirl10 Fri 10-Aug-18 23:52:40

The problem is longer term op, rents go up most years, mortgages don't and equity increases over time.

What is your retirement plan, how will you be able to afford rent then?

Most aim to have paid off the mortgage by retirement.

Look at different areas and find a compromise.

HeddaGarbled Fri 10-Aug-18 23:56:50

I totally understand how you feel, but I do think you are making a mistake.

When you are retired, you won’t be able to afford an equivalent rent.

The point of buying now, while you have healthy incomes, is that the money you pay each month, chips away at the mortgage so that eventually, you own a property outright. And then when you retire, you don’t need to find money every month to pay for your home.

Stay too long where you are and it will get harder and harder to give up the extra space.

When you are young and healthy and independent is the time to rough it a bit, so that you can enjoy the fruits of your sacrifices in your later years.

It’s the classic dilemma of instant gratification versus long term benefit. And research has shown that individuals who are able to wait for treats win in the end.

BackforGood Fri 10-Aug-18 23:57:11

I am no expert on London property prices, but surely you can afford to buy a house/ pay a mortgage when you have got nearly £3k a month to throw at a mortgage ???
That is a huge amount of money - and a pp has done a bit of googling to suggest your maths seems off too.

I can't understand why you wouldn't buy your own property when you can afford it. It is a lovely feeling to have paid your mortgage off, rather than to look back, with no capital / asset, and realise you have paid someone else's mortgage off, and you still have another 40 years to continue paying rent - however much your income may be redced, or other expenses increased.

peachypetite Sat 11-Aug-18 00:00:29

Almost 2k rent a month is insane. What are you going to do when you're older?

NotSuchASmugMarriedNow1 Sat 11-Aug-18 11:57:30

I'd rather live in a studio flat that I owned than a posh house someone else owns.

Do you do much entertaining at home? Just wondering why you want such a big property

Silversun83 Sat 11-Aug-18 13:20:48

Also don't understand how you can afford £3k a month in rent and savings and not a £300k+ house?? confused Our house was £310k and our monthly mortgage is £830. Granted, we had quite a big deposit from equity in our previous house, but if you can afford £3k a month then you obviously don't need as high a deposit..

As others have said, much much better to own a house than rent in old age when you probably won't be able to afford nearly £2k in rent..

user1457017537 Sat 11-Aug-18 14:03:05

I can see the point of what you are doing and your tenancy sounds quite secure. It’s probably a lovely property and worth much, much more than you could afford to buy. As long as you are happy

Cheeseislife Sat 11-Aug-18 14:06:09

We did this...£1350 a month for a house worth 400k, we could afford to rent it but would have been 100k short of buying it. Was also outer London... its a funny old place hmm

specialsubject Sat 11-Aug-18 14:35:27

the idea that landlords can or do evict on a whim is of course nonsense. rachmann is long gone, and the op's landlord is a charity so wont die, divorce or be easily driven from the market.

however you need a long long tenancy and a plan for when you are no longer earning.

dingdongdigeridoo Sat 11-Aug-18 14:46:12

We currently rent a tiny place so we can save a deposit for a house. We could rent somewhere bigger, but we would never be able to own. I want the security of owning a home as I get older, and I’d be scared of losing my job or getting a long term illness and not being able to cover the rent. 1800 is a hell of a lot each month.

If you have decent credit and a high salary, you might not even need a huge deposit. There are even 100% mortgages if you have a guarantor such as a home owning parent.

puttyandslime Sat 11-Aug-18 19:56:24

To answer questions... we’ve been abroad so haven’t bought before now.

Moving area isn’t an option as this is perfect for both of our jobs and the kids schools.

It’s not a massive house, it’s a 2 bed house! This is just a very expensive area. We were previously paying £1250 for a 2 bed flat on second floor.

We have no savings.

DH got a big promotion, literally double his salary, hence why we now have enough money for this rent and for savings too.

Can’t get a mortgage with zero deposit and crap credit ratings. Will need a few years to save and improve our ratings after a skint few years (I was a student midwife so no income for the past 3 years).

Buying a flat to let is a great idea!!

Houses like ours go for about 500k. We’d never get a mortgage for that much.

Thanks so so much to everyone who has taken the time to reply- all really helpful and has given me lots of different perspectives to think about- I really appreciate people sharing their opinions with me!

Thanks!

puttyandslime Sat 11-Aug-18 19:58:03

Oh, and PS- moving here put us in the catchment area (2 min walk) of the secondary school we want DS to go to. It’s outstanding and among the best in the county. Previously we were looking at private school as where we used to live the schools were awful. So it was a choice between paying £600 a month more for rent, or over a grand a month in private school fees for ds1.

puttyandslime Sat 11-Aug-18 20:06:55

Sorry meant to say we have no deposit, not we have no savings. We’ve got 20k so far saved.

onceandneveragain Sat 11-Aug-18 20:54:54

why don't you look at the buy-to-let flat now, and stay where you are for a few years, then think about buying a family house once the children are both accepted in the good secondary school you like?

once they are older you wouldn't be so tied to the expensive area you are in now and could move slightly further out - you could do a slightly longer commute (if you are both even in the same jobs) as you wouldn't need to be home for the children and similarly they would be old enough to travel to school by themselves on public transport.

also by then who knows what effect Brexit would have on housing/job markets? With the insecurity that can come from renting (although not so much in your case) there is also flexibility.

user1457017537 Sat 11-Aug-18 20:59:03

You can’t uave a buy to let mortgage if you don’t already have a property

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