To buy or admit defeat and stay renting?

[tootiredforthissh1t]

DH and I missed the boat when it came to buying property when we were younger and it was more affordable. We met in our late twenties and we're now in our late thirties. We have 2 DC and we rent very cheaply in a lovely town where we would love to buy.

However, the property prices here are expensive (for us); even entry level houses would be at the top end of our budget, committing us to 20-25 years of stretching ourselves to pay a mortgage, unable to afford to make home improvements to add value and space, and sacrificing nice holidays, treats etc. Outlying villages are more affordable, but we like our town and feel part of the local community where we live.

Our rented house is dated, needs modernising and extending to accommodate our family as the DCs grow up. I'd love to buy it, but the mortgage would be more than double the rent we pay and we wouldn't be able to afford to do the work. Our landlord is good and leaves us alone, but I feel insecure in rented property.

I've been obsessing about buying a house so that we have a home that is 'ours'. It's a very British expectation and marker of success which doesn't seem to exist in other European countries. I feel like a bit of a failure really. There's also the consideration of paying rent in old age compared to owning a property outright.

So, all things considered, WWYD? Buy or live in rented?

[lalalonglegs]

If you can buy even a shabby house which will take work over the years and that you can live in while saving, I would always recommend that because (a) it is more secure than renting (b) rents tend to be more volatile than mortgages so you may find your rent goes up much faster than a mortgage would (especially if you buy a long-term fixed rate). I'd also tend to look at it as something for the next ten years - are you both working at the moment, if not, is one of you likely to return to work in the next couple of years meaning that your family income will go up? Are you paying for childcare and is that likely to be a finite expense as your children move to full-time education/get older and can look after themselves more? Are you or your partner in an industry where promotion is likely?

If you can't see your income going up at all for any reason, would it be possible to buy something in the town that you like and can afford and can rent out until you and your husband downsize to it when your children move out and continue to rent bigger properties that can accommodate you all in the meantime? I really wouldn't want to be a pensioner who doesn't own my own property - I think it would be very difficult to find LLs willing to accept me.

[Bunzanda]

Im in a very similar situation. Rented for past five years. Nice neighbours. Landlord leaves us alone. But also he will not modernise because the rent is so cheap. We are even in London, zone 4. Transport is great. We have one dd, another on the way.
So... last month we decided to start to save as much as we could for the next 2-3 years and buy whatever we can afford. It will mean leaving london and this great, school catchment area, but for me, i want a meaningful asset to past down to our dcs.
I also can't help but feel that's the whole point in getting a decent paid job after uni

[Bearbehind]

The thing is, we can't all have everything we want and there has to be a compromise. It's seems there is a solution; buying in the cheaper town.

You just need to decide if that compromise is worth it in order to have your own home.

Personally I'd chose home ownership over renting every day of the week and, whilst it is impossible for some people to buy, I think if it can be done it is worth making sacrifices to achieve that.

[tootiredforthissh1t]

Thank you for taking the time to reply lalalonglegs

To answer your questions:

1. We are both working at the moment. I will be changing jobs and increasing m salary later this year, but the calculations I've made regarding mortgage affordability are based on our future income
   
2. We do pay for childcare and that is a finite expenditure, but realistically it's an ongoing expense for al least the next 5 years.
   
3. DH has good prospects for promotion in the long term, but we will incur expenses in the next 5+ for him to take further qualifications to make that possible.
   

In terms of buying something smaller and renting it out, this a something we have discussed in the past. I need to look at the figures and update myself on the current legislation regarding buy-to-lets. My understanding is that we would also need to save a much bigger deposit for a buy to let mortgage.

Like you, I really don't like the idea of renting I old age.

[namechangedtoday15]

How will you pay the rent when you retire, or are you not planning on retiring? That would be my worry. Ideally, even if its a financial struggle for some of the years, when we're approaching retirement agent (sort of mid-60s) the mortgage will be paid off and we can use the money we'd have spent on the mortgage for travel / other things, or should we decide, reduce our hours / stop working. I would be worried that if we didn't have an income, we wouldn't be able to pay rent (unless you're planning to save now so you have enough to pay rent until you die).

FWIW, we bought a house at the very top of our budget (although cheap for the area). It was v old fashioned, had one bedroom less than we really needed but it was in catchment for an amazing primary school (and fab secondary schools), lovely area etc. We didn't really do much to it at all for about 5 years, until we'd stopped paying nursery fees and my income had increased. It was frustrating at times thinking of all the things I wanted to do to it, but with no money, but we made little changes as funds allowed. We still have the coloured 50s bathroom suite 6 years on.

But it's ours and we'll have paid the mortgage off by the time we're early 60s.

[IWannaBeAPopstar]

We are in a very similar situation. We just gave up on buying for a while - lived too close to London's claw-like grip on house prices near transport links. Dh recently was made redundant and got a new job further north; we haven't had to use his redundancy package to get by, therefore giving us a huge boost to our savings. We've just put an offer on a huge, gorgeous house in kind of a divey area (that is experiencing a bit of an overhaul and lots of investment); I want the security and freedom of owning our own home. I want to redecorate as I choose, and the DC want pets. I'm tired of paying off someone else's mortgage and being treated like an expendable commodity as a result. Even with only a 5% deposit, our monthly payments will be about the same as rent. And like pp have said, our income will rise over time as the DC all get into school, so we'll be able to pay it off a bit faster or just save a bit more each month.

We paid over 40k off someone else's mortgage over the past 5 years. I want that to go on our mortgage instead!!

[tootiredforthissh1t]

Sounds like your situation was similar namechange
I should add, we haven't started saving for a deposit yet. We're clearing debt and plan to start saving when I change jobs and increase my income later this year.

So far then it's Buy 2 vs 0 Rent

[ItMustBeBedtimeSurely]

Buy. I think you're being unnecessarily negative when you say 20-25 years of being skint etc. The first few years will be tight, it's true, and of course you're subject to interest rate changes, but in general your payments will go down as your equity goes up.

We bought for the first time three years ago (we're mid thirties), and I can't tell you what a relief it is to have security and know it's ours. And yes, interest rates will probably rise soon, but we'll cope and at the end we'll own the place. I hated renting - the inspections, not being able to make the place your own, being kicked out when your LL decides to sell.

Easy decision for me.

[IWannaBeAPopstar]

From what little I've read, renting is the norm all over Europe. Tenants are better protected, and I think leases can be passed from one family member to the next. There is a lot more stability in the housing market compared to here. I could be wrong.

There is an obsession with owning a home, it's true, but I'm not surprised considering how horrible it can be to rent , especially for young families.

[specialsubject]

yes, but the OP doesn't live in the magical land of Europe where tenancies can be inherited. There is a lot of tenant protection here, but with the best will in the world, even if the landlord is happy to continue at a lower-than-normal rent, landlords die.

the OP can negotiate a long, long tenancy if the landlord/mortgage/insurers are happy.

[ThroughThickAndThin01]

I'd buy, much more security. And in the long term a paid for home, and asset.

[DownstairsMixUp]

Hard one op. Both of pros and cons. Obviously the main pro of saving would be the end result of owning your own house. But I'd also hate to spend a good chunk of my life when the kids were young struggling and not being able to go out places, take them on nice holidays etc. You only get your children young once and I'd hate to miss out on that to.

[Wuffleflump]

I fear this thread is just re-making the point you started with: that Brits are obsessed with buying.

Consider the counterpoints:

You're not just buying a house, you are also paying interest on a loan. Money spent on interest payments is 'lost' too.

Repairs and maintenance are currently the responsibility of the landlord.

Interest rates are at a historical low. The security of a bought house is an illusion if you lose it because costs increase. If you would need to stretch yourself to buy, you have no cushion, certainly in the early years. You may not even be able to get a mortgage: if you know you're stretching, the banks certainly will. They will not lend on your theoretical future income.

If buying would mean changing location, that's a big downside. In a town children can be more independent, in a village they are more likely to be stuck with car travel or limited public transport in order to enjoy activities, see friends etc. Have you factored additional transport costs into what you can afford? Are you willing to ferry your kids around as a result?

If it was going to cost you the same monthly either way, buying would have more appeal. But the fact that the rent (presumably under market rate) is half what it would cost to buy changes the maths. That's money you can use to put in a pension to provide an income to pay the rent in your old age - and rent for a couple will be lower than for a family.

If you landlord puts up the rent, or chucks you out, you can re-examine. At your age you will still be in a position to get a mortgage in a few years. This isn't a decision you have to make now and forever.

[bakingaddict]

I don't think Brits are obsessed with buying it's just that in this country without the rental protection of other European countries it's safer to buy as you're not at the mercy of a landlord who may ask you to leave with only minimal notice.

Don't fall into the rental trap of being able to afford a nicer house than you could buy. If you can buy now, do it even if it means moving out to the more affordable areas, areas can blossom over the years those deemed rough can be in a few years considered trendy and desirable which has happened in my area. I would hate to be retired and worrying about how to pay rent or looking for rental properties in my old age

[tootiredforthissh1t]

We are in a bit of a rental trap. The LL is a local land owning family who have owned the house (and many more besides) since it was built in the 1930s. We are only the 3rd tenants to live here throughout that time so as far as rentals go, it's fairly stable (and well below market rent). However, it's entirely possible that when the LL dies, their children would sell (and we'd be at the front of the queue with an offer).

Moving out to the villages would cost more in transport and we would lose the safety net of local friends and amenities. Personally I wouldn't move out, but DH is more willing.

The matter of saving a 10% deposit + fees is majorly daunting though.

[Qwebec]

I don't know if it is relevant, but we baught an property with a flat we could rent, the flat pays off more than half our costs of living in the property, we are not too tight, heating costs arenot too high and we have spare cash for maintenance.
couldthat be a middle ground?

[tootiredforthissh1t]

What a brilliant solution you found Qwebec. Chance would be a fine thing for us though. We would be looking at a 3 bed semi or similar with enough garden to fit a shed!

[Wuffleflump]

"The matter of saving a 10% deposit + fees is majorly daunting though."

If you're currently paying half what you would in mortgage, you should probably be paying off any debts / saving with the excess anyway. This will benefit you either way. If you struggle to save all the extra, you will know how hard you will find it (or not) to pay for a mortgage.