would you buy a house if your mortgage would be double your rent?

[anothernotherone]

I know this scenario would be rare in the UK, but:

Rent is below current market rate, because the landlord prefers secure reliable long term tenants who always pay on time and never bother him - we've been in the property 12 years and he's never raised the rent.

Tenancy is as secure as you could reasonably hope for - 6 months notice period, and rent could only be raised at a fixed percent per year if he decides to raise it.

The house is a bit quirky and run down but big enough - kids all have their own rooms, though there's only one bathroom. Location was nice with preschoolers but not great for teens, due to lack of facilities and public transport.

We didn't think we could afford to buy in this area at all, but have been approved for a scheme reserved for locals. House would be brand new and 5 miles away on the edge of a small town walking distance to schools, shops, sports facilities, library, and a train station with trains to the city - better location for teens.

However the mortgage will be double our rent, and the scheme ties us into living there for 15 years! This is the only way we will ever be able to buy a house of compatible size to the one we rent within this area.

We have confirmed that we can borrow enough but we'll be quite stretched. We currently save about 1/5 of our after tax earnings and won't be able to save much at all paying this mortgage.

Is it worth it to own and live in a better (as in more convenient, both are equally safe etc and feed the same schools) area?

We aren't young either - in our 40s. We'd be tied to the mortgaged house til the youngest child is 23, by which point we might not need such a big house unless we have 3 adult offspring still living with us ..

Wwyd?

Yes totally. Because in twenty five years it's yours and you stop paying the mortgage. You don't have the risk of rhe landlord selling up. Say he died, or just didn't wish to do it anymore. Your house will increase hugely in equity in that time. And you'll be able to down size.

You keep renting, then in twenty five years, you'll be lucky to be where you are now. It's highly unlikely. You'll be paying massive, massive rent by then, and you'll be doing it as a pensioner.

No brainier.

Buy the house.

You're paying well under market rates for rent and could potentially be kicked out at any time if your landlord decides to sell. Have you looked around to see if there are other opportunities to buy a non-new build? With new builds you're generally paying a 20% premium - a bit like buying a brand new car. If you can't find any other alternative, it's still worth buying in the long run.

To assume you will be massively underpaying your rent and still there in ten, twenty years is incredibly fool hardy.

We bought last year for the 1st time and both in our 40s. The mortgage is not double the rent but is quite a lot more. We manage it and it feels really good to have our own - albeit small - place.

Due to a quirk of where we live existing houses are at least 25% more expensive. We'd actually have to build this one (it's very common here, a lot of people build a sort of off the peg house, we know people who've done it). I was trying not to mention that as it sounds complicated but it isn't really relevant. Once we've built the house it'll already be worth more than it cost us, but we'll be poorer ... on a daily basis until we can sell after 15 years.

You must have a crystal ball. Are you sure in fifteen years your landlord will still own that house and be renting in the low ball park he is.

Because for my money he could chuck you out any time he fancies it and sell up. Or he could die and his family sell up.

You're assuming you get to live there for ever more.

You're also assuming even if you got chucked out you know what will happen to market rents near you. They could of course Escalate out of your budget.

As said, that's incredibly short sighted. The overwhelming odds are in the future you will be paying market rent, whatever that is, on someplace else, be too old for a mortgage and wishing to god you'd bought when you had the chance,

We definitely wouldn't still live in our current rental after the kids leave home regardless of whether the rent goes up.

We do save quite a lot living here and would have healthy savings if we didn't buy, yes assuming that the landlord doesn't sell up or die and his heirs sell or increase the rent. If he did sell we might get our house for about the same as the one we'd build because it needs a lot of work and the location is less attractive. However that's only an assumption and may be incorrect. I also don't want to buy the house we live in (DH did suggest asking the landlord).

I would, because it amounts to something at the end of it.

I agree with Bluntness I really don't think you should pass up this opportunity. I can understand your concern about things being tight financially but that could happen anyway if you have to leave this rental property for another one.

Is there a possibility that your salaries could increase over time or that a current cost eg childcare/dc activities might no longer be relevant down the line, thereby freeing up some of your income?

There’s a scheme reserved for locals to build their own houses?? Who funds it, or provides the land?

It’s a difficult one.

I don’t like being tied to stuff, so the 15 year thing would really put me off. Are you allowed to rent it out?

Do you get full control over building it or fire it get built by their contractors with you making some choices?

Seems as though everyone would buy despite mortgage being a lot more than rent. Hmmm.

mizu That's interesting, good to hear you don't regret buying in your 40s. We have actually owned before but sold up to move hundreds of miles away and when we initially moved 50% deposits to buy were the norm so we didn't really consider it,as well as not knowing whether we'd stay in the exact area.

Are you in Australia?

I would buy a buy to let potentially and carry on living where you are. Long term owning is your best bet

How old are you kids? By my maths the youngest is eight? Which means you're gambling on the next ten years before they go to uni? That you get to keep living there at low rent, and don't find yourself someplace new, where the rent on a tiny place might just be double your mortgage would have been?

That's one hell of a gamble op. I'm too risk averse for that.

TheGrey1houndSpeaks we live in Bavaria, it's really not worth going into, but it's a council owned land. There's a housing shortage, hardly anyone can afford to live in our part of the state unless they inherent a property. We'll also get given 1200€ per child per year if we build a house, to encourage families to build houses... It's a very different system!

This makes no sense, why would you not want to? It's crazy.

BarrenFieldofFucks unfortunately we're not allowed to buy to let under the terms of buying the land. We have to physically live there for 15 years. Otherwise we basically have to hand it back, having lost our mortgage payments. Otherwise that would be a sensible idea as an investment.

Wow, good system.

There was something on TV yesterday about this happening just outside Bicester. You buy a plot, it's slabbed over, and electrics and water is connected. They reckon you pay about two thirds of the cost of a normal new build. Don't know if this is the one that OP is referring to?

But yes, you get security! No one can evict you on a whim, and you'll end up with it mortgage- free when you retire. It's a no brainer.

But you get a house in a part of town very few people can afford to buy in. It sounds pretty good to me?

IncrediblySadToo were not allowed to rent it out. We are allowed to build what we want within certain rules. There are a lot of rules, about roof type and height and style and footprint of the house, but still a lot of flexibility. The rules increase the cost of building rather but aren't otherwise objectionable.

The 15 years does put us off, as does the sheer enormous amount of money involved and the fact we'll have virtually no savings and be financially stretched, whereas now we have good savings and are comfortable financially.

But you’ll be quids in after 15 years, having a valuable asset to hand down to your children, instead of chucking away another 15 years worth of rent with nothing to show for it.
15 years in the same house isn’t really that unusual when you’ve found an area you like, tbh.

Singlenotsingle it sounds a bit like that, but we're abroad.

The 15 years is understandable because they don't want people doing this to make a quick buck, they want local families to buy and stay in the area. 15 years is a massive tie in imo. I've never lived in one house for 15 years in my life. The longest I've lived in one place is the house we're in now, but we're not tied to it...

TheGrey1houndSpeaks yes I really like the location, it's ideal.

Yes now op, now, but you have a huge risk against it.

You'd have to be bonkers to walk away from this. Because you risk being even more over stretched in the future.