Rent or mortgage does it matter??

[Catty1720]

Me and my partner rent a lovely 2 bed apartment for 825 per month. We comfortably pay rent and bills between us and have enough left for the month.
He’s older than me (47) I’m 31.
We don’t have money for a deposit as we had to use savings when I became sick and needed time off to recover. My partner never ever begrudged this as a lot of the savings were his. We live in a town near to London so it is pricey to buy (or in my opinion it is)
I worry we don’t have a home of our own and probably due to ages never will. I save money for our DD so she will have something when she’s older it won’t be a lot but something.
Should I worry we won’t ever have a home of our own?? Am I unreasonable to stress over it? Would you say There’s pros and cons for both?

The advantage of buying is that one day it's paid off. I'm due to be mortgage free in 18 months all being well - the plan is to then stuff our pensions to the limit and retire when he's 62 (I'm younger so might stay pt consultancy). If we rented this simply wouldn't be possible.

Many people have to rent, have no choice but if there's an option to buy it us usually the right one

Buying gives you security, freedom to shape your home to your own tastes and, as long as the housing market continues as it has done pretty much since records began, is a good investment. If you can't raise a deposit though, and you're certainly not alone in that regard, there's not much you can do. I would question why you are saving for your child though. I know it's the done thing these days but putting away money that your child won't be able to utilise for many years, when you do not have your own finances squared off, makes no sense to me. Especially when you consider that your children benefit from your own financial fitness naturally and you can always pass on your savings to them in the future.

@schmockdown

I posted in haste, what I was trying to say was you are better off having a mortgage if you can.

It’s not an issue in itself if you’re happy renting - the upside is flexibility to move, no need to worry about maintenance. The downside is you will pay rent your whole life, so you need to make sure you will have appropriate pension provision, or plan not to retire.

It’s always better to own. Cheaper than rent, an appreciating asset and security. How are you planning on paying your rent when you’re 80? Although you’d need to get your skates on to buy as you partners age will prove evermore difficult to secure a mortgage.

I'm currently in a similar situation although am single. Aged 42 no savings, renting. I do worry about the future how will I afford rent when I ever get to retirement. I'm planning to start saving this year but by the time I'll have even £10k I'll be maybe late 40's and don't know what sort of mortgage I'll get or whether I'll even be able to get one. I've paid in pension all my working life but only minimum contributions so probably won't get much pensions. So pensioners get help with rent?

I have rented in the past and would never want to go back, my house would be more if I rented it and rents are rising.
I like the security of owning my home and the thought of one day having no mortgage to pay, no worries of a landlord selling up and having to find somewhere else.

I rent. Had mortgages years ago when married with small children, bought and sold a few times to move up the property ladder. Wouldn't bother again, too much stress, too much responsibility re. bills, fixing things and insurances. And if you need your money out, it's all tied up in the property.

I would only buy if I had a huge lottery win/inheritance and could buy something outright. As that's not the case, I have rented for many years and do so now, facing my retirement, and will into the future.

I go for long-term rents, where the property can be kept for as long as I wish, unfurnished places where the landlord is perfectly happy for me to paint/decorate/make my own alterations, lay carpets, refit bathrooms or whatever. With renting I can (and have) chosen to live in beautiful places I could never have afforded to buy, yet if I need to move/change area quickly, it's easy to give notice and leave. If something goes wrong, someone else fixes it, not me. In my current rental I pay a small monthly amount and it covers all bills even council tax, it's definitely the best way to live in my opinion.....

If I private rented I would be terribly concerned about what happens when you retire and you don't have a particularly good pension. The rent continues to go up year after year, how can you afford it?
Also, landlords can give you notice to quit. Imagine being an old pensioner being told you have to find a new home, it would be terrifying.

Buying is obviously best. Anyone saying it’s “posh rent” clearly doesn’t understand how it works. For one, with a fixed rate mortgage, payments dont go up as rent can, two, you pay it off one day, and trust me, the time flies by, and the difference when it’s gone is literally life changing. Three, you can over pay to reduce the term, even a small amount can make a big difference, and four, when the kids grow up you might be able to downsize and have a nice lump sum to travel round the world/help the kids out/put in pension pot/whatever.

@FinallyFluid

A mortgage is posh rent.

But you pay it off eventually, don’t you? .

I would much rather buy then rent for most of the reasons people have said.

But its getting to the point, that unless I suddenly find a relative that I am unaware of, who is a millionaire who dies and leaves me all their money, I am never going to own. It worries me what I am going to do when we retire.

Have you looked at shared ownership schemes etc?

It's fine to rent longterm, lots of people do for various reasons. What you need to consider are

1. stability. Can you stay where you are long-term, or is it private rent that could be sold from under you - and could you afford to pay more rent if the market rate has gone up? Would your children need to move schools etc.

2. What will you do about paying rent in retirement? If you have a paid-off mortgage your living costs are lower. If you rent, you always need to pay the rent.

We are similar, rented all our lives, now in our 40s and don't see how we can ever manage to buy in London (where we have to live for work, for now).

I prefer renting but I do worry about post-retirement, not having the same security, not sure how much pension we'll have. I wish there was more protection for elderly renters here, like in other countries.

Our thinking at the moment is to try to save as much as possible, and DH has some inheritance coming down the road, and between that hopefully we can buy a small place outside London when we retire.

A mortgage is posh rent.

Except you then own the house after X years and don't have to pay rent or mortgage to live in it.

There are pros to renting but I’d always rather buy. No one can whip it out from under you at a couple of months notice, you have more choice where you live, and you’d hopefully have the mortgage paid off by retirement so less living costs

@2pinkginsplease

I would rather have a mortgage at least you know that the house will eventually be yours with nothing to pay on it. In 5 years our mortgage is paid off, my mum at 72 still rents and still has to pay her rent money. Circumstances meant she couldn’t get a mortgage.

Only thing with a mortgage is when something goes wrong, eg heating, leaky roof then you need to find the money for repairs.

Do you tho? I remember the horrific repossessions and negative equities of the 90s. 15% interest rates etc. Just saying it’s not a given. The U.K. is the only place that sets such a high stall on ownership, and looks down on renting. You should be able to do what is best for you, knowing the pros and cons of each.

Do you still want to be renting when you are 65 and the cost is double what it is now?

This is the current sitiation my MIL is in:

Has privately rented (very cheaply) same house for approx 10yrs, landlord is taking house back.
She only gets state pension.
New private rent for equivalent house will cost £700pm +.
Shes failed affordability checks so needs a guarantor...which we cant do due to own financial commitments
She thinks she'll get approx £400 help towards the rent from housing benefit but has to pay rest from basic pension.
Cant get social housing
She is sooo worried, at 74 she just wants to stay where she.
Id be very worried if i was renting into my retirement.

situation id want to be in.

We rent now quite comfortably, but we're saving for a deposit and aim to buy in a few years. I totally understand the benefits of having a landlord there to fix things but my concern is what we do when we retire. We should just about pay off our mortgage as we retire but I'm not sure how we'd pay rent through our old age.

Our parents all rent and are all dreading the future. One set of parents is planning to move into a caravan once they retire as they won't afford their rent (I'll try to help them avoid this!) or they will keep working until they can physically work no longer. So from hearing their worries, it's made me keen to buy.

The U.K. is the only place that sets such a high stall on ownership

I don't know how people come to this conclusion, there are countries with much higher rates of home ownership than the UK

It's always better to have a mortgage than pay rent. I'm 40 and we are still renting. Buying got delayed for several years due to career changes and mat leaves for me and dh starting a business, and then we should have bought last year but the purchase fell through at the 11th hour due to vendors having to shield and leaving their jobs, so no longer wanting to sell. But there is still absolutely plenty of time for us to buy. In 25 years, or sooner hopefully as we want to overpay, we'll be mortgage free. If we didn't buy, we'd be paying rent until we die and have no equity to pay on to our children. Your money will ultimately grow much more invested in property until your dd is an adult compared to you saving for her anyway. You can always sell and downsize then and give her a big chunk of savings when she's ready to buy.

It really depends and there is no set good or bad. A mortgage is basically renting money from the bank to pay for your asset. At the end of the day you will have paid for your asset and it is fully yours. But you will have definitely paid a lot on top in 'mortgage interest' -although that is at historically low rates at the moment, it can go up. You have all the benefits if the house increases in value, but also the downsides if it doesn't. You also need to pay for all upkeep etc. Renting a house may make imminent financial sense for some though, as you don't get the downside of any fall in value, nor upkeep. Whether it makes sense will however mostly depend on how much rent you need to pay and the rent security (in countries such as Germany rent protection is very strong and many people happily rent all their lives). A lot of the 'you must own' is emotional, rather than financial. Look at your own circumstances. As long as you are renting somewhere nice for a reasonable rent, and you can save on the side, it might make more sense to save or put your money in an index tracker rather than the housing market.

If you can secure social housing then I wouldnt be concerned about renting into retirement as you will get benefits to help pay your rent but your not entitled to the same benefits/help when you are renting privately .

Rent:
+ve if unemployed can get rent paid quickly using UC
repairs paid for by owner - good if dodgy older property that might be a homeowners money pit
as asset that can be sold one day to pay for something else
-ve never own the property - dead money
can be asked to move out with private rent after a short notice period

Mortgage:
+ve property will one day be yours to sell and spend money or pass on
can do with it as want within reason
rent will keep on rising and in time the mortgage payment pay be (already is) less than paying for rent
-ve
9 months to pay before help if qualify for UC - so put payments aside in short term saying for this