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?

You shouldn't worry if you can't do anything about. If you do want a mortgage, much better to plan out how you can do that.

I agree with most others that it's better as there's more stability since you're not reliant on the renting market and beholden to landlords. I know in some countries like Germany it's more common to rent but renters have many more rights and protections there.

I like that I'm paying off a loan and will someday own the property rather than the money going to pay off someone else's mortgage.

Like anything there is pros and cons to both

Mortgage, eventually the property is yours but all repairs and problems are fixed by you. Mortage payments typically go down and if you are able to overpay you can pay it off quicker. downside is if you need care in your golden years the house is sold to help pay the bills.

Renting, you pay it forever but any repairs etc are fixed by landlord. There is also a risk that if landlord decides to sell up you have to leave. Also at mercy of landlord with rental increases. If you need care in your golden years this is paid by the state.

We have a mortgage - would much rather mortgage than rent but i understand the risks of not paying my mortgage and that all repairs are my responsibility. When we move again we will move further away from where we live currently as housing will be cheaper

I rented for a long time. I was always frustrated by waiting on someone else to
Fix problems.
One thing I always worried about is what happens when you retire and you have lower income?
That always worried me. Hopefully by the time you retire your mortgage is paid off x

Almost at retirement at 47!!!!!

We bought 2.5 years ago aged 45 and 41 and as I was 45 at the time, our mortgage term was 23 years.

We saved for years to get a 5% deposit. I though we would never do it. Now we live in a 2 bed flat that we 'own' and I love it. It is the only place we could afford in the area we live in which is very expensive. It's a trade off, I have the school on the same road and I can walk / cycle into town.

However, our mortgage is more than rent ever was, not a huge amount more but more.

I knew I didn't want to rent forever despite having things fixed when needed.

I only bought for the first time when I was 30, same as you - it wasn't that I didn't want to, I just didn't see how it could happen. Was reasonably chilled, had always earned, liked renting etc etc.

FF 20 years and now I'm 50 and paying that mortgage off is within reach... and my god that feels good. I am tired of working, tired of the grind, and I can see a retired future. Not having housing costs (ie no rent or mortgage) makes a HUGE difference to what that future looks like. DH will be able to start scaling back (he works ridiculously hard) and we will have some decent time together.

When you don't have to find that £825 pm, the state pension starts to look liveable on! When you do...

To put the same thing another way, both your state pensions would go on the rent if you retired today. So whatever other pension you've built up would be all you have to live on.

I think the main issue is will you be able to afford to continue renting come the time you want to retire? The ultimate advantage for a mortgage is that for most people by the time they want to retire and have a reduced income is that their mortgage is finished.

Depends a bit on what your pensions are like! £825 a month is a lot when you’re retired.

Another bonus is the money we have that could be used to buy a property we can use for other things.

I don;t see it like that.

I live in a 5 bed house, with garden, 20 minutes from the city centre. I pay £580 a month mortgage- which will be paid off soon.

Being able to pay rent in retirement is a big concern. Lots of private pensions that were previously OK have been massively devalued and are not going to pay out as much as predicted. State pension is also not guaranteed, and certainly not at the level that it is now (which is already quite meagre) - Covid isn't going to help with that either, the public purse has been emptied and we have record levels of borrowing but people will object to significant tax increases.

As well as the concern over actually paying rent, there is the question of a lack of housing. If you rent privately there is nothing to stop your landlord from selling up and you having to move out. That might be ok now but can you imagine being 80 and given two month's notice to move? The upheaval would be awful and you might not be in good health. Local authority/housing association is more secure but there is a massive shortage and you often have to just take what you are given as there are so few options available.

I agree with a pp, you should stop saving for your daughter and start saving towards your own house deposit. Even if you could do shared ownership to start with it would be a help.

Much better investment to buy if you can. We have just switched our mortgage over, and taken over 20k for home improvements which obviously if we were renting we wouldn't have had to do. But longer term, our mortgage will be paid of in 11yrs when I turn 49 which gives more financial freedom than renting. I genuinely feel for people who can't get on the property ladder, as renting is often as expensive as a mortgage.

We had a hellish time renting, very little Protection in Ireland for renters and we found ourselves in situations where a landlord refused to get something fixed but told us not to tamper with it, given notice to leave as they were selling etc. In ten years we moved 5 times. It's sold destroying, especially with children. Our mortgage repayments are half of the going rent. Your partner might not be too old, if you talk to banks there might be options, especially if you've been putting money away for your daughter, that's proof of savings

My only concern would be what happens once you retire. Private renting when you’re elderly can be difficult (if you need adaptations etc). Renting with a housing association would be fine though and in many ways the most preferable option.

Also I like to decorate to my taste and that’s not always possible when you rent privately.

@FinallyFluid

A mortgage is posh rent.

That's a ridiculous statement to make. I took out a 20 year mortgage. I'm in my 40s and I have no mortgage. My sibling has always rented, few years older than me, paying more now than I ever paid for mortgage. I wouldn't want to be starting on the property ladder now with the huge deposit needed and I probably couldn't afford to buy it now! Well maybe I could but it would certainly stretch the finances!

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

Yes, but it depends how much it cost you, would savings and an investment vehicle been better in the mean time, it's not simple to answer in cities with very over-priced housing and a competitive rental market, and obviously there's also big questions on risk (major repairs for the property required vs faster than expected rental prices)

Obviously historically the extreme benefit of excessive house price inflation and the leveraged nature of that investment have made many periods obvious - particularly in the generation that bought in the 70's / 80's.

But if you bought a flat in building with Grenfell style cladding, or a house in what's now a flood zone, you're likely suffering significant losses that you would not with a rent and saving approach.

Obviously rent+saving approach does actually require you to invest the saving that renting is bringing (and being in an area where it genuinely is cheaper to rent, which isn't necessarily true in all areas of the UK) as the enforced saving aspect of the mortgage may be relevant to many.

Have you got a massive pension? If no, I’d be cutting down on all other non essentials to save for a deposit.

Hopefully there may be a housing crash which will make owning a house more affordable.

There are always the overlap of people when owning is more expensive in retirement if repairs are needed and they have little in pensions that they would be entitled to housing benefit to rent and live maintenance free. The same overlap in deciding if to put into a pension pot that may have little benefit.

@FinallyFluid

A mortgage is posh rent.

Rent is paying someone else's mortgage.

Could you not buy even somewhere really tiny that’s not exactly suitable just to get your foot on the ladder. Then you can overpay and move onto something better in 2-4 years. Mortgage is so much better than rent. We’ve had to take in my FIL as he just couldn’t go on working to afford his rent at the age of 76. We’re currently overpaying in order to buy somewhere with an annexe in about 9 months time. He says that selling his house is his biggest regret as he was mortgage free for 15 years. He just blew the money on god knows what and now we’re having to pick up the pieces.

Could you replenish your savings?

Then you would be able to take out a mortgage in your name (as your younger) with a legal agreement about DH's rights etc and financial interest in the property.

The early years of a mortgage can be difficult and for many there is a drop in lifestyle ( there was for my family). Long term though it is absolutely the best decision. As many posters have pointed out, rent will continue to rise at least in line with inflation. Over a few years your mortgage payments will become easier as hopefully your wages go up in line inflation. Eventually it’s paid off. I just reached this milestone and it feels amazing not to have that money to pay each month and to have a secure home for my family.
One warning though is that interest rates have been very low for a few years. They can rise significantly so make sure that in the worst case scenario you could manage payments. Fixed rates cost more but offer peace of mind if you don’t have a significant savings cushion. It’s best not to stretch yourself too far. Buy scruffy in an area you want to live was our policy. Also think is there room to extend as circumstances become easier.

Paying rent is basically paying off someone else’s mortgage. It’s not easy to buy a house nowadays though.

Lovely people of MN I have clarified that I posted in haste and did not make myself very clear.

You may as well pay your own mortgage as rent and pay someone else's.

Look at the two situations.

Renting. You and your partner pay the same amount for all of your working life. Lets say your income is £30k. You retire at 65 and your only income is state pension of £16k. You still have to pay the same rent and all of your other bills.

Buying. You pay the mortgage for 25 years. Your income is £30k. You retire at 65 and your only income is state pension of £16k. But that's actually, as now your mortgage is paid off which means that your outgoings have halved. You can now still afford to live on your pension income.

Yes, there's also a whole lot of other stuff around security, being able to decorate, emotional attachment etc vs being responsible for the structural upkeep and maintenance etc, but fundamentally that's the crux of it. If you pay a mortgage and this is paid off by the time you retire, your outgoings have correspondingly reduced so that you can live off your reduced income.

A mortgage you pay for say 25 years. Rent you pay for always