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 do your thing and I'll do mine, @2bazookas.🙄

@Joeblack066 that’s exactly it if only we had a crystal ball. My health worries me that I’ll leave DH in the lurch but it’s also the reason I want the security you don’t get with rent I think for now save and see what life is like a year down the line

@Catty1720

Speak to a broker too and find out what you'd need. Then you'll know what to aim for at least.

If you can get the mortgage it’s always better to buy. You put money down the drain when you rent. It goes to someone else. When you have a mortgage every month you are a step closer to paying it off and owning it. Plus your property is your kids inheritance When we die our house is split between our children if that’s your wishes So the money you are putting away for her you would be better to put towards a deposit because In the future the property will be hers and worth much more than you have saved for her

The advantage in the mortgage v's rent question comes when you are older and you have eventually paid off the mortgage.

There are some expensive problems that are on you to fix when you own but also you have security of not being at the whims of a landlord and also knowing that one day you won't need to find the money for the mortgage if you are smart and, I suppose, lucky.

[quote Catty1720]@2bazookas our two wages together are comfortable we had to use savings as I had skin and bowel cancer I had to have time off and my sick ran out I was also pregnant at the time so with a baby and being unwell we had to do what we could. If we can save again payments wouldn’t be an issue depending on what our repayments would look like but we wouldn’t be silly we only need a two bed house or apartment[/quote]
Oh Catty, this puts everything in to perspective, home ownership seems so trivial pitched against this. You and your family are safe and together, that is all that matters in the big scheme of things.

@LaLaLoopsieLoo it’s definitely been tough but I have been so lucky with the care and my DH has been amazing. As you said in the big scheme of things I have everything I could wish for I think we will just start up our saving pot again and see where we get to

At 47 he will have no issues getting a mortgage, most lenders will only lend to 67, so 20 years.
Rent is for life, once your mortgage is paid off, you live in your nest egg/kids inheritance for free.
Id hate to be paying rent when retired

fridgepants

"H2B is expensive with restrictions but seems to have worked out for some people."

What would you say about shared ownership? For me it seems like basically a more secure form of renting, but on the other hand you do get more autonomy over your space and less chance of being served S21“

Fridgepants I don’t know a lot about shared ownership, had a look years ago in the last property boom when we were priced out of the market. Probs around 2006. It was a tiny new build flat, overpriced and the rent element seemed to bump the overall cost way above rent/mortgage for an older terraced house. But I do think that was probably more so down to the developer hiking prices and shared ownership being a newer concept. Funnily I saw one similar on sold prices recently and it had made a loss.

www.rightmove.co.uk/house-prices/detailMatching.html?prop=85045373&sale=11357971&country=england

Shared ownership flats seem to hang about around here but houses seem to do better. If the sums stack up and it’s a foot on the ladder it could be a good move.

Pros: lower deposit and mortgage required

Cons: Clauses like not being able to make drastic changes or rent it out if your circumstances change.

Could be issues around Leasehold/freehold. Maintenance/hidden charges, admin fees etc

It’ll all depend on the scheme and sure there will be good ones out there, is it something you’ve gone for or considering?

🥰 wish you all the best for the future Catty

Fridgepants yes I agree, heard lots of horror stories around Leaseholds, they’re usually a given for flats but would try to avoid for a house.

Don’t know how shared ownership works fully, have seen developers advertise that you can staircase to increase your share but imagine if it’s a private/individual investor they probably wouldn’t want to own less than 50% as they might lose certain legal rights.

A girl I know, her brother and his wife were stuck in a small shared ownership flat with children for years because they couldn’t sell but couldn’t rent it out either. They ended up selling at a loss after being on the market for years. His wife bought it as a singleton pre marriage and babies. A SO House would probably be better long term.

Keep squirrelling a rainy day fund away and you never know what is round the corner. We were well and truly priced out of the market in the last boom, never ever thought we would be able to buy, but being priced out did us a huge favour, the 2008 crash happened and in 2011 we were able to buy a knackered old repo that no one wanted, we weren’t fussy, it was literally the worst house in a no so great area haha, renovated it and never looked back.

Definitely, savings will give you options. Relocating would open up loads of opportunities for you. Are you in the south? Do you have family in Scotland? Maybe have a little nosy on Rightmove and Indeed at Cheshire, it’s a quiet life, not super exciting haha but some lovely safe villages, friendly with good transport links to Manchester. Prices have risen the last few years but expect them to come down a bit if this bubble bursts.

We were lucky with the property market and your right DH is pretty handy which helped but it was hard work and we were skint for a few years, it wasn’t all rosy but it paid off long term. The reason I mention this is that SM would have you believe that everyone has a brand new house, spanking cars and exotic holidays on a silver platter but people never show behind the scenes :)

@FTEngineerM

Yes, buying a house is usually more cost effective in the long run.

Example figures:
£600 x 300 ( monthly payments) = £180000

House value at purchase:
£150000, cash deposit circa £23000

Even if you don’t have an increase in house price over 25 years then it’s still worth £150000 you’ve spent £30000 borrowing the cash to buy the house and £23000 for deposit. Then it’s yours, just maintaining it.

Comparing to rent, assuming it’s the same to rent the house, probably isn’t though:

£180000 later and you are in the same situation you were at day 1, you’ve spent £180000 and have nothing to sell to recoup.

Even if you include maintenance into the cost of buying the property, it still is a sound investment, if you spent £50000 on repairs over the 25 years, you can still sell for £150000 and you’ve spent £103000 (the 30k interest, 23k deposit and 50k repairs) still a lot less than the £180000 for the rent.

Rent will need to be paid until the moment you die unless there are good investments elsewhere, few compete with property though.

If you paid if thd capital you spent 150 + 103 which is 253.k So more than the renter.

But you can sell and get back 150k
Or not if it all goes to pay your care home fees....

Why on Earth are you saving for your DD when you don't own? Surely she'll inherit your home when you pop your clogs? That's her inheritance. You could beg chucked out with two months notice plus how will you pay the rent in your old age? I think you're being foolish.

There are pros and cons to both imo. If you rent in the private sector, you can be given notice at almost any time and have the stress of finding somewhere affordable to live in an area that's convenient for schools, work etc. If you lose your jobs or become too unwell to work, your rent will mostly be covered by benefits, your mortgage won't.

Owning gives you more flexibility and choice, and you can downsize on retirement to reduce your outgoings. And you have something to leave your children. But my god, the cost and headache of maintaining it! I've had a new boiler every 10 years, on average, new fencing, had to replace windows/doors, guttering etc, bathroom, kitchen and the bloody place needs decorating all through now. I'm on my own due to bereavement and still working nearly a year after retirement just paying the bloody bills.

I sometimes look at my MIL, rent and council tax paid by benefits, who's had her windows replaced, a new kitchen, bathroom and heating system all done and paid for by the council in the last 10 years and wondered if it's worth the hassles of owning.

@Ilikewinter, I'm really surprised your DM can't get social housing. Housing for older people usually has a high turnover and becomes available fairly regularly. And she'd be in priority need because of her age. The councils in my area would definitely help and she wouldn't have to wait long.

A bit scary but some lenders will now consider your pension as income, allowing you to mortgage well into retirement!

Not for me personally but in the OP's case it could be useful, given the age gap.

OP. In many cases, buying is preferable, if you can but don't beat yourself up about it if you can't. If you're a good saver then it sounds feasible so best of luck. Also, it's worth considering an offset mortgage if you're good with money. They're not as lucrative as other investment options but great for maintaining liquidity and wiping years off the mortgage term.

@Catty1720 If I were you I would make an appointment for the two of you to see an IFA and discuss your options. They are very good at looking at your finances and can advise/make suggestions on factors you may not have considered. (Some independent financial advisers charge for this but some don't - I worked for an IFA who didn't.)

@allthegoodusernameshavegone I will be £500 a month better off as my mortgage will be paid off, my next door neighbour same age as me will still be paying £1100 + per month rent. Having said that she is very happy a new boiler cost me £4000, hers cost her £0. Does she really think her boiler cost her nothing? The rent she pays contains an amount to cover maintenance and repairs, plus contributions towards the insurances and other costs like this that the landlord will have to pay. When you own your house you pay charges like new boilers directly, but even indirectly through rent you are still very much paying for them one way or another. I'm surprised adults (like your NDN) don't seem to realise this and think repairs and maintenance costs are free?!

My NDN has an interest only mortgage (only one she can afford) and so, after 25 years, still won't own her property and will need to either sell it or remortgage. She will be about 70. I would rather not have this situation if it was my life and would rent if I had to I think.
She should have a savings vehicle in place to pay that off at the end of the term, like endowment mortgages did. It doesn't make sense to have an interest-only mortgage without an investment policy running alongside. Downsizing at term is an option for her but it's hardly ideal, is it. She should also get financial advice imo, there might be options open to her that will work better for her.

I had an endowment mortgage on my first house years ago (all I could afford); DH didn't like it and remortgaged for a repayment type but we kept the investment policy going as it had handy life assurance built in. That policy is due to mature next year and while it definitely won't be the target figure, what with stock markets crash and covid etc, it will be a nice chunk of money. The original mortgage is long since paid off so we will be able to keep 100% of it.

Definitely is one better than the other, in my eyes. With one, you have security at the end of it, when the mortgage is finished. You don't owe money once it's done - it's your house. The other is dead money. You'll always have to pay it and won't own anything after all those years of it. Also rent tends to be more expensive than the monthly mortgage payment.
At 31 I have just 35k left on our joint mortgage. We will have paid it off in our thirties. The freedom of that I cant wait for!