Not sure if I want to buy a house, anyone else decided not to?

[Drumstick38]

I earn minimum wage, though I am currently applying for higher paid roles.
I have zero debt apart from student loans which is good, and about £1700 in savings.
I can't see how I could ever afford a deposit, as well as all the associated fees. I'm in Greater Manchester and having to look in Bolton, Wigan, Rochdale etc. As everything else is much more expensive.

Aside from this, I think the responsibility of paying a mortgage would be too much for me. I've already lost money this week due to having Covid and having to isolate, I'd be too worried about losing my job or something and not being able to pay.

The repair and maintenance costs are a factor too of buying a house.

I like the flexibility of renting, I don't have any pets and I like that more responsibility falls on the landlord.

The thing that people seem concerned about is in retirement age, and whether people can afford to keep renting, but surely there must be solutions?

Anyone else in a similar situation?

@MediocrePenguin

GoodMove forecasting predicts the average house price to be £251k in 2025 and this will rise 64% to £392k in 2050.

So if you take a 25 year mortgage out for a house at that cost by the time you will have paid it off you will have:

Mortgage - £392k
Renting - £0

So if you can afford it, absolutely go for it.

Are those figures inflation adjusted?

@entropynow only in the short term though - they ALWAYS go up in the long term. So much though that it's ridiculous. The average house price was £19k in 1980!

@entropynow how long did you own it for? I think the poster means in the long term, over decades. Anybody trying to anticipate any markets on a short-term basis (i.e. less than 10-15 years) is vulnerable to market shocks. Flats are also notoriously worse at holding their value than houses. Particularly newer build ones. And even more so post-Covid where people have realised that outside space is so important. It sounds like you were unlucky, but doesn't disprove the general analysis that purchasing a property for the long term tends to be a better idea for most people than long-term renting (in the UK) if they are in a position to do it.

@PassionfruitOrangeGuava

God, the whole ‘renting is money down the drain!’ thing is irritating and exhausting isn’t it?

It’s payment for a roof over your head. Just because you don’t own the roof in the end doesn’t make it wasted money. You spent those years with a home for crying out loud. It’s like saying eating food is money down the drain because once it’s provided it’s nutritional value you no longer own it.

Nine times out of ten it’s spoken by someone who can’t understand the idea that not everyone can buy and that for many renting is a permanent situation. It just smacks of privilege.

I think it’s your circle of friends OP. I’ve had friendship circles where buying literally never came up as it wasn’t even tangentially realistic as an option. And circles where nobody rented.

Laugh it off, ‘I’m happy where I am for now thanks’ or if you want to be more direct (which I recommend) a ‘huh, what a personal question!’ And subject change.

👏👏👏

@TheLastBeach

1. is it possible to figure out exactly how much they rise? Or is it just inflation? (Actual question not rhetorical). Re mortgaged: whilst the purchase price is set there certainly aren’t any 25 year fixes so at some point the purchaser will either be on standard or have to refix both would be at the mercy of interest rates, it’s clearly marked now on mortgage applications what the payments would be if they were at 11% (back in 2008 interest rate figures I think). When I took out mine for instance it was paying £88k interest over 25 years, I’ve since remortgaged and it’s down to £49k over 23. I remortgaged because interests rates lowered but I’m fully expecting at the next fix is over for them to rise.

2. I know those costs are burdened by the renter I’m not sure I’ve written otherwise. Just as a home owner some seem to be saying it’s cheaper in the long run and quote the purchase price only and that’s a tiny snapshot. Legal fees can get complicated and messy depending on the property, which if you had to pay for additional services every time you remortgage it adds up to a few months rent.

My own DP said ‘so we’ve made 20k on the house’ when it was valued and then I wrote down our costs for him to see and we’ve actually just broke even. We haven’t made a penny. We’ve spent the same in relies, interest and fees and we have made in equity. So us personally wouldn’t have been any better off if we’d carried on renting.

@Drumstick38

That's good, as I don't think that people over retirement age should go homeless just because they couldn't afford to buy a house in working age? But people seem to make out that you're screwed if you rent in retirement age.

You may get your rent paid, but what if your landlord decides to sell? And you find it hard financially, and perhaps even physically, to find a new home? Would landlords want to let to someone who’s retired with little income? It’s hard to find somewhere to rent on benefits for someone of working age, let alone someone with no hope of work.

I’m glad I own my home. I will never be forced to move away from all I love, which in old age, I’m sure will become ever more important.

I would do all I could to buy if I were in your position.

Repairs*

@FTEngineerM hopefully you should see some big benefits in the longer term though.

They more you pay off the higher loan to value you have, this will translate in smaller payments and better intent rates.

I have about 50% equity now and my mortgage payments are about 1/3 of what I'd be paying in rent.

There is nothing wrong with renting if you can’t afford to buy. Life is for living. There is no point in barely scraping by to afford a mortgage. It’s not the mortgage itself that’s the issue as it would be the same as rent, it is trying to save for a deposit whilst paying rent which is impossible on lower income jobs. Good luck Op.

My mortgage is a lot cheaper than rent but I was lucky enough to buy at a decent time and have a small deposit due to family bereavement
Mortgage is about £380, my apartment will rent out for £550 so for me it makes sense
I wouldn't judge anyone differently though if they rented

It's not for everyone at some point. There were times when I wouldn't buy because renting gave me flexibility and no big responsibility for a building. If you are happy with it now (you have great cheap rent), wait. Everyone does things on a different schedule.

[quote FTEngineerM]@TheLastBeach

1. is it possible to figure out exactly how much they rise? Or is it just inflation? (Actual question not rhetorical). Re mortgaged: whilst the purchase price is set there certainly aren’t any 25 year fixes so at some point the purchaser will either be on standard or have to refix both would be at the mercy of interest rates, it’s clearly marked now on mortgage applications what the payments would be if they were at 11% (back in 2008 interest rate figures I think). When I took out mine for instance it was paying £88k interest over 25 years, I’ve since remortgaged and it’s down to £49k over 23. I remortgaged because interests rates lowered but I’m fully expecting at the next fix is over for them to rise.

2. I know those costs are burdened by the renter I’m not sure I’ve written otherwise. Just as a home owner some seem to be saying it’s cheaper in the long run and quote the purchase price only and that’s a tiny snapshot. Legal fees can get complicated and messy depending on the property, which if you had to pay for additional services every time you remortgage it adds up to a few months rent.

My own DP said ‘so we’ve made 20k on the house’ when it was valued and then I wrote down our costs for him to see and we’ve actually just broke even. We haven’t made a penny. We’ve spent the same in relies, interest and fees and we have made in equity. So us personally wouldn’t have been any better off if we’d carried on renting.[/quote]
Hello @FTEngineerM

No, it's not possible to figure out how much rents rise. All we can do is look at trends and data within the UK market, and also consider externalities that may impact the UK. These are very uncertain times so this is particularly tricky at the moment.

Over the last few decades, rents have risen far above the general rate of inflation. There are a number of factors that have driven that (a higher percentage of people renting, rising population, insufficient house building, smaller households therefore a population the same size would require more properties to live in, concentration of employment in certain areas etc). Few of those factors seem likely to reverse in the medium term, but as always the past can be analysed and the future can only be predicted with the best data and hypotheses we have at the time.

Interest rates were not 11% in 2008. They have not been at that level since the early '90s. It was massively damaging and now with so much of the population highly leveraged on housing (and the Government itself exposed to this through "Help to Buy") plus highly indebted businesses, I cannot imagine that happening again for a long, long time as it would result in economic catastrophe. Interest rates will likely be raised in the coming years to control inflation or in response to foreign influences that are devaluing GBP (not that our Governments have given a shit about that for the last 15 years!!) but not that high, as it simply isn't something our economy can sustain now, as a direct result of what our previous few of Governments have done.

I hope that's helpful and I've answered what you were wanting me to? If not let me know and I'll try again!

The graphic is of the Bank of England base interest rate by year. Sorry, should have said that.

@TheLastBeach ah fantastic thank you, I will have to read it in the morning now

[quote FTEngineerM]@TheLastBeach ah fantastic thank you, I will have to read it in the morning now [/quote]
No problem! Sleep well!

Also @FTEngineerM I had huge issues with one property so I get what you mean about unexpected costs!!! And through life's unexpected swerves, I ended up buying three houses in a 5 year period so paid horrific stamp duty 3 times. 😤🙄 So totally get that in individual circumstances it can end up costing a lot more than expected. But on average people who buy stay for 10 years plus, and most won't find huge structural issues that need to be fixed etc 🤦🏻‍♀️🙈 so I still - despite my personal experiences! - think it's a good decision financially to buy for most people.

And now I intend to live where I am until they carry me out in a box. 🤣🤣

@TheLastBeach haha! No chips here (unfortunately, I’m ravenous)

@PassionfruitOrangeGuava aaaargh now I want chips! 😬😣

You should aim to do what makes you happiest, but you’re so lucky to live somewhere relatively cheap for housing if you do decide to try to buy one day. Where I live, it’s at least £280/300k for a basic 1 bedroom flat- virtually impossible for my partner and me- both on minimum wage in unstable jobs, no real deposit and no family help. Makes me want to cry reading that and we’re not spring chickens either!

I would try to buy if at all possible. By the time I’m fifty, my mortgage will be paid off & I’ll own my house. No more mortgage/rent payments ever again! If I’d rented I would have to find ever increasing rent payments & have no freedom to retire early or perhaps retire ever!

@Flawedperfection

You should aim to do what makes you happiest, but you’re so lucky to live somewhere relatively cheap for housing if you do decide to try to buy one day. Where I live, it’s at least £280/300k for a basic 1 bedroom flat- virtually impossible for my partner and me- both on minimum wage in unstable jobs, no real deposit and no family help. Makes me want to cry reading that and we’re not spring chickens either!

I'm so sorry for your situation. I am in the SE and it is hard. I'm a single parents and housing plus nursery fees are killing me atm!

I think though that there will always be public support to help people who couldn't buy a house, so that they can afford a place to live when they retire.

The issue I raised earlier was about people who could do that but said "I'd rather have more free cash now to spend on DC/ fun/ holidays" etc, who then say that's fine because someone else can pick up the bill for their rent when they retire anyway, even though they could have sorted it out themselves either by buying or by putting that extra money they are spending each month into pensions or investments like the rest of us do! That makes me quite cross tbh, it's cheeky fucker behaviour.

Somebody in genuine need who could not afford to put anything aside, I don't think anybody would object to helping through taxpayer funds.

@FrownedUpon

I would try to buy if at all possible. By the time I’m fifty, my mortgage will be paid off & I’ll own my house. No more mortgage/rent payments ever again! If I’d rented I would have to find ever increasing rent payments & have no freedom to retire early or perhaps retire ever!

I think that's a huge issue. Many people who are renting for life will never be able to retire at all.

[quote FTEngineerM]@TheLastBeach

1. is it possible to figure out exactly how much they rise? Or is it just inflation? (Actual question not rhetorical). Re mortgaged: whilst the purchase price is set there certainly aren’t any 25 year fixes so at some point the purchaser will either be on standard or have to refix both would be at the mercy of interest rates, it’s clearly marked now on mortgage applications what the payments would be if they were at 11% (back in 2008 interest rate figures I think). When I took out mine for instance it was paying £88k interest over 25 years, I’ve since remortgaged and it’s down to £49k over 23. I remortgaged because interests rates lowered but I’m fully expecting at the next fix is over for them to rise.

2. I know those costs are burdened by the renter I’m not sure I’ve written otherwise. Just as a home owner some seem to be saying it’s cheaper in the long run and quote the purchase price only and that’s a tiny snapshot. Legal fees can get complicated and messy depending on the property, which if you had to pay for additional services every time you remortgage it adds up to a few months rent.

My own DP said ‘so we’ve made 20k on the house’ when it was valued and then I wrote down our costs for him to see and we’ve actually just broke even. We haven’t made a penny. We’ve spent the same in relies, interest and fees and we have made in equity. So us personally wouldn’t have been any better off if we’d carried on renting.[/quote]
Long term fixed rate mortgages are available in the UK, one lender was potentially offering a 40 year fixed rate back in March.

@Watchingyou2sleezes which lender? That is very interesting as it's very common in many other European countries to offer 20-30 years fixed so people know exactly what they'll pay until it is fully paid off. But I'd not heard of it here before on that scale. The longest that existed in the UK market when I last refinanced was a 10 year fix. It would be great if they are now matching the fixes to mortgage terms, it would make buying so much less risky for people.

I think if you won’t be able to afford a small repairs fund and a modest pension, sometimes it’s better to remain renting and have access to full pensioner benefits. The danger being that rents might rise a lot further and make even that quite a meagre safety net.

You’re only young, though. It probably very much hinges on your future carer plans and income expectations.

other countries like Germany actively encourage long term renting by ensuring there are rent caps and tenant protections.

In the UK landlords are entitled to upwardly rent review every five years which can cause rents to increase in line with inflation - whereas mortgages can be fixed rate and even if not the overall amount is fixed to the initial price paid/loan to value.

But this may change as buying isn’t for everyone. in fact even though private landlords are finding it harder to let, many institutional investors like pension schemes are looking to buy assets and rent to young professionals for the longer term - so called build to rent assets.

so you’re not alone in your views as to the flexibility and lack of hassle of renting- it definitely has a place and should be encouraged for those who would benefit from it