AIBU thinking it’s cheaper to stay renting for the foreseeable

[cheapertorent]

Couple in 20s, renting under a government first time buyers scheme where you rent a new build at 80% of market rent value for 5 years with the option to buy after. It is not shared ownership so we aren’t getting any equity or any of this money back. We’re paying about 500. Both on average incomes.

We are nearly one year through the five years and probably won’t buy this house as it’ll be too small in 5 years.

For a long time we felt disheartened at our position and have been saving to get a foot on the ladder. We want to own our home. With interest rates soaring on mortgages as they are, it feels like a stroke of luck that we chose to wait. No way in hell would we be able to afford the repayment calculator we’ve seen for the forecast interest rates - a 200k mortgage with a 10% deposit would be £1020 over 35 years. Little over 25% of our joint income!!!! Wow. Around us that would probably get us the size of house we are in now - so we’d be paying double. A 3 bed (our ideal) go for no less than 230k in areas that are worse than the one we’re in now.

We are making future plans and wanting to start a family in the next couple of years but have had it drummed in from various sources that you should have a mortgage before DC. From all the forecasts though it seems as if the economic crisis and interest rates fiasco won’t go away for a minimum of 2 years, if not longer

There are two schools of thought, I guess: buy cheap and in this calendar year, possibly compromise on area, location, safety and quality of house. We don’t have time or funds to do those full large scale renovations really. Accept the large repayments for what they are and cut cloth accordingly.
-Remain renting and continue to save, and hope that, somehow, a new government will step in to save the day.

It’s impossible knowing which outcome would be better! 2022 is not the year for prospective first time buyers, clearly …..

I've said it before and I'll say it again.

In the long term, property always increases in value.

Whilst the rates have shot up right now, I didn't see them coming down dramatically. Interest rates have been ridiculously low for such a long time that they have given people a misconception of what is normal.

Home ownership isn't just about cost as such like you like it to. It's about long term benefits. Will you be able to afford the rent rates at whatever they are by the time you retire, and still have the lifestyle you want at that time whilst paying that?

Our current mortgage payment includes an overpayment and is about 35% of our income and we have two children, one with additional needs so I work part time. It's not a huge struggle. At 6% our payment will be the same as what we pay now, just without an element of overpaying.

You know, I had the same drummed into me and followed it to a tee. Owned my first house before having DC. But then after having our 4 DC, years later an accident pushed us off the property ladder and into renting when the eldest was 15 and the youngest was 8. Since then we have rented, and honestly, it’s not been that bad. The DC still have a home. They are less attached to bricks and mortar- a particular house- because we’ve had to move due to evictions and we have moved to get into a better school catchment. This has made them a bit more adventurous than their counterparts who were born and raised in the same house.

So, while I agree owning first is best, sometimes you cannot do things in that order if a economic or personal crisis is going on long term. And as women, we don’t have the luxury of putting off childbearing very long. Even waiting until mid-late 30s hugely increases the risk of needing years of expensive and exhausting fertility treatments.

If you do decide to go ahead and have DC now or soon, as in before buying, be very thorough in researching the costs of maternity and childcare as these can seriously hamper saving up that deposit and stamp duty/fees. It is unlikely you would have the financial security to go to PT work or be a SAHM if homeownership is a priority. So think though the knock on effects of choices.

And then don’t beat yourself up down the road. We all make what we think are the best choices with the information we have. Life always throws shit at you, so whether a choice ends up good or bad in hindsight is often out of our control.

25% of your income isn’t a lot. Renting, depending on where, can be much more and of course you don’t own it so it’s like burning money

@Discovereads interesting perspective, thank you. I bet it’s been good like you say for your DC to experience a few homes and can see why it would make them adaptable, never thought like that before.

We consider shared ownership on and off but there are pitfalls to that too. At the moment we would be really pushed to mortgage this 2 bed because of how prices in the area have shot up. Luckily the rent is fixed for the foreseeable.

It’s tough, nobody can ever say for certainty how they will feel when the time comes but I think I will always want to work FT where I can until the last DC for pension reasons and because I love my job. I hope we wouldn’t have to rely on full time childcare due to family help and working different hours between us, but we’d almost definitely need at least two days worth.

That is also true! We don’t know how the future will pan out, you can only do your best with the options you have at the time of the decision making

I think you are correct in buying home before having children. Once you have children, wonderful they may be, but very expensive also. Nursery fees, milk, nappies, clothes they keep growing out of, equipment. I would definately advice buy a home first, save up to have a child afterwards. I have seen couples have a child first, then get trapped into renting forever. You are still young. You have plenty of time. Have you opened a LISA to get government 25 percent funding yet?

I had a Google as I have never heard of a rental reduction scheme. Looks like it is rent to buy you are using? That means your rent is only reduced for 5 years to allow you to save, after which time you are expected to decide on whether you purchase. From what I can see you are not guaranteed to be able to stay after those 5 years are you and if you do, you will have to pay rent online with current market value. So there won't be a discount on rent if you are allowed to stay. Looks like some give you money back too.

We purchased at the age of 35 after 15 years of renting. Our children have lived in many homes and it's not all positive. I would much rather have had a small but stable home for them. Paying market value rents, childcare and other child related expenses meant it was impossible to save. Rents have increased dramatically since we purchased too so I would say if we didn't but when we did, it be almost impossible. 😔 You are in a very envious position right now for most people and I would grab that with both hands!

I would buy now, housing prices might go down but if you hold on they’ll go up again and you’ll be in a better position.

We've always paid 25/30% on the mortgage
From when we earnt average salaries to both now high earners
Always worth paying for space and a decent long term home for your family
Tbh I don't know anyone under 50 who pays less than 25/30% on mortgage in London

I think I would wait in the very short term just to see how the current market turmoil settles.

A lot of people go for 30 year mortgages now to help affordability so if you started at 25 you could be 55 when your mortgage finishes. Wait until 35 and you'd be 65 etc - unless you can overpay it. That's if you don't move and take a new mortgage of course.

It might be worth crunching the numbers for shared ownership to see if renting 50/75% is cheaper than paying interest on the mortgage on that chunk. The rented part will get more expensive to buy if house prices go up.

Be cautious of buying at the top of your budget in case you/your partner would like to (or needs to) go part time after you have children.

@Winter2020 didnt think like that! There are some calculations to do in that case. Thank you

Yeh @Winter2020 everyone j know around my age has a 30yr mortgage as well
Needs must!!

I would buy sooner rather than later. As PP said, children are expensive and you will be penalised heavily by mortgage lenders when they do your affordability calculator if you have dc. They look at nursery fees etc.

Definitely buy before having children. It’s so much harder to buy after, because your affordability goes down. I’d choose a smaller house now over trying to buy a larger one after kids, buying a 2 bed starter house was always a normal first step.

Is there a great rush to have kids? Saying this as someone who had their first at 16! Last at 32. Children are expensive and financially draining. In these turbulent financial times I’d consider delaying and saving a bit more. If you saved for another couple of years would that make a difference to what house you could buy? Could you live at a parents for a couple of years and really hammer the savings? If I had my time again I’d have waited until 30’s before having kids. I certainly was in a better position when I had my last child and it made life a lot easier. It’s wonderful having kids but as you know if you’re in Mumsnet it restricts your life hugely, enjoy yourself whilst you’re young. Infact sod the house buying, go and travel the world in a camper van! That’s what I’d do in my next life! Lol