Dear gals (and guys if any),
I would very much appreciate opinions on this major decision we are about to make.
We are moving to Edinburgh in August (I already asked for your help with schools and we are applying to 5: GW, GH, EA, Clifton Hall and Erskine Stewart's Melville - thanks everyone).
Back to my topic. Being a geek I developed a spreadsheet comparing the costs of buying versus renting for our situation (around 200K house) under a variety of scenarios: inflation range (1% - 4%), rent-to-price ratio, APR (int. rate) on the mortgage, loan-to-value ratio. I have made some simplifying assumptions like: house price grows at the same inflation rate as the rent, the discount rate for all calculations is the same as the APR on the mortgage. But I have tried to be very realistic in all other respects by incorporating all fees, maintenance costs, insurance, taxes, etc., associated with buying property.
Overall, the results show that:
Buying is better than Renting if:
the rent-to-price ratio is above0.35% (i.e. £700 rent for a £200,000 house),
Inflation is more or around 2% and
APR is higher than 3.5% (it currently is 5% for fixed rate loans)
My first question is: What are rents and prices like in the city, not necessarily in the very centre, but in good neighbourhoods.
I did look at ESPC, but there are very few rent offers available and it is impossible to get a good idea what the rent-to-price ratio is for the same neighbourhood.
I would love for us to be in the city, but DH prefers rural environment and if we end up choosing Clifton Hall (outside the city), there will be too many factors against me. On top of that we are ourdoorsy people and tend to go on nature trips every weekend.
Question 2: What other arguments can you give me for living in the city, except the obvious one that Edinburgh is gorgeous.
Obviously for some borderline values of the driving variables in my spreadsheet the difference between renting and buying may be relatively small (eg. £5,000 in present value terms over a 25-year horizon) and in this case I would lean towards buying because I greatly dislike moving.
However, our jobs have taken us around the world every 5 -6 years and even though I am more excited to settle in Edinburgh than I have ever been before (even compared to when we moved to Montreal), I have to allow that a fantastic job offer may come along and move us across the Atlantic in a couple of years.
We have always rented wherever we have lived so far and in hindsight I am glad because it was easier to move, but I feel like finally settling down.
Questions 3: How do you all stand on renting vs buying?
Thank you in advance. I hope my post is not too technical.