Mortgage vs renting

[FlyMeToDunoon]

Talk me through this please.
DP and I are in a 3 bed house. We can't afford to move.
Can't afford to keep the property maintained properly. It needs some repointing, windows need renovating, window sills and front door frame need replacing. etc etc.
Basically we have no spare cash. We live on overdrafts which we are trying to pay off.
So we sometimes fantasise about selling up, putting the equity in a savings account of some kind and renting.
Assuming a good, nice landlord then maintainance is looked after, we have an investment [equity] for the future and possibily our monthly outgoings are lower.
What is the reality?

but "long term let" doesn't exist anymore, the landlord can say yes it's your for 5 years but in reality they only have to give you 2 months notice!!!

If you went interest only etc it's just the same as renting in a way and possibly cheaper. It depends on the price of rentals in your area Also what is the situation with getting a rental place near school etc

Plenty of rentals near the school.
With interest only you have to find a huge lump of cash at the end that is the difference.
If we sold and rented we would have a huge lump of cash in the bank at the end.

I'm sure the percentage of people who are homeowners in the UK is bang on the European average. I remember reading this (and being quite surprised). When people talk about how renting is so popular in Europe they're really referring to Germany in the main.

The thing is it is highly likely that eventually prices will have to fall substantially and then buying will be a good option again but atm everyone is paying through the nose for something that cannot keep its value without govt intervention which we saw in 2005 and are seeihg again now.Eventually normal multiples will have to return because there will be no first time buyers otherwise,atm we are in a no mans land but reality will have to strike soon.

hmmm yes but that's only if renting is cheaper than the mortgage at interest only. Yes at the end of the mortgage period or sooner if you wish you need to sell and repay the loan but you would most likely still have a lump of cash too as over 10 years the house is likely to increase in value.

I know we could afford to rent our house!!!! £1k per month for ANY 3 bed.

I see our property as a long term let, it has been let out for the pas 20 years by the current owners and could have been prior to that. The only way I could see a change is if the owners both die and their children inherit and they no longer want tenants. There are quite a few properties to let on estates around here. Lots of people also rent and do so for a long time, we are talking decades.

What else do I need to take into consideration apart from rent?
Council tax?
Insurance? Would this be contents only?
Life assurance? Yes I guess.

There is no way of knowing it will increase.In reality IO means you can't really afford it.If prices fall back to historic levels and then rise with inflation as is normal and not rocket in the way they have then you could be short.It is defintiely not a good idea atm unless you are in the bonus situation or likely to recieve a huge inheritance.

I dunno this whole home-ownership thing that goes on in the UK is a bit over-rated IMO

Houses are money-pits. Ours costs a fortune and is relatively modern.

I realise the thought of realising your equity now is pretty attractive BUT

1. If you invested £100k in property 10 years ago, it would be worth £300k now, even though we are at the bottom of the market. Invested in a really high paying interest account - say 10% pa (which is not available now and will not be for some time) you would have less than £250k now. So property is still a better long term bet

1. Landlords don't always maintain properties to the same standard, you are subject to their whims (they may decide to sell for instance)

1. If you went to interest only, if indeed you could get an interest only mortgage, the idea is that the capital you will realise at the end would repay the capital you owe and you might still be able to buy a property outright with your remaining equity.

How about upskilling in DIY to help solve the maintenance problems?

have you actually checked rental prices in the area you want?

my tenant pays me pretty much the whole value of the mortgage (i live in DPs house) and i know people are actually making money out of buy-to-let meaning the rent they are charging is MORE than the equivalent mortgage repayments.

the big plus of renting is that potentially you could get housing benefit.

If you can't afford your mortgage then yes renting is worth considering and in some ways if you end up getting evicted by a landlord then you can end up with social housing as it gives you lots more points.

Quattrocento - what makes you so sure that we are at the bottom of the market?

I dunno, thought houseprices in London were going up now. Everyone in the City is talking about green shoots, and some of them actually seem to be meaning it.

Only read the OP.

The reality?

The reality is that you are never more than 60 days notice away from homelessness when you rent privately (after your initial 4 months of tenancy are up).

You and your family are at the mercy of private landlords and letting agents to do major repairs, give you back big deposits (are you in Scotland? Private landlords can charge more for deposits here) after you move and fluctuations in the market to even find a private landlord willing to take kids on at all.

Ever been threatened homeless in rural Scotland with October on the horizon and not a single 3-bed flat on the market that will take kids?

It's not a good prospect, I can promise you.

I'd stay put and even get a second job if I were in your shoes and be damn, damn grateful you're not someone like us.

Rental in our area for a decent three bed is around £1300 pcm. This is equal to ur mortgage and life assurance atm.
But we cannot afford to maintain our property.
As I see it our property is degrading year by year and our return on a sale will get lower and lower.
Actually we could move to a cheaper house in a crap area but we feel that our quality of life would be much reduced.
Seems a bit extreme rnting to get evicted so we could qualify for housing association or housing benefit.

Sorry Expat x posted with you and would dfo not want to be your position but that is sadly very extreme surely.
I know quite a few renters around here who purposely rent with their children in tow to get into the good school. It is very possible

Prices are rising again hre in th SE but I am sur it is temp.expat have you found anywhere yet?

'Seems a bit extreme rnting to get evicted so we could qualify for housing association or housing benefit.'

And that's not automatic.

You have to go through your council's process unti they come up with a decision as to whether you are or aren't intentionally homeless or threatened homeless.

This can take almost all your 2 months notice period, whilst you ring and ring and write and write and wait for their decision whilst the clock ticks down.

And if you think all social housing/HA housing is somewhere you'd actually want to live, guess again!

Oh, yeah, you'll have plenty of points, and they'll offer you first a squat or former squat in dire condition whilst you languish in temporary housing or B&Bs with your family, spending all day on the street or in your car because you have to be out of the B&B during the day.

Then when you say no you'll have a fight on your hands, because the council will come back and say they have fulfilled their legal obligation to you by offering you that shitty shite housing, so they're no longer obliged.

Because newsflash: all the best social/council housing has tenants in it or has been bought.

I wouldn't recommend this or wish it on all but my worst enemies.

You're very lucky.

It's possible, but it's never idea, FlyMe.

Those people may have their kids in teh school, but there's nothing stopping their landlord from selling up and their scrambling around trying to find another home in that same area.

As I see it our property is degrading year by year and our return on a sale will get lower and lower

No as it is the land which is worth money and the actual building is not really worth that much overall.

Developers will buy one or two houses and knock down and start again.

A house can be built for under 100k and then be sold for 300k.

Dont worry about the repairs, just do a little at a time a little each year.

Or sell up and buy something smaller or in better condition.

I am not for a moment seriously thinking of going down that route Expat except in dire need.
I hope you get settled soon. I think I read that you have found a place atm?
I am lucky in that I would have a lump of cash from house sale.
The way it seems to me now is that there are pros and cons for each circumstance and I need more information about local availability, prices, length of lets and the experiences of local renters.

I have a sweet little house in a nice area but no extra cash of any kind.

Could you use your equity to get a buy to let place as well as renting?

We brought 5 years ago and are now having to move to rented as we haven't made enough money to buy the size of house we now need. We have made enough to cover moving expenses and our mortgage is similar to equivilant rental. I am so fed up with people telling me renting is like chucking money away. I had so much more disposable income before I got a mortgage!!

I don't think house prices will rise until it is easier to get mortgages as a first time buyer and/or unemployment goes down. But historically in this country property has always gone up over a 10 year period I think, and so the expectation must be that the market will recover. It is difficult to know what to do. I personally hope I will be able to buy again in about 2 years. I want to have a house paid off before I retire as well.

I've read most of these replies and thought it was time to add my two pence worth!

We sold our house as it was too small. Luckily it paid of debts too. We're now renting a lovely house that we couldn't afford to buy (in the South East)(. Really nice landlord, lets us have our dog and children. We live peacefully and respectfully of the property. we treat it as our home.

We both have pensions for our retirement and I think we will buy again at some point. But not yet.

I love the fact we don't have to worry about maintenance. ATM we have a leaky loo. The landlord came round (at our convenience) twice last week. It's a PITA for him... but not for me. I sat there watching TV whilst he tried to fix it, and went to B&Q etc. The most we have to do is change lightbulbs in terms of maintenance.

I don't actually think property is a safe bet for retirement, and I always wonder what happens... You pay off your house so you own your home, but where's your disposable income? Do you have to move somewhere smaller to release the capital at that point? It doesn't seem like a safe option to me. If house prices have fallen when you're 65 then you might be left with a house that isn't really worth anything, and still no income.

FlyMe what you must understand is that regardless of what you are told you really can be served 60 days notice to leave even if the lease you signed says 5 years on it. Also if you have a lump of cash in the bank then you wouldn't qualify for housing benefit or possibly for social housing.

Have you considered shared ownership?