Buy outright now, rent, or mortgage?

[Clairebella27]

Hi, I have around £200k (solely from buying and selling my own houses over the years) which will get me around my area an ok semi detached house... I don’t particularly want a semi detached (bad experience with an extremely noisy awful neighbour banging on the walls in the middle of the night, blasting music etc) totally put me off being attached to anyone. However with interest rates being so high I’m really unsure as to whether I go into rented, put all of the house money into savings and just pay my rent and bills monthly out of wages, or do I wait say 6 months to see if house prices come down a bit and the interest rates drop, or find a detached I like now and take out 100-150k mortgage? WWYD? So much going on at the moment I really can’t think straight, any advice at all would be greatly appreciated. Thank you

Firstly, well done on your capital accumulation. I guess it’s not been an easy ride. Personally, I would rent for now. There’s no rush to buy in the foreseeable future. Interest rates aren’t coming down anytime soon and the risk on a house purchase is definitely to the downside - even above the ‘dead money’ suggestion of renting.

I'd say rent and save if you can get a higher interest rate on the savings, than you would pay on a mortgage. But I would look into the mortgage, if you have a very high loan to value, you might find a good deal which is on a par with savings, or not much more. We're buying now and our rate is 4.11% with 20% deposit. At least you're increasing your investment then. And there are bargains to be had, we've got a great price on a house, much less than we expected to spend.

I would start looking at property to buy because it can take a few months to find the perfect place. Plus prices have fallen so you're not buying at top prices and no one will know when the market was at the bottom until prices start to rise again.
Why waste money on rent long term?

I'd buy, with a mortgage (assuming you have a salary to support a 100k mortgage).
If you start looking now, you'll move in later summer /autumn now.

@Lastwhisper thank you, that means a lot.

Thank you all also for taking the time to respond.

Where are you living now?

Sorry pressed too soon! You’ve all given me good points to think about 😊

@turtlemurtle1982 I’m in Stafford 😊

Sorry I meant, do own your house outright or do you rent?

Rents are insanely high right now. In your shoes I’d be buying. Always better to pay your own mortgage and not someone else’s, surely

We are in a similar fortunate position, having enough from an inheritance and savings to buy outright. But we are waiting until next year to buy, due to the falling market. I'm keeping a close watch on the market though, any signs of an upsurge and we will have to jump in there!

We are also in the Midlands. I keep lists of potential houses on Rightmove, but we aren't viewing. I notice many properties have been for sale for months.

Renting is quite difficult at the moment though, expensive and competitive. To save on rent you may consider something smaller, not great area, more run down, than you would ideally like. We are lucky enough to have recently moved in with a relative and they are temporarily working abroad, on and off so it works well for all of us.

Renting is a complete horror show atm. People fighting for properties, agents pulling all kinds of uncouth tricks, LLs not even providing white goods cos EAs tell them there is such a demand for tenants that they don't have to.

Closed bids. Yes, really.

Could you buy a semi in an area full of old folks to bypass noise issues?

@turtlemurtle1982 Im with family at the moment, as crazy as it sounds I think I’d prefer to rent even if it’s a year rather than spend a year with family. Going from having my own space and quirks to sharing again isn’t ideal.

@Pemba I like your thinking. Keeping a daily eye on RM and making lists. Thank you.

@KievLoverTwo your totally right. Things are mad round here at the mo.. that’s a good idea too, thank you.

I think that you'd be crazy to bank that amount of money. Unless you're earning over 10% in interest, your money is losing value fast. Being cash rich is not good when in inflation is high, I'd invest in an asset personally.

Put yourself up in a nice hotel every other weekend to get some space, and the arrangement won't feel so claustrophobic.

I would buy, with a mortgage. Also, I wouldn’t rule out another semi - perhaps look at older properties. I live in a 1930s terrace and the brick is so thick I can barely hear the neighbours (nightmare to drill into but I’ll take that for the peace!)

In that case op I'd buy outright with the money you've got. I don't know what age you are but perhaps you can upsize later? The feeling of owning your house outright is fantastic.

@turtlemurtle1982 I am 31. Yes that’s not a bad idea, I’ve take onboard what @Gemstar2 said about older properties, they are more sound proofed

1 mortgage
2 buy outright
3 rent

Renting is bonkers if you have money to buy.

I don't think you should use one bad experience of semis to guide your view.

Just look for flats/ terraces/ semis that are older and have thick walls and absent/quiet neighbours.

Interest rates are also high. At 4% she would be getting £8k per year interest on the £200k whilst she waits for the housing market to tank. People call rent dead money without understanding the nature of opportunity cost.

Why is renting bonkers? If the market goes down 20% she’ll be £20-30k better off and the interest on the 200k will have offset some of the rental cost.

Sorry - down 10%

I was in your position OP and I decided to buy the best I could afford, outright.

Savings interest % are so low compared with inflation, cash is wasted in the bank, and you don't need to worry about mortgage rates.

With cash in the bank and living with family you are in a GREAT buying position, the market has really slowed so get viewing properties 20% above your budget ASAP and make some offers - you could get a great bargain. I was able to negotiate £25k off with my position.

Good luck!

To those of you talking about inflation - that's only relevant if house prices are going up by that much? We are in the same position and our interest on cash is paying our rent. Yes inflation is high but I don't see house prices following inflation rates of 10%

The only thing I’d add, is that interest rates are not high. They are at a level we normally see during a recession. Forget the last 10 years, they were crisis rates.