Renting or Buying?

Thank You everyone for all your comments and advice. It is very much appreciated. I am going to go and see a financial advisor in the next week or so, to see what they say, but as I dont particularly have any savings (Damn BJ tour ) then it is looking like I will have to rent. Not my first choice by any means, but there is no possible way I can afford a mortgage on my own.

I work full time, of course, but the wages arent particularly great by any means. I need to ask for a payrise at some point, but I don't know how I will go on that. I guess If I cant get a payrise, then I will also have to start looking for work elsewhere. I dont want to leave at all, but it may resort to that, so there could be many changes in my life in the coming months. Its pretty damn stressfull. Was everyone else this stressed when they first moved out? I really would rather buy, but It's just not financially feasable at the moment

Have you looked at shared ownership with a housing association?

I'm late as always, and can't be arsed to read through all the answers so sorry in advance if I'm repeating something.

The thing is, UK doesn't really compare directly with X country. In the US, it's preferable to buy, that's what a majority of people do, and house prices are more affordable. People in general have more cars, and don't rely on public transport. In Europe on the other hand, renting is often the better option, and is more typically done. For example, in Finland, the average age when a person buys a property is considerably higher than say in the US. There are several reasons for that, no need to go into that here.

In this country, it's a two-fold. I don't know about Liverpool, it's probably way more affordable up there than it is down in London where the house prices are ridiculous and most people just can't afford to buy.

When I moved here in March, I wanted to rent, because we didn't know the place, and didn't know where to buy etc. I've liked it, because when you rent, you're 'free' - if your boiler breaks down, it's not your responsibility. You don't need to dish out the cash for it, your landlord takes care of it. Then comes the buts, and now I've lived here for a while, I can't wait to buy a property.

In fact, I'm putting in an offer on a property tomorrow. It's ridiculously expensive for what it's worth, but then that's London for you. It's a nice flat, has got a big garden, it's not big but it's got atmospheare, it's a very reasonable commute for both of us etc. We just fell in love with the place at first sight, and I will do everything I can to get it. The mortgage "agreement on principle" hasn't come through yet, but it will.

The thing is, even if you want a mortgage which is more than three or four times your salary, you can still get it nowadays. The lenders know that most people couldn't afford to buy if they didn't give way, and that's how it's done nowadays. If they weren't flexible, most people in London could not afford to buy, that's the reality.

I suggest you find yourself a good mortgage advisor, and they'll tell you everything you need to know. Better yet, talk to someone who's just recently bought a house. But make sure you know the realities - you will need to dish out at least £3,000 initially for essentials - stamp duty, solicitors' fees, mortgage advisors' fees, surveys.............even if you're getting 100% mortgage, you still need to have a couple of thousand for the running costs. And you need to make sure you have enough to deal with any emergencies - broken down boilers, dishwashers etc.... The list is endless.

I would say rent first, whilst you're looking. If you can get a rental agreement with a short rental period - make sure you're not committed for a year. And take your time looking around. On the other hand, you've got the upper hand that you live with your parents - an excellent opportunity to save up!

Between the two of us, we're spending at the moment almost £15,000 a year on rent - I'd rather be paying that money towards my own house, rather than help build someone else's property empire. I love this place, and I don't want to move out, but it's way too much to pay for something you'll never see the return of.

Kev, I've been doing extensive research on this the last couple of weeks, if you want any pointers, checklists, questions to ask etc.... pm me. Buying by yourself is more difficult than if you were buying with someone else, but it's not impossible.

huh? That makes no sense. Banks lend you a certain amount based on a formula. Not based on your individual lifestyle. Just because their formula (which happens to be different from market to market - after all we want to keep selling real estate...) allows you to borrow a shitload of money, doesn't mean you actually can/will/are able to adjust your lifestyle accordingly. On paper, I'd be able to take out a much bigger mortgage than I carry, but *I* know what expenses I have and how much I want to save for retirement, so I truly cannot afford a larger mortgage. I want to say that *I* know better than the mortgage broker eyeing that commission....

Yep!!!


That's assuming the real estate market it the same everywhere. Which, of course, it is not. While you probably won't ever have to worry about depreciating value, there are markets in the US and abroad, of course, that are actually on the losing end of the market.

When I was still married, I was contemplating buying a townhouse in Germany as a vacation home. I eventually decided against it as I saw a divorce looming. Lucky me. Those townhomes now sell for less than they did 6 years ago. This is in a prime location in the countryside. (perhaps my cue to revisit the buying part ).

I guess what you really need to look at, Kev, is how much is the smallest place in the most promising neighborhood to buy? Now is the time to buy a condo - you don't need anything big as you are still single. Once you are married and have 5 kids you don't have the luxury of getting in on a study apartment with incredibly promising appreciation. Now you get that small place, wait a while, trade up.

In most markets, you (or I) won't be able to save up to buy that starter home. Real estate appreciates so much faster than you can save. Get in as early as possible and buy the cheapest/smallest place in the most promising neighborhood.


One other thing: I'd never ever in my life consult a mortgage guy about what to do. I have yet to meet a loan consultant that didn't want to sell a mortgage, regardless of what made sense to me personally. Talk to a CPA instead. Or financial planner or whatever you call it over there.

There are Independent Mortgage advisors in this country which will offer independent advice on your personal situation, to get the best deal out there. They will do all the negotiations with the bank, which I find really good. If I have to pay £300 for their service, I will gladly pay, knowing that someone is looking out for my best interest. This is especially good if you're in need of a flexible lender (willing to lend you more than 3x the salary). The fee is only payable upon completion, so if they don't find you anything, you don't pay.

And here, as ever, contacts are important. Talk to people, and if anyone you know knows a mortgage advisor, get them to drop in a good word for you.

That depends on your definition of 'afford'. In the UK, banks base their mortgage offer based on affordability and to a certain extent, lifestyle. They do not work it out by a simple formula based on your income alone. I take your point that you have to decide how much spare cash you need after bills etc but I sort of took that as read.

At the end of the day they are still mortgage brokers in the business of selling mortgages. Of course a good broker will find you the best deal and if you have to get a mortgage you need to enlist the services of a mortgage broker. However, I'd never rely on their word of what is a good deal. While they do the footwork for you, they still need to get paid at the end of the day. If it is a flat $300 or a commission by the mortgage company based on the rate or buried in your closing costs. It makes no difference.

It's your finances and you need to understand the workings of a mortgage and you need to know what competitive deals are.

I don't go to a Toyota dealership and ask advice on what car to buy and/or where to finance it.......

In my field of business it is called lack of independence.

Just because I have decided to use a mortgage advisor (an independent one) doesn't mean I have not done my leg work, or cannot act independently. I've compared a lot of different mortgages, spoken to a lot of people who have recently bought in London, and taken everything aboard. So when the mortgage advisor comes back to me, I know whether or not what he is offering is a good deal. I know it won't be the best interest rate, because the fact is that based on our income, and the house prices, a flat-rate formula won't work, and most banks won't give us enough money. In order to find a bank that will, we have to be flexible in something else. That's what it comes down to.

It really can't be compared to going to a Toyota shop and saying I want the best deal on a car. That would be me going to HSBC, and asking for the best mortgage. Moreso it compares with me going to a (make-)independent car salesman, and asking him for his best offer. Since he's not specialised in one particular make, he will give the best fit for my situation from the cars he has on offer, regardless of the make. And because I will have done my legwork, I know if that is acceptable or not.

I'm not lacking independence, and I do have my own brain. I've done my research, and now it's time to get down to it and close the deal.

I wouldn't really go with this option, I know someone who did this and although it sounds like a perfect scheme you pay a mortgage and rent!

Although late I would definitely buy if possible - I still regret waiting so long. However you don't want everything you earn to go into a mortgage. If you are just starting out, think about what you can miss per month on rent/mortgage, utilities, insurance and food and work from there. The upside of renting is that usually your rent covers utilities and if something goes wrong you have a landlord to fix it. If you are smart though, you will try and save if you do decide to rent just to build up capital when you can and want to buy.

huh?

chill out. I never claimed otherwise.