To buy or not to buy

M

Mely

Registered User
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Were renting a 3 bedroom house for 700/month.
The house next door went on sale for 300,000 & just for curiosity I enquired about a mortgage to buy it. Its the exact same house as the one i'm renting, & i was getting an average of over 1,200 per month to pay back the mortgage.

I'm 25 & enjoy renting as i can get up & go when i please ie if travelling for a few months etc But will be settling down soon, but there is a big different in the expenditure per month on the exact same house

Is renting still looked upon as the whole waste of money.
 
wouldnt think so right how for reasons expressed elsewhere might be a risky time to buy, i.e. there could be better times to buy
 
And dont forget, the mortgage is not the whole story. Yopu have to add in maintenance and upkeep, and that new kitchen or roof when the old one packs in. For 700/month, dont rush out of it.
 
Agree that you would need to be serious about 'settling down' before committing to purchase, because you also buy into the area and take on a long term investment with the house.

I think there has been a great over-emphasis placed by some on the need to 'own' a house rather than rent, fuelled by the lower interest rate and relative ease of mortgaging. For many it is an investment in the future, but I think for many others, its not the gilt-edged saving scheme they thought.

Renting can seem expensive or a 'waste', but - as you allude to - you're paying for the benefit of being able to get out of your rental arrangement swiftly and you have no responsibility to repair the house or buy major consumables or furniture for it.

No two cases are the same, so in order to have a reasoned basis for whatever your decision is, why don't you list all the pros and cons of buying and then of renting, and see how they stack up.

Don't forget three things:
* It's not just about money, you have to consider your emotional wellbeing - i.e. how it feels to rent/buy and how you will feel continuing as you are or taking on the house.
* When you buy, it's always more expensive that you think - there are always unforseens, extras and overspends that you can't predict.
* It's not really worth buying unless you intend to stay two years or more in the place. This is due to the upheaval that moving causes- particularly moving from a house you own with all your stuff - and from the financial perspective, fees, stamp duty, charges, costs etc. associated with selling and buying again.

the only exception to No.3 is when the market is rising a lot, but at the moment, it's not going up like it used to so equity gains can't be predicted to be like they were.
 
Think of it this way:
If you took a 92% LTV mortgage at 5% APR for 35 years,
in a period of 27 months (2007 - 2009) you would have paid of 30,682 of interest and 6,927 of capital. Take out the TRS (20 %)* from the interest and it's only 909 per month of real cost. The rest is building equity up in your house.
The monthly repayment net of TRS would be around 1,164 euro.

*TRS ceiling being 16,000
 
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