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To Buy or not To Buy

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davidsheena | 13:11 Wed 10th Aug 2005 | Home & Garden
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We are renting a 2 bedroom house house at the moment and are very happy here, but we have the opportunity to buy a lovely 2 bedroom cottage in a perfect village setting.
The owner of our house might want to return at any time, so we have no long term tenancy guarantee.

Should we continue to rent - or should we buy ?
Rent = �650pm. To Buy = �320k
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umm having lived in both rented and purchased, I would say buy but that's me and my feelings. What would you/ could you/ will you do when the owner of your rental returns, have you got a plan to deal with this? How "solid" is the price of the house that you are buying? IMHO a market correction is coming but if the house is genuinely lovely and the location is genuinely lovely and the house isn't over priced, again IMHO I don't think its going to be as bad as the last "correction" also how big a mortgage would you need? The worst negative equity sufferers last time were the folk who had mortgages that were most of the value of the house.

Given the choice my option would always be to buy, especially if you plan to live there for a while as invariably over a period of time house prices do increase (my parents brought their house for �1500 in 1955 and its now worth 1/2million!) and you will always get something back for your money. Whereas with renting you never get a return on your investment.

I suppose its a British thing though 'cos if you go to Germany, everybody, except the landlords, rent

Money wise (repayment) I don't know as not sure how much you earn and deposits etc so I couldn't say (that's somethign for you guys) but I would always buy.  I have always been of the opinion that renting is paying another persons mortgage.  The good thing about buying when you're renting is you're not in a chain so you're in a better position to negotiate.  However, I would personally do what is best for you.  Don't buy anything unless you're 110% sure.  If it is right then you will know it in your hearts!!

As everybody's said depends on what sort of a deposit you can rustle up.

Even so you may find it a bit of a shock. A 25 year repayment mortgage for  �300k will cost you an extra thousand pounds a month at 4.5% interest over and above what you're paying in rent

I would always buy. Pay a mortgage for a fixed term (max 25 years) and at the end of it, the property is yours. Otherwise, pay rent - for ever. How long you expecting to live? On top of this, your monthly mortgage payment usually works out to be less than rental in a like-for-like property.

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