To rent or to buy, that’s the question?

21 Jun 2017

So you are in your late twenties and have been renting for a few years, you have a secure job and reasonable salary and you are thinking, will I keep renting or should I try to buy?

Maybe you have been saving a bit every month and you are now in a position where you might start to look at buying.

Some things to consider, as a tenant you are only responsible for paying your rent and the bills and generally reporting things that might be wrong in the property, you don’t need to budget to fix things that go wrong, like the boiler, or the roof. You can just call the landlord and he/she will have to fix it! So really you can budget a bit better and have less chance of unknown expense, but it can seem expensive, and some people see it as paying off someone’s debt (i.e.mortgage).

Partly it depends on where you want to live, if you want to live in some swanky flat in Merchant City that would cost you £200k plus to buy (plus the factor fees at £125 per month) then you would need minimum £20k deposit and with a decent deal your repayment on a mortgage (paying off the loan over 30 years) is likely to cost you around £750 per month so £875pcm total (mortgage plus factor) – if you wanted to rent it you would probably be paying about £900pcm. So it’s similar in terms of monthly costs, but on one hand with the mortgage you are paying off a loan and may get increased capital value, and on the other hand, you have a lot more potential expense and less flexibility.

Let’s take a more realistic first time buy,  so you’ve seen a property you like at £100k, saved up £10k, so repaying it will cost you around £425 – 450 PCM and to rent it might cost you £500pcm. Unlikely to have significant factor costs so again it’s similar in terms of monthly costs.

It’s a big decision either way – a big commitment but the chance of benefitting from a rising market or flexibility and reduced risk?



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