RENTING VS BUYING IN YOUR TWENTIES.

Monday, 15 November 2021

 Buying a house is something that most of us dream of doing or at least have on our 'life goals' list from a young age. I didn't give it much thought until after university and even then, I knew I wanted to go travelling and live abroad for a while so saving for a house wasn't really going to be feasible. I am now 27 and have just signed for one of the '50/50 affordable houses' that won't be complete for me to move in for quite some time. So right now my predicament is whether to rent or save by living with my parents until it is ready! Everyone's situation is different, which is why renting may make more sense for you than buying or vice versa. Here are a couple of things to think about when deciding. 


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When to buy a home 


I think there are a couple of important factors to consider when purchasing a home - your financial situation, your long-term plans and your current living arrangements. 

Financial situation


Buying a house requires quite a few up-front costs and a deposit to secure your house. The average for a first time home buyer in the UK is around 15% although there are now mortgages that accept 5% deposits (BBC News). It is important to remember that the more you pay with your deposit, the lower your monthly instalments will be when it comes to paying your mortgage. 

You can use a website to calculate your payments to see realistically what you will be able to afford and how much you can save. So for example, if you wanted to purchase a house for £250,000 and deposited £50,000, you'd be looking at a monthly mortgage of around £876 for 25 years. Which brings me on to my next point!

Current living arrangements


I know we see lots of success stories on social media of buying a house on your own, but unless you're earning a really good salary paying a monthly mortgage of £900 won't leave much room for other fun things in life! If you're trying to buy on the open-market and earn a regular salary, my advice would be to save as much as you can by living with your parents until you can afford to put a good deposit down, or wait until you're in a stable relationship and can purchase something together. After all two salaries are better than one. (and paying half the mortgage!) You can also work out what mortgage you can afford to borrow depending on your combined income. 

Long-term plans 


Another point to consider is where you see yourself in the next 5 years or so, because if it's not where you currently are then maybe buying a house won't be the best option for you. Although if you can afford to buy and do plan on returning to the area then buying might be a good investment as you can rent out your home in the meantime to cover your mortgage payments. 

Another thing to remember is that your first home doesn't have to be an 'insta-worthy' 3 bedroom flat in central London with a pink door. It's better to buy something you can actually afford now and then upgrade down the line when your situation changes than try buying your 'home for life' at 21 and being up to your throat in payments and not be able to enjoy your 20s! Plus, renovating can be fun and IKEA hardly disappoints. 

When to rent 


Renting is usually better as a short-term solution, or if you're someone who doesn't stick to one place for very long. Here are some reasons why you might want to rent instead of buy.

Flexibility


Choosing to rent makes it easier to move house once your lease has finished, and in majority of the times you won't need to worry about furnishing the place or replacing furniture (unless you want to) as the landlord will deal with that. It's also a good option if you work remotely or are somewhat of a digital nomad who doesn't stay in one city for too long. 

Less Risk 

As long as you don't breach your contract, you can leave most of the issues for your landlord. So you won't have to stress about changes in the property market or dealing with a leak in the kitchen!


Cheaper (in short term)


Renting an apartment can be a pretty quick and easy process, especially if you choose to do a house share through a website like SpareRoom which only asks for the bond, a reference and one month's deposit (in most cases). If you're new to a city and plan on sharing with friends this could be a good option as you could find yourself paying £400 rent a month. Which is great if you're just going to be in London for a year etc. 

One good thing to come out of the Covid pandemic is that flexible/hybrid working has become a lot more common. So the need to live near the city centre isn't as necessary, meaning you can rent something a lot nicer and cheaper by being on the outskirts. A study by Metro listed the cheapest places to rent in London which included Manor Park (E12) and Forest Gate (E7). 


So, to rent or to buy?

In a nutshell, if you're settled in one place and have a stable job, then my advice is to save as much as you can in the next few years and buy your own property. In the end you'll have something that is yours and it's always good to have some collateral. If you're someone who moves around a lot for work or buying a house has never been what you want to do, then renting it is!


G



* This is a collaborative post but all words are my own. All collaborations are kept relevant to Tea With Gi and my audience *








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