Monday, May 14, 2007

Should I stay or should I buy?



Me and GF are living in a nice one bedroom flat with a massive living room/kitchen in Herne Hill. The rent not quite cheap is 1000 quid a month. Are we wasting our money every month? Should we get on the property ladder?

What can you buy for 1k a month ?

Thanks to Mortgage calculator, assuming we can get a loan at rate of 6% - it would probably be more... - on 20 years - do you really want longer ?



for around 1000 you can get a mortgage of 150000 with monthly repayment of 1089.80.




So now what can you buy for this price?



A renovation project, or a flat in the big nasty towers! I think I'm better off renting !



5 comments:

Vonric said...

You shouldn't calculate like that. First you can now extend the mortgage to 25 years (this is the standard in England) or even 30 years. Second, a rend is like paying the interest of the property. For a mortgage of 160K the interest are only £700 so which means that we are better talking about a mortgage of +220k for you. Then you might have a bit of deposit to reach 250K. For that you can find nice 1 bedroom victorian flats.

And more important... when the rent can always increase and force you to move, you can better manage a mortgage repayment. And as more likely the property will increase in value, you will end making money when eventually you sell, that you won't have been able to make by just renting...

So if you can, it's worth it!

benoît said...

or maybe the bubble will burst and you will loose your money ...
Or you live in a comfortable flat, and you save maybe half a month compare to your loan...

French Fry said...

@vonric

Buying is not a one way bet, it can be a bad investment.

Depending on the house price inflation, rent infation, house price and interest rate you may be better off renting.

Check Buy or rent calculator

Are prices sustainable at this historic high with raising interest rates ?

Vonric said...

French Fry> justement je viens de regarder ton lien... et dans les deux scénarios que j'ai essayé (pour moi et pour quelqu'un que je connais) il est mieux d'acheter...

French Fry said...

@vonric
It all depends on your home inflation expectation. But from what I read here and there, even the most bullish people think that it's gonna raise at a maximum rate of 3-5 percent a year.