If you’re a first-time buyer who’s spent years saving for a deposit, the last thing you want to be told is that buying a house is the worst financial decision ever because you’re not getting value for money.
Despite there being a property crisis in Britain for renters, there’s also an argument that home ownership is a financial curse. We don’t have the security renting in the UK that some other countries do. However, there are also naysayers who think buying a house is a like falling into a black hole with every penny you’ll ever earn, never to resurface. So who’s right?
Here’s what’s covered below:
- Why Buying A House Is A Bad Idea
- 10 Reasons Why I Found Saving For A House A Great Idea
- 10 Reasons Why Renting Doesn’t Always Suck
Where we live is a big life decision, me hearties. I like to think I occasionally apply some rational maths to my endeavours, but this is limited by two things. A)maths hating me and B)the idea that we only ever make emotionally biased decisions even when we’ve convinced ourselves they’re totally justified.
We get scared of eviction.
We’re proud of putting our stamp on our own space.
We enjoy moulding our environment to our lifestyle.
Perhaps we can’t always do the latter while renting. Maybe we’re not sorry losers either if these are the highly emotional reasons why we sign up for a huge liability. Perhaps it’s good to be alive, and to be passionate about where you call home.
I hope by the end of this post you’ve either embraced your emotional side wholeheartedly, or convinced yourself that you’re armed with enough new information to make you a practical, rational decision-making machine. Either way, you’ll be right.
I remember what it was like to rent. I also remember wondering if I should just use my savings to travel the world, or move back to California (I lived there for a year). Or if I should rent forever just because. And by “just because” I most likely mean so that I could play at being a commitmentphobe in all areas of life just a bit longer.
I’ve included at the end the challenges I set myself to work out whether buying a house was the right decision for me. See if it isn’t the right decision for you, unless you’re harbouring a deep desire to be a nomad.
Why Buying A House Is A Bad Idea
Let’s look at the arguments for why buying a house is a trap:
- It costs a lot to buy and sell property
- Most buyers end up paying far more in interest than their house is worth
- You could make more from the stock market
- A home is only ever as good as it’s location
- The cost of maintenance is a burden
- They’re hard to liquidify when you need cash
- They can be expensive to insure and lost in a heartbeat
It costs a lot to buy and sell property
This is still true for existing homeowners largely because of stamp duty. Removing stamp duty for first-time buyers on the first £300k makes it theoretically possible to move with less than £2k spent on fees.
Depending on what kind of survey you opt for, and if you choose a solicitor that charges a package fee then the administrative side of buying doesn’t have to be so painful.
The other reason it’s assumed that buying is expensive aside from the cost of the deposit itself is because I was repeatedly told to put aside many thousands to furnish my new house.
“You’re all batpoop crazy”, I said. Why would I spend £5k+ on new furniture when you can furnish a house for free or very cheaply through carboots, Freecyle, Freegle, secondhand marketplaces etc.? I mentioned in the intro many of us want to stamp our personality on our new home. What if this is easier done by curating preloved pieces than buying the latest trend hot off a factory conveyor belt?
Most buyers end up paying far more interest than their house is worth
Certain buyers will have gotten relatively poor value for money in the first place depending on the location. The square footage you get for your money in London versus other parts of the country is phenomenally expensive. Of course, if you love living in London, this isn’t poor value for money at all.
Besides that though, most buyers not only never consider paying their mortgage off early, but will continue to remortgage and remortgage, using their house as leverage to live the rest of their life on loans.
This is a personal choice of course. Love your career? Then I can see why you’d rather work until you’re dead and keep taking out mortgages with all the associated interest to fund any shenanigans in the meantime. Forever taking on more debt to keep up with the Kardashians instead sounds to me like a road to misery, rather than happiness.
You could make more from the stock market
Alternatively, if you can earn more from investing in stocks and shares at a higher interest rate than your mortgage, then I can see why ploughing spare money into your investments makes more sense than overpaying the mortgage.
Hypothetically someone who rents forever and invests in stocks and shares might after 30 years have more net wealth than someone who dutifully paid their mortgage off. So renting wasn’t “dead money” because you became better off financially in future.
This falls apart slightly when someone is spending three times on rent what a mortgage payment would cost them. You can also invest in stocks and shares for as little as £25 per month, so I don’t see why you can’t have your own shelter and invest in stocks and shares. What would I spend all that investment money on in 30 years otherwise? Rent until I die?
If we hate that our rent is paying someone else’s mortgage, then it’s only worthwhile having a mortgage instead if we actually put our cash towards owning equity.
When the majority of our mortgage payment is just chipping away at the interest because we only ever pay the minimum due, then we’re making the bank rich, but creating very little equity for ourselves. That’s when buying a house is a bad investment.
A home is only ever as good as its location
The argument here is that buying a house is a waste of money because most of the time you can’t pick it up and move it somewhere else. Unless you build or buy a tiny home like a houseboat or mobile conversion. I’ll do a few blog posts on those too, so subscribe to catch those.
If something dire happens locally that affects prices, you’re stuck. We can also only choose our neighbours to a certain extent. While we might think we’re buying a genteel home on a civilised street, there’s nothing to say that El Weirdo next door actually loves loud parties. Or likes to leave litter in your garden for reasons unknown. Then again, perhaps it’s you that’s El Weirdo who loves loud parties…
You’re also then committed to that location for work. I was working remotely before working remotely became the new normal. This argument has already flown for me therefore…
I bought the worst house in the “best” location. The best location is theoretically a place that on paper has great local amenities, transport links, community activities, lots of green space, and well-kept houses on the same street.
The neighbours were quite relieved when I gave my property a facelift as it had been an eyesore to them for years. My handiwork likely raised the value of their houses. While I can’t pick my house up and wheel it anywhere else, I don’t want to because I thought long and hard about location.
You can often change a house, but it is harder to change the surroundings, Instead of negatively assuming your location might take a downturn, I would recommend turning a caterpillar into a butterfly in a place that ticks the boxes you need. (Kirstie and Phil have been making entertainment on this premise for over 20 years).
The cost of maintenance is a burden
The grand total I spent during year one: £80 for a local dude to fix my washing machine. Said machine came with the house and was at least five years old, so go figure.
Caveat: Granted, the various painting and refreshing we did during the refurb meant there wasn’t much else that could fall apart during the first year. I’ve also seen it said that no one takes into account the time involved in fixing housey dilemmas. Again I was lucky. It took one phone call to get my repair done, and because I work from home, I knew I’d be around for the repairs without having to take time off. I understand not everyone has this kind of freedom (but freedom can be a thing that you carve out for yourself…)
What I didn’t maintain
I could have replaced the floors in the kitchen and bathroom as they were showing serious signs of wear and tear. I decided to save instead. After all, it was only me walking on them and they weren’t a safety hazard.
I’d rather earn interest on that money and invest in decent floors when the rest of the bathroom is falling apart, or the floor needs to come up for some other reason.
No one has a crystal ball. You may find during the first year that you need to replace the boiler, the fridge, the shower, and get out someone for the mice if you’ve bought a home that calamities decide to descend upon to test you.
This is why mortgage lenders like it if you have a little leftover after your deposit so that you don’t go under right away. It’s also why I paced my spending on revamping my fixer upper over many months, so that I had money for anything else that came up that was more urgent.
Keeping up with the Kardashians and the Joneses
I think spending on maintenance is actually more optional than it’s treated. Lots of homeowners will keep sprucing and decorating and replacing for its own sake. Just because you know you’ve had something for two years doesn’t mean anyone else does.
The desire to have everything match purely for looks seems like a waste if it means getting rid of perfectly good towels or furnishings just because they’re not in the right shade. One way around this is to buy mainstays like linens in neutral colours and small appliances in finishes like stainless steel. That way if you change the rest of the room, you won’t have to update every last accessory to achieve a certain look.
Some whisper or shout that it’s unfair that landlords benefit from rising house prices so that they can charge renters more. Remember this when you have your own house: we only benefit from rising house prices if we reign in purely emotional spending on the interior.
Similarly to losing equity if we keep remortgaging, is buying a house a good investment if we sink our life’s earnings into decorating constantly and extravagantly on a whim? Let’s say an estate agent suggests updating the 20 year old bathroom and kitchen will add £20k in value. Spending £20k or more doing the work will gain nothing except for a hella lot of granite everywhere that the new buyer plans to rip out because they hate the colour anyway.
I’ve also seen it argued that home ownership means you have to pay council tax, insurance, and utility bills. Erm, yeah? And I had to pay all those things in addition to my rent before I owned a house! My council tax and bills are roughly the same (so we know who was using all the hot water now, don’t we…) Despite needing buildings AND contents insurance now, I pay roughly the same for that also. My mortgage however, is half the last rent I paid.
They’re hard to liquefy when you need cash
For first-time buyers, this is unlikely to be a concern again for at least the first five years. This is when observing the common wisdom that says don’t buy if you plan to move again within this time. ‘Tis true that finding a buyer in future may take time and moving on means becoming part of a house-buying chain which can complicate things.
Unless you continue to improve and expand your existing property, thus removing the need to ever move again. More and more homeowners are improving rather than moving because the former gives potentially more value for money (step away from the granite…)
Here’s another process to ensure we have cash in future:
- Build up our emergency savings
- Discover our priorities in life and spend only on those
- If our earnings increase, still spend only on our priorities
- Arrive at financial freedom
- Realise happiness doesn’t have to hinge on selling our house to access any profit
On the other hand, if we never sell, and we’re averse to taking more loans from the bank with our house as collateral, then can we really call it an investment? We never unlocked any increase in value. Otherwise most owners upsize, so they just use their equity towards owning a bigger albatross.
Subscribe at the bottom of this page for future posts on how to earn more and save more without living in a potato sack and existing on only fresh air.
They can be expensive to insure and lost in a heartbeat
My buildings and contents insurance costs are kept down by a few things. One, my property is compact in the first place. This limits the amount I would need to replace after a hurricane, fire, plague of locusts etc.
The Only Wealth Philosophy You’ll Ever Need? is a post all about how I go one month to the next spending very little. This also curtails the amount of new belongings I acquire.
I own a lot of stuff still because I once had a clothes shopping addiction and I love to read. Because I conquered my addiction in my early 20s, it’s very rare that I have anything new to store. The rest of my possessions were free or secondhand anyway, and so cost very little to insure.
I own almost nothing that an insurance company would wring their hands over such as expensive jewellery or tech. Once I’ve paid for something, I’d like that to be the end of the story. If houses have maintenance costs, then I don’t really want to be forking out hundreds of pounds year after year to insure a designer watch until I’ve paid more to insure it than its resale value. (Again, are these things really an asset if we never sell them for profit? Can we enjoy something for its own sake without wear and tear that destroys the resale value?)
Need help resisting a flashy purchase? Ask these questions:
Will I be owning this, or will it be owning me?
Would I rather have this, or own a house?
We’re more likely to save a deposit quicker if we can control this kind of impulse spending. We’re also likely to find home ownership less of a burden too.
10 Reasons Why I Found Saving For A House A Great Idea
Saving for a house allowed me to do the following:
- Take action to secure my future
- Own my first major asset
- Achieve independence from my family…
- ….While being closer geographically
- Choose a new lifestyle
- Diversify my income
- Start a business
- Become a personal finance ninja
- Abandon a lifetime of renting
- Learn new skills
Let’s take a closer look at why I’m such a cheerleader for being a homeowner (apart from the biased fact that I’ve spent the money and now I’m fricking committed).
1. Take action to secure my future
Prices were rising quicker than wages the year I bought my house. I don’t believe entirely in now or never because we’re all living longer. There are nearly always more solutions if plan A doesn’t pan out. I did have a sense of urgency when I bought though.
My flatmate upping sticks gave me an opportunity to make a clean break from private renting. I knew I wanted to buy somewhere in the near future. I just had trouble defining “near”. My optimistic parents let me move home. They expected my new abode to materialise in months, not years. I had to crack on therefore.
I’ve written more about accelerating a purchase in What You Need To Get The Best Mortgage Offer.
My savings were at a point where compound interest was really showing off. I’d done everything I could to look attractive to lenders and I’d rethought the kind of property I was looking for (something less palatial).
Taking action has its own momentum. You feel proactive about tackling other goals. Saving for a house wasn’t about deprivation, but asking what were my spending priorities really. It spurred me on to be more green, less wasteful and more interested in my rare purchases.
Once upon a time I would have spent hours shopping online, half of it to be returned unwanted. If you know you don’t want to spend anything today then browsing is pointless. I funnelled the time into earning more, looking for more savings, and taking tentative steps towards starting this blog.
They say one of the perks of homeownership is that you are king of your domain, deciding what to change and when. You also become the owner of your fate, because your financial future will always be intricately linked with whichever roof is over your head.
Obviously we don’t know exactly what will happen in future. If I had waited longer and continued saving, would I have been priced out of the market completely? Who knows? My savings plan meant I could secure my little corner of the world and embark on phase two: unlimited financial freedom a.k.a. a lot of Raspberry Money.
See Epic Ways to Save For a House for what raspberries have to do with money.
2. Own my first major asset
It’s not necessarily easier to buy a bigger house on two incomes. This is because the bank won’t multiply both salaries by the same amount. I assume that they assume that a woman earning a good salary will inevitably earn less after they buy and decide to pop out sprogs. Excuse us while we defy the destiny chosen for us by a bank computer.
Even if you could borrow more by buying jointly, this is a terrible reason to keep certain relationships going. Even in a good relationship women should still pursue their own assets.
Others take it for granted that part of love is you bail your BAE out in whatever way needed. There’s something very dangerous about relying on your partner in this way. It’s about Raspberry Money again and having the financial independence to own your own property and give yourself options no matter what happens at work or in love. (Follow the link above for the blog post that goes into detail on that).
3. Achieve independence from my family…
My parents were getting older. Apparently this is a thing we do? Although they weren’t directly paying my expenses like my rent, I knew it would be a relief for them to see me financially independent and under my own roof.
Independence obviously came in other forms too:
- No more calling for a lift to their tiny village when stranded by a complete lack of bus.
- I could organise my belongings so that all my footwear for instance was not only in one room(!), but in one place. Moving in and out of the family home over the years and a lack of space meant my shoes had been scattered to every inaccessible corner. Apply this to every category of possessions and you have a very confused (and sometimes inappropriately dressed) bear.
- No more earphones if I needed to work in the lounge while mother watched Poldark from the beginning again. Sorry Aidan Turner. Being Human is more my style.
- I could go to bed on a work night in a silent house. Yes, my retired parents were staying up later than me (and on the weekends too, the degenerates).
Of course there were lots of benefits to living with my family too
Seeing my family daily
Excessive central heating to keep the arthritis at bay
Input on these buying-a-house shenanigans
Opportunities to see other family when they visited
A social life since my parents got outside more than me
Sharing energy drains like the washing machine and oven
An explanation for the sound of any bumps in the night
If you’re buying with a partner then you’re more likely to bounce ideas of each other (and to have the input of in-laws). Consider yourself lucky to have less opinions to contend with if you buy alone.
It might seem counterintuitive, but my family’s assistance with decorating and unpacking was actually so that I could live more independently.
4. …While being closer geographically
Buying did also mean buying outside of London where I worked. This also brought me geographically closer to my family however. When I rented I was walking distance from my job in the capital, but easily a 45 minute drive away from family. To go by train took over an hour, especially as I still needed a lift when I reached the station at the other end. Sound familiar to your own situation?
Going home when I was renting often meant a weekend away because otherwise by the time I arrived, it was nearly time to go back to the train station again and I was reliant on someone to drop me off.
If my parents came to mine, there was no space to stay, so it became a day trip that had to be plotted in the calendar far in advance. Receiving my wayward post or passing on presents in time for my parents to deliver to family because I was too far away to drop in on the special day became a major event requiring military precision.
Saving up allowed me to have my own space and schedule while being a hop, skip and a jump away for catch ups and family celebrations. If I forgot something or vice versa, it became easy as pie to nip back without turning it into a mission.
I preferred to buy in the countryside where I grew up rather than London anyway, but I couldn’t have afforded anything in the city. We have to decide our priorities when house hunting and it was important to me to be closer to family.
5. Choose a new lifestyle
My house search also got me thinking about my future lifestyle. Someone in my family was very ill in the lead up to moving out of my rented flat and it was frustrating to not be around to help care for them.
When I did move home, I still wasn’t available to help properly as my job was swallowing 70 hours of my week, especially if my travel got delayed. After work, I was a zombie unsurprisingly.
It might seem odd to resign right after buying a house, but that’s exactly what I did. Once you complete your purchase, you do need to actually try and pay your mortgage. Usually quitting your job is not the first step to achieving this. (Sherlock called, he says no ****).
However, I realised a bunch of stuff once I had my house:
- It wasn’t going to refurbish itself, and it was a bit pointless working to live when I couldn’t…erm, live in it
- The problems I was having at work anyway weren’t going to go away
- A new location meant new opportunities
- There wasn’t any point moving closer to my family if I was still going to be either at work or on a train during nearly all my waking hours
- Getting onto the housing ladder gave me both a big financial responsibility and a certain amount of financial freedom
Giving you a mortgage is the hardest thing you can persuade a bank to do. My mortgage cost far less than renting, leaving me to invest the rest.
Because I made sure I had some Raspberry Money before walking out on my job, I wasn’t worried about paying the new mortgage. Ideally you don’t want to put every last penny into your deposit unless you’re close to the next loan to value boundary. This gives you an emergency buffer for life.
You look more attractive to lenders if you have separate savings too (expect a mortgage application to ask how many months your could pay your mortgage for if you lost your job).
The bottom line is that saving manoeuvred me into a position where I could find more control over my time and income than working over 40 hours a week for someone else. I could make my ageing family a priority.
My house search got me away from a draining career (if it counted as a career). It left me open to choosing somewhere I could work close to home and in a more relaxed environment.
6. Diversify my income
Trying to earn more is an obvious strategy when trying save as much as possible, and so like lots of people I also developed a second income. I was also already doing a sporadic job on the side when I worked full time in an office.
Although my primary job was demanding, this side hustle fitted in and sometimes meant I was getting paid twice while on holiday from my first job. When I decided to change my day job, I knew at least I still had some work to come in future if I took time transitioning to a new career.
Diversifying my income gave me an extra layer of freedom and I wouldn’t have considered having different income streams if it weren’t for my goal to save for a house. The working world is filling up with robots and 3D printers. Apparently pandemics are a thing we have to consider now that might stop our industry altogether. I couldn’t assume I’d always have one job that would cover my mortgage. Becoming self-employed on the side and working from home provides options.
7. Start a business
An extension of working freelance from home was that it got me thinking further. I started researching how to start a business.
Being an employee has a whole bunch of frustrations:
- Your boss won’t let you tie your own shoelaces even though you’re a fully competent adult who they routinely rely on to organise their working day and save their life
- No one washes up in the staff room
- Your boss confiscates all the tableware because no one was washing up and you end up drinking soup out of a mug for weeks on end
- Your colleagues are generally filth when it comes to using kitchens
- If it’s not your boss berating you, its members of the public
- When they’re not berating you, they’re being passive aggressive (which is worse??)
- You’re the only person who replaces the paper towels/coffee/milk/soap when they run out
- You discover by accident that your hours have been changed permanently because no one had the decency to discuss it with you
- The phone lines regularly go down
- There are regularly nationwide IT issues
- The work WhatsApp lights up like bonfire night for everyone’s birthdays, but no one answers anything urgent and work related
Other highlights included Christmas dinner at 11pm because it was booked last minute and all the other sittings were taken. (We were lucky to have Christmas dinner though – can’t really complain about this one!)
There were also regularly floods, power cuts and plagues of locusts. By locusts, I mean slightly less biblical rats.
Yadda yadda, can you tell my tongue is wedged firmly in my cheek? I won’t even go into the joys of being a manager specifically.
Apparently I got a raw deal with that job, and no else’s workplace is this farcical. What do you think? Either way, you can see why working for myself looked attractive.
8. Become a personal finance ninja
Preparing for a mortgage generally requires getting our finances in tip top shape. This has other advantages. It’s dangerous to assume that you will always be able to work for someone else at a wage you like and in one town with hours that suit you.
To give myself options to work from home, be self-employed, or have Raspberry Money I had to make my pennies work hard in the highest interest savings accounts. I use MSE to get up to the minute information on the best interest rates. Diarise when it’s time to switch fixed term products, or keep an eye on deals for everything else that can be switched whenever a better rate strikes elsewhere.
9. Abandon a lifetime of renting
To plan to climb the traditional career ladder I would have been looking at higher paid work in London. That also would have meant either commuting, or living there longer than I planned.
I was already spending 40% of my wages on rent. Once you tip over the line where your mortgage interest would cost less than spending the same number of years renting, it’s time to get out of Dodge.
10. Learn new skills
We generally fall into two categories: we can either put up a shelf or we can’t. My dad has always been a dab hand at fixing and building things (without the help of YouTube). When I moved he was retired and wasn’t looking for a full time job at my house sorting out my loose screws.
There were things that needed fixing from day dot and there would inevitably be things that needed DIY attention in future. I made a rule that Daddio had to show me how to do anything and everything that involved a toolkit from completion day onwards.
It would have been quicker for us to attack separate tasks. I couldn’t learn anything that way though. I didn’t get a diploma at the end. On our mission to fix schiz ourselves though, I reckon I could tile on my own in future, paint almost any surface without ruining the finish, and reseal a kitchen or bathroom. My tiny bear paws find the last one tricky purely from an ergonomic perspective. Does anyone want to invent some mastic that’s easy for girly hands to apply? No? Why not?
I’m still a bit cackhanded when it comes to knocking holes in walls or changing light fixtures without electrocuting myself. It’s not a bad thing to have a few things that family can flex their muscles with when needed. We don’t want them to feel like they’ve been kicked to the curb after the decorating’s over after all, do we?
My house might not be an investment according to some financial experts. However, if the advice is to invest in yourself instead, then I definitely used it as an opportunity to do that very thing.
10 Reasons Why Renting Doesn’t Always Suck
Depressed about still being a renter? Despite how much I love my little house, I’ll concede that renting is not terrible for everyone all the time. Sometimes you have to look for the silver lining. Then turn it into a cape and wear it because it’s up to us to control how we feel about our life. Especially when we feel like we’re being handed absolute poop.
Here’s my 10 reasons:
- It cost me less in the long term than if I had had a mortgage from day one with a high LTV. Especially because of the amount of interest I would have paid.
- I could live somewhere that was too expensive for me to buy (a college town in California, London, Oxford, a shared mansion in Leamington Spa).
- It kept me social. I really wanted to live alone in my own space. The necessity of living with others gets you out the house when their invites become your invites, gives you someone to rant about your day with, and someone to share goodies with/borrow milk, or whatever from.
- There are perks dependent on who you rent with. My Californian landlady was generous to a fault and fed me and chauffeured me far more than I deserved.
- It gave me time to really control my spending. After a refurbishment to last the long-term anyway, I spent very little on maintenance in my first year of owning. But owning a house can come with big expenses that renting doesn’t, such as replacing large appliances or paying for boiler cover once it’s out of warranty. (The argument that ‘landlords fix everything for you’ falls apart when they fix nothing). I don’t mind having maintenance costs but you still need to be able to afford them. If you overspend and can’t pay your rent, you might be able to move back home etc. If you can’t pay your mortgage you lose your house. Much bigger stakes.
- It gave me time to become a minimalist. A hoarder needs time to come round to the idea that stuff is stuff and we shouldn’t be emotionally attached. I also began strategically using clothes/makeup/toiletries etc that I had had for years. The aim was for most of this to have been used up or taken to the charity shop as rags by moving day.
- It gave me time to really think about where I wanted to live and how much space I needed. I started convinced I needed at least a three bed house. Then maybe three beds only would be fine. Then I realised I was visualising living in a one bedroom. Travelling from my flat to family at different distances also gave me an idea of how much time I would tolerate on public transport/by car. I learned how far I was willing to be from amenities too.
- It gave me time to increase my income. I wanted to have a big deposit because it would cost me less over the lifetime of the mortgage. But I also had no choice because of what banks would lend me on my salary. Increasing my income and my deposit at the same time helped me reach my goal.
- It gave me time to settle into my job. It’s not a good idea to job hop directly before applying for a mortgage. I know I ranted above about the ills of being an employee. Soldiering on in the same haunt though meant I built relationships at work and my CV didn’t look flighty.
- It gave me time to dream up my business. I wouldn’t have been able to get a self-employed mortgage, but once I moved somewhere permanent, I wanted to be in a position to be less of an employee, especially if there was commuting involved. I know not everything in this blog post could possibly apply to everyone, and starting a business might not be on your radar in the slightest. If it is though, use your time renting to think about the possibilities.
Bonus reason 11! You can negotiate rent! Apparently. When I had to leave, the landlord offered to drop the rent. We had been well-behaved tenants and they really wanted us to stay. If you’re on good terms with your landlord, let them know if you’re thinking of moving on because of rent costs, and see if you can’t haggle too!
Let’s Wrap This Up Like A Regifted Present
- The costs associated with buying a property don’t have to cost a lot… but there are costs to selling, so the more often you move, the more owning property will cost you overall
- Most buyers end up paying far more in interest than their house is worth… But they could overpay their mortgage instead and be mortgage free early on in life
- A home is only ever as good as it’s location… But it’s more likely you’ll be able to beautify an ugly duckling in a swan of a location than it is for your location to go downhill overnight
- The cost of maintenance is a burden when things go wrong unexpectedly, so it’s wise to have a rainy day fund
- Be choosy about the other “maintenance” you do that doesn’t count as essential repairs
- Homes are hard to liquefy when we need cash, but a savings habit now means we’re unlikely to rely on a house sale to rescue us financially in future
- They can be expensive to insure and lost in a heartbeat… Only buy what you can afford to insure, stop smoking in bed, and try not to buy next to a giant tree that’s going to keel over any day…
Owning can be a great idea if:
It teaches you to save
You use that financial nous to keep a secure and dry roof over your head
You’re looking after yourself (because no one should do that better than you)
You don’t devote your life to filling the house with schiz
It gives you confidence to do other things
If these things cushion you against external changes
It brings you closer to loved ones
It frees you up to change your lifestyle
The cost of buying is less than renting over the same time span
You learn new skills
Renting is beneficial if:
You’re forced to save yourself into a better LTV bracket
It allows you to live somewhere you can’t afford to buy
You’ve got housemates who enrich your life
You get other perks from your living situation
It teaches you to budget
You take the time to offload too many possessions
It gives you time to decide where you want to settle
It forces you to be worth a higher salary because you need that moolah
You stop job hopping to your CV’s detriment
How do we know if we’re making the right decision?
Here are some things you can do to balance the pros and cons for yourself:
Use a calculator like this one to find out if a mortgage with interest would cost you more than the same period renting.
Use this post The UK’s Best Place to Live if you need help evaluating locations.
Think about what you want to get out of home ownership. Don’t buy just because it seems like the thing you’re meant to do next, or because friends and family think it’s best for you.
Ask yourself what happens if you never buy a house?
Take stock of what you own and how your (many? too little?)possessions are influencing you.
Research investing if you come to the conclusion that you want to own somewhere to live, but that a house is not an investment by definition.
Speak to a mortgage broker about what’s available if you think you’re close to being financially ready.
Join the mailing list if you want savings tips direct to your inbox (and a reminder when shiny new things are added to the blog!)
So what do you think? I didn’t even mention inflation, homes as status symbols, or using your home to generate income in future via Airbnb and the like (whoops, I just did).
If you’re set on buying, is it purely an emotional decision? What are you looking forward to most about buying? Let me know in the comments.