Is it sensible to ‘buy’ a house if actually you are just renting it from the bank or building society?
If your mortgage on a 4 bed house in the Kentish suburbs is £1500 a month, and £1200 of that is the interest,… and you could rent a 4 bed house for £1000 a month, then even ensuring that you save £300 a month (as you were paying off the mortgage) then you would still be a couple of hundred pounds a month better off? Right?
Well… nothing is ever simple and this rather crude example assumes that houses are not increasing in value (Ed- which they are not currently, in June 2012). But it’s enough to make you think, and it’s time to get out Excel or the calculator or a pen and paper depending on your preference.
As mentioned in a previous post, the New York Times rent or buy calculator is another way to get some perspective on the issue
Usual caveats apply: this is general statistical modelling and not specific to your financial situation. Don’t make decisions based on this, but talk to a financial advisor before making any financial decisions.
The point is to consider whether renting is actually a better option? It costs around £10-20k out of your equity for the average house move (sell and buy). Good luck.
photo credit: tifotter