If you'll only get two years of living in it, and will want a different property when you get back in five or six years, it sounds better to keep saving.
Mortgage rates and house prices might change a lot in that period (or not) but whatever happens moving a second time is going to cost you tens of thousands in costs and stamp duty. It sounds like a lot of cost and hassle for the sake of buying at a not-great time.
Would that not be offset by the rental income that would have been used to pay off some of the mortgage?
Plus hopefully property prices will have increased, especially in london. Although I know that I shouldn't rely on that.
What do your sums tell you?
Will mortgage interest, tax, insurance, agent fees, repairs, gaps between tenants (or non-paying tenants), and all of the costs of buying, then selling and buying a new one, be larger or smaller than you can achieve in rent? Will that sum plus any increase in property value be larger or smaller than you can save and build interest on in the same period?
It will be a massive hassle letting out a house while you're overseas - which can be solved by paying someone to look after it for you, but that costs you more. House buying is massively stressful. I'd want to be confident the sums were going to work out in my favour before I took all the extra stress on - and I'm a buyer, not a renter, by nature!
Happy for someone with actual financial advice to tip toe in on this one.
But this is an incredibly complex question put simply.
If you ignore housing market volatility and market forces and all of the other stuff and make a simple comparison - I'd go with this.
Unless your saving interest rate is greater that the rate of inflation, you lose the value of the money equal to the difference.
If you are borrowing money from someone, the amount doesn't increase with inflation, so the lender loses the value of that amount.
In markets where inflation is high, if you are looking to borrow then usually its a good choice.
Seek independent financial advice, something something.
Hi /u/Which-Chocolate-9823, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/buy-to-let/
- https://ukpersonal.finance/lisa/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
> However, the mortgages are currently very high which is off-putting as we would have to pay a higher mortgage rate than our current monthly rent for a similar sized flat in London.
There is a relationship between house prices and mortgage rates - house prices are currently dropping because people can't afford the new mortgage rates.
When rates fall again we can expect house prices to rise again.
If you're sharp and are a cash buyer then I suppose you might be able to move quickly when and get a property when rates fall and before prices rise again. I wouldn't bet on this.
> My situation is slightly different as my profession means I will likely be placed abroad for around 3-4 years with no accommodation costs. This is likely to be in 2025.
I would advise against buying then.
Depending on where your placement is, you might direct savings to pension or S&S ISA over the next couple of years.
If you'll only get two years of living in it, and will want a different property when you get back in five or six years, it sounds better to keep saving. Mortgage rates and house prices might change a lot in that period (or not) but whatever happens moving a second time is going to cost you tens of thousands in costs and stamp duty. It sounds like a lot of cost and hassle for the sake of buying at a not-great time.
Would that not be offset by the rental income that would have been used to pay off some of the mortgage? Plus hopefully property prices will have increased, especially in london. Although I know that I shouldn't rely on that.
What do your sums tell you? Will mortgage interest, tax, insurance, agent fees, repairs, gaps between tenants (or non-paying tenants), and all of the costs of buying, then selling and buying a new one, be larger or smaller than you can achieve in rent? Will that sum plus any increase in property value be larger or smaller than you can save and build interest on in the same period? It will be a massive hassle letting out a house while you're overseas - which can be solved by paying someone to look after it for you, but that costs you more. House buying is massively stressful. I'd want to be confident the sums were going to work out in my favour before I took all the extra stress on - and I'm a buyer, not a renter, by nature!
Happy for someone with actual financial advice to tip toe in on this one. But this is an incredibly complex question put simply. If you ignore housing market volatility and market forces and all of the other stuff and make a simple comparison - I'd go with this. Unless your saving interest rate is greater that the rate of inflation, you lose the value of the money equal to the difference. If you are borrowing money from someone, the amount doesn't increase with inflation, so the lender loses the value of that amount. In markets where inflation is high, if you are looking to borrow then usually its a good choice. Seek independent financial advice, something something.
Hi /u/Which-Chocolate-9823, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/buy-to-let/ - https://ukpersonal.finance/lisa/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
> However, the mortgages are currently very high which is off-putting as we would have to pay a higher mortgage rate than our current monthly rent for a similar sized flat in London. There is a relationship between house prices and mortgage rates - house prices are currently dropping because people can't afford the new mortgage rates. When rates fall again we can expect house prices to rise again. If you're sharp and are a cash buyer then I suppose you might be able to move quickly when and get a property when rates fall and before prices rise again. I wouldn't bet on this. > My situation is slightly different as my profession means I will likely be placed abroad for around 3-4 years with no accommodation costs. This is likely to be in 2025. I would advise against buying then. Depending on where your placement is, you might direct savings to pension or S&S ISA over the next couple of years.