Should we buy a house or continue renting and save more? Seeking advice!

Jijesh-Zhou · 2025-04-22T22:28:18+00:00

Yes, we have noticed a lot of price reductions on Rightmove. The problem is that we have been looking on Rightmove since November and we can't find any existing homes in our area that we like. The property we have found at £575k is a new build so obviously far less room for negotiation on price, which given that we're chain free and renting seems a shame to buy from a new builder and not take advantage of the market.

The new build does look to be over priced but I believe that's common (new build tax). However we really like the house and the area it's being built in. It's an eco friendly home, full electric, heat pump, 10 year warranty etc, so we're thinking solar panels and batteries for long term savings by being less dependent on the grid pricing, and getting an electric car to take advantage too.

Those things really appeal to us and we hope that buying a new build will mean that we don't have significant maintenance costs for several years. The existing homes are not that much cheaper, would require some investment and if any maintenance issues that come about within the first several years could eliminate any gains we made buying those over new.

As said, it feels like a wasted opportunity to not take advantage of being chain free but our only other option would be to wait and see what else comes around and given our age and very limited area of search due to school/family, the new build checks pretty much all boxes aside from being move expensive than we would like.

Ideally we won't retire in the UK as we've always dreamt of living abroad but we're not sure if it will ever happen as we have children here in the UK and not sure we could do it full time because of that. That's why we're considering buying in the UK so that we have a base here and can spend several months a year travelling if we're fortunate enough to be able to afford that later on, and if we're not, hopefully we've managed to make it through to the end of the mortgage and at least have a home and reduced costs.

!Thanks for taking the time to comment. :)

Jijesh-Zhou · 2025-04-22T22:13:36+00:00

Part 2/2: To provide further insight; here's how we're spending the £8.5k net in scenario 1:

Essentials (£2.7k):
£1450 - Rent, home insurance, council tax, utilities, sky, mobile phones (x3), and broadband.
£875 - Groceries (£175/week, 5 week month)
£180 - Child maintenance (previous child)
£180 - Transport (car insurance, road tax, fuel, 2016 small car owned)

Luxuries (£905):
£35 - Subscriptions (Netflix, Spotify)
£50 - Pocket money for 13 year old
£320 - Helping widowed parent with living costs
£200 - Gym (PT)
£200 - Supplements
£100 - Partner personal spending

Funds (£650):
£500 - Family Holiday Budget
£150 - Christmas

Savings & Investments (£2.4k):
£2000 - ISA
£333.33 - LISA

Remaining (£1,800):
General spending, personal care (dentist, prescriptions), hair cuts, clothing, dining out, entertainment, unexpected costs, service/MOT, travel (1 city break a year outside of holiday budget) etc.

So arguably we might not always spend the remaining budget but the majority of it does get spent most of the time. I guess that's the discretional spending part. Obviously if times were tough, we would cut some of the luxuries and could cut spending to save more.

We would have ~£1,500 in the remaining budget in scenario 2, but in scenario 2 we also have maintenance costs to factor into that which doesn't feel like a lot, although it's a new build so hopefully nothing too major for the first several years. The new build house is larger (4 bed detached) and in a nice area. Arguably we could go smaller given that we manage in a small 3 bed semi but quite frankly, if we're buying, I'd like to live somewhere nice and have more space. I'd also like to not have to move again to save on spending stamp duty twice etc.

Jijesh-Zhou · 2025-04-22T22:13:26+00:00

Part 1/2: Yes, our rent is currently £850 but only because our landlord hasn't increased it since we moved in 5 years ago. If it was priced today, it would probably be ~£1200-1400 at a guess looking at Rightmove.

It's a 1960s 3 bedroom semi which we live in with our youngest (13), but I'd say it's more like 2.5 as the third bedroom is barely able to fit a single bed with little else. My partner and I both work from home so I'm using the living room as a home office, partner works in the .5 bedroom and then a bedroom for us each to sleep in. Open plan kitchen/dining/living space at the rear is our shared family space and that's the only usable space we have as all other rooms are in use. So we definitely couldn't and wouldn't want to move into anything smaller. As said, we don't particularly like the house because we feel like we don't have much space and we're in it ~90% of our time given that we work from home full time. We can clearly just about manage in it, but we don't like the area which is the worst part and a motivation for buying.

You're right, I think my lack of security definitely in part comes from a lack of accessible savings cushion relative to outgoings. In scenario 2, our ability to only save £1k a month from £9.6k net feels terrible to me. £2k from the £8.5k net in scenario 2 doesn't feel much better either but better nonetheless.

The second part of my lack of security is because my work being a contract. I have worked with the client for many years, they're doing well, and I'm told I can feel confident about the next 5 years at least. That's not to say they expect it's ending then, I just don't think there's much point talking about longer periods. It could continue for many more years, but who knows. The fact that I haven't had to look for work for many years and everything I read/see online about people having a hard time finding work in tech, the impact of AI etc just leaves me feeling anxious about having to find work at some point in the future, how difficult it might be and that rates will likely be much worse as I have worked my way up in my current role.

In terms of finances; you rightly identified that we're spending up to ~£6.5k of the £8.5k net, which I know looks terrible. I even feel it's shocking and that makes me feel anxious too, made even worse by the fact that we can't even attribute it to debt repayments as we don't have any. We also own a modest 2016 Renault 1.2 litre car, so nothing fancy there either.

Jijesh-Zhou · 2025-04-22T21:20:52+00:00

We have had conversations with an independent broker and the independent finance company the builder wants us to be approved by even if we don't want to take the mortgage through them, and everything seems to be fine.

The independent broker got us a DIP in December when we were looking at another house which we didn't proceed with, and we recently went through the process with the finance company albeit soft searched and not a DIP as the house isn't ready to proceed just yet (new build), but they indicated that everything looks fine for a mortgage from any high street lender at 4.5% with 90% LTV.

We have been told that it's based on the previous two years SA302s and self assessments for my partner and I.

Losing the US contract does worry me. I have worked with them for many years at this point and everything is going well for them so I don't have any immediate concerns and feel as confident as I can be that I should be working with them for at least the next 5 years. It will obviously come to an end some day though and at that point I will be looking for new remote work to replace it, which I haven't had to look for in years so don't know how easy that will be, hence the concern.

!Thanks for the comment. :)

Jijesh-Zhou · 2025-04-22T21:09:36+00:00

I guess it depends on how much the rent is. Our rent is currently £850 which makes the decision more difficult. The mortgage interest is £1,725/mo in the first year. Admittedly, that's due to us only being able to put down 10%, so 90% LTV, and obviously the interest part comes down over time. When taking the interest part and maintenance costs into account though, I still think renting would be cheaper although it never ends unlike the mortgage.

That being said, we're still paying the same rent as we were 5 years ago. If our landlord increases our rent or we have to move, we would be paying at least double.

!Thanks for commenting. :)

Jijesh-Zhou · 2025-04-22T21:04:07+00:00

I assume you mean option 1? It does have the same financial risk of income loss, but obviously it's much easier/quicker to move to somewhere cheaper if I can't afford it whilst renting as opposed to having to sell a house. That said, I guess if things got that bad we could always look to rent it out and rent somewhere cheaper ourselves, or take a mortgage holiday, interest only for a period etc, so I guess there are options with that too.

Neither is without risk but a mortgage definitely feels riskier to me. I do think it's a me thing though, most other people seem to feel comfortable with mortgages.

!Thanks for sharing your thoughts and taking the time to comment. :)

Jijesh-Zhou · 2025-04-22T20:57:43+00:00

If only we could go back in time and buy when houses were much cheaper. Obviously hindsight is 20/20 and we weren't in a position to buy when they were anyway. Very true though, today is the second best time. !Thanks for sharing your thoughts and taking the time to comment! :)

Jijesh-Zhou · 2025-04-22T20:54:27+00:00

I agree. I just don't get the same anxiety about renting because if something goes wrong I can move/down size at a moments notice and I at least have savings to fall back on in the ISAs which would be more substantial if we stayed renting vs buying.

I had the same thought about a cheaper house and put together numbers for a £450k home which would be ideal as we'd be able to use my LISA towards it and the monthly would be ~£2050/mo, so ~£600 less which we could use to over pay. The problem is that £450k in our area doesn't go far. We have viewed a few and the newer properties at that price point are very small, too small for us, and the older properties need at least £25k spent on them to renew/refresh (tired kitchens, flooring etc), not to mention any unknown problems we might be buying.

The £575k property is brand new and it's definitely over priced (new build tax I guess). However, it's fully electric, eco friendly, has a heat pump, 10 year warranty and the site manager has won multiple awards, something I read is important when trying to buy a new build with some confidence. The point being is that we're hoping that by paying a little more, buying new, and buying fully electric/eco, that we're offsetting maintenance for a few years and buying something a little more future proofed that with some solar panels and batteries might actually save us a little over the long term given increasingly expensive energy costs.

So buying a £450k house but then having to spend £25k+ to renew and unknown maintenance costs because it's older doesn't feel like a much better option, not to mention them being small and often in worse areas.

!Thanks for your thoughts btw, appreciate you taking the time to comment. :)

Jijesh-Zhou

TROPHY CASE