In this brief guide, we will discuss the alternatives to buying a house. There are several alternatives to buying a house which you may want to consider.
Alternatives to buying a house
There are a few alternatives to buying a house if you feel the cost of buying a house is too much and are wondering what our alternatives may be.
Live with parents
If you don’t want to buy a house you could simply choose to continue living with your parents. Of course, the issue with this is after a while you may find your childhood room to be too small or if you decide to start your own family you may find it a bit cramped for you, your wife and a kid. The plus side of living with your family is that you may not have to pay rent or any bills as your parent may continue paying this. You will always get a home-cooked meal. Living with your parents is, therefore, a very good alternative to buying a house. In the UK, over 3.3 million people who are aged between 20 and 34 live with their parents. That’s a staggering 26% of the young adult population.
Be a property guardian
Every now and then you will see an ad out for a property guardian. Property guardians could be very good alternatives to buying a house. You will still have to pay rent but you will essentially be living in a property at a much-reduced rent and all you have to do is ensure the property is kept secure, report any problems such as leaks, damp etc to the landlord and that’s it.
The issue with property guardians is that they have fewer rights than a tenant on an assured shorthold tenancy agreement. As long as you are happy with this then you should be fine.
Live with friends
Living with friends is another very good alternative to buying a house. You may have made a group of friends at university and luckily you all work in the same city. Living together and splitting rent payments could be a very good option but it cannot be looked upon as a long term option as your friends may eventually want to set up families of their own and move into a more suitable home.
Live on a houseboat
A good alternative to buying a house will be to simply live on a houseboat. Houseboats are much more common in the UK than they used to be and with house prices rising even further they are seen as a good alternative to buying a house. The issues are you will find it very hard to find a permanent mooring in London and this means you will need a cruiser license which could set you back at least £850 a year. You will also have to then move every 2 weeks. This can be a bit of an inconvenience for most but having to empty your toilet every now and then will also be a huge roadblock for many.
Houseboats are also significantly cheaper than houses with an average houseboat going for £25,000.
Buy a mobile home
Mobile homes could be great alternatives to buying a house as they are much cheaper than a typical house. You pay less to have them at particular sites and you can always move without too much drama and fuss.
Join the church and live in the church
Another alternative to buying a house is to join your local church. A lot of local churches will provide accommodation for their staff within the Church quarters.
Join the army and live in the barracks
Another very good alternative to buying a house is to join the army, or navy. You will be allocated accommodation within the barracks and this will prevent you from buying a house. Should you decide you later wanted to buy a house you will also find that ex-armed forces members are given priority on a lot of government schemes and grants to buy a house such as the Armed forces help to buy Scheme.
Travel the world and work as you travel
Another alternative to buying a house is to simply travel the world, get local jobs and live in your van or at hostels. This may be your kind of holiday or maybe not.
Of course, if you do not want to buy a house then a good alternative is to simply rent. A lot of people, of course, will query if renting is better than buying a house. The answer you get will depend on who you are talking to but generally, in the long run, buying a house seems to edge this argument.
There are a few disused properties which could be good alternatives to buying a house. Disused properties such as bunkers or old storage units could be converted into dwellings for a much reasonable price than having to buy a house.
You may need to get planning permission on any work you want to do on the disused property.
You may also need to get a mortgage to purchase the property. If this is the case, you may want to consider using a mortgage broker.
Garages are slowly coming into the fray as dwellings and they make good alternatives to buying a house. You will have to consider running water and electricity to the garage but the person renting it to you should figure this out for you.
It became legal to convert garages to domestic dwellings since 1 October 2008 without requiring planning permission. The work must be internal and not involve enlarging the building. You may still want to check with your local planning authority as their policies may have changed
You could rent a garage or buy it and if you are buying it you may want to use a conveyancer to ensure everything goes smoothly.
If you choose any of the above alternatives to buying a house you may find you have extra income waiting in the wings. This means you should be able to invest in your retirement, invest in a buy to let or even invest in a property ISA to benefit from the rising property market(if it is rising)
FAQs: Alternatives to buying a house
Is it better to rent or own a home?
Owning a house seems like the better option in the Long run but many will agree that renting when house prices are at their peak is always a good idea.
What are the pros and cons of renting or buying a home?
Pros of renting:
Less annual tax
Easy to move
Cheaper over the same period
No risk of depreciation
No risk of negative equity
No huge mortgage deposit required
The opposite of the above and the cons of buying
Cons of renting:
Costly in the long run
Cant make huge changes to the house
Won’t benefit from property price growth
The opposite of the above are the pros of buying
What are the disadvantages of owning a home?
The disadvantages of owning a home:
Possible negative equity
High utility bills
Huge mortgage deposit needed as a down payment
Huge maintenance and renovation costs
Harder to move
Buying a house
If you decide that there are no alternatives to buying a house and decide to go on and buy a house then you will want to use a mortgage broker.
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
Government schemes to buy a house
Some of the government schemes available which you may be able to use include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
In this brief guide, we discussed the alternatives to buying a house. If you have any questions or comments please let us know below.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.