Should I buy or rent?

Q I am a 46-year-old teacher. I rent but am considering buying for the first time using a keyworker loan of £30,000. Given the unsettled housing market at the moment, is buying a property a good idea, or given my advanced years is it more economically sensible to carry on renting?

The cost of a monthly mortgage will be £150 more than my rent, for a slightly bigger (though still one-bedroom) property. Would I be better off not using the keyworker loan which ties me indefinitely into teaching and getting on the housing ladder through buy-to-let, or should I just wait it out?

JO

A To answer your point about being tied into teaching, my reading of the rules for keyworker loans at www.keyworker.co.uk suggests they are quite flexible. If you stop being a keyworker, you don't have to repay the loan for at least two years after you are no longer eligible for it. And, if you manage to agree a three-year career break, you could be out of teaching for a total of five years before you had to worry about repaying the loan.

So given that the key worker loan doesn't seem to tie you into teaching indefinitely, I'd say that if you do want to get on the property ladder, you would be better off taking the £30,000 interest-free loan and buying a home of your own rather than going down the buy-to-let route.

And even though the monthly cost of a mortgage is higher than your rent, in the long run, it still makes sense to buy. This is largely because - assuming that you choose a repayment mortgage - once you have repaid the mortgage loan, your housing costs are zero. This is a big advantage if you expect, like most people, that your income will fall when you retire. People who have to carry on paying rent on what can be a much-reduced pension income clearly find it harder to manage than people who own their homes outright and don't have to pay for the roof over their heads.