Accommodation Task Sheet
What is the cost of renting compared with buying? Can you afford to buy a property?
When you see the required. symbol, this indicates that a calculation is
1. Mortgage offers - buying
A mortgage is simply a loan to cover the cost of buying a home. These loans can be repaid in different ways, over different periods of time (term) and at varying rates of interest. Mortgage offers are based on your income.
Annual Gross Pay (A)
(Salary before Deductions)
=
Using your annual salary and some of the following suggested links, find out how much banks and building societies will allow you to borrow. ESPC mortgages – click on the ‘How much can I afford?’ link to use the mortgage calculator. Nationwide Mortgage Calculator Alliance and Leicester – borrowing calculator Royal Bank of Scotland – Mortgage Calculator Bank of Scotland Mortgage Calculator
On a Salary of £16500 I am allowed to borrow in the range of
You may want to think about buying a property with a friend. Your friend earns £20000 a year. The bank will allow you to borrow 4.25 times the amount of your joint salaries. Does this make a difference as to whether you decide to rent or buy? Show your calculation below using this formula: Amount allowed to borrow = 4.25 x (your salary + your friend’s salary) Buying a property with a friend – Yahoo Finance BBC Homes Website
On a joint salary of £16500 and £20000 I am allowed to borrow up to…
Use the following links to find out information on two-bedroom flats in the Edinburgh Area. ESPC Property Finder Edinburgh Estate Agents The Scotsman – Property for Sale
Give information on 3 differently priced two-bedroom flats. Include information on rooms, heating, double glazing and any other features you deem important. Use the table over the page.
Flats to buy in Edinburgh
Lowest Price Mid-Range Price Most Expensive I can afford with a friend
Address
Offers Over/ Fixed Price
Key Features of Property
Using the links on the next page, obtain 3 different mortgage offers and write down your findings in the table provided. They can all be from the same provider. Assume the following: You will be requiring a 95% mortgage (i.e. you have savings to cover 5% of the loan). The term of the loan will be 25 years It will be a fixed rate mortgage paid on a ‘repayment’ basis The ‘Offers Over’ or ‘Fixed Price’ is the price of the property
If you can’t afford to buy on your own, work it out as if you are buying with the friend mentioned above. Use these links to complete the following table: ESPC mortgages – click on the ‘How much can I afford?’ link to use the mortgage calculator. Nationwide Mortgage Calculator Alliance and Leicester – borrowing calculator Royal Bank of Scotland – Mortgage Calculator Bank of Scotland Mortgage Calculator Maximum Loan I can receive on my own salary: Maximum Loan I can receive on a joint Salary:
Mortgage Offers
Low Price Price of Property
(from previous table)
Mid-Range Price
Most Expensive
Loan required = 95% of property price Will you buy on your own or with a friend? Provider (Bank or Building Society) Term
% rate Total Monthly Payment Your individual monthly payment
This should give you an idea of how much you will have to pay if buying your own place, either on your own or with a friend.
2. Flat prices – renting
Use the following links to investigate the availability and cost of renting a flat in the Edinburgh Area. ESPC - Renting Right Move The Scotsman - Renting Use the table provided below to note down 3 different properties for rent in the Edinburgh Area.
Flats to rent in Edinburgh
Property 1 Property 2 Property 3
Address
Price (per month)
Room or whole flat?
Key Features of Property
Think about the advantages and disadvantages of buying and renting and record them in the following table.
Advantages and Disadvantages of Buying and Renting
Buying
Renting
Advantages
Disadvantages
3. Decision time!
Are you going to buy or rent?
Which property are you going to choose?
How much are you paying in rent/mortgage per month?
Why have you made this decision?
You have made a decision to rent or buy based on your income and understand the advantages and disadvantages of both. There are many other costs involved in owning or renting your own property such as insurance, electricity/ gas bills etc. and these will be covered in other task sheets.