Borrow up to my eyeballs for a mortgage? I’d rather rent ...Middle East

You would be hard pushed to find someone who has rented over the past few years who says they would love to carry on doing so for years to come.

With renting comes the risk of regular price rises at the whims of your landlord, the prospect of being turfed out of your home, and problems that often go unfixed for months on end – things I’ve experienced first-hand in the past decade as a tenant.

Issues like these are why so many renters have taken the opportunity to boost their chance of owning a home, whether that be using schemes like Help to Buy, taking advantage of savings accounts like Lifetime ISAs, or in some cases, turning to alternative means like shared ownership.

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There are a multitude of advantages to being an owner-occupier: the security, the fact that you are slowly accumulating ownership of an asset, and – with most mortgages – the peace of mind that your monthly payments will stay the same for a set period of time greater than a year.

But with house prices still high and mortgage costs not falling as quickly as hoped, many renters who dreamed of getting on to the housing ladder are finding it difficult to do so.

For people in this situation, such as myself, there is a growing range of mortgage products which lenders claim can help.

Traditionally, banks would lend borrowers up to around four and a half times their income, and a typical loan term for a first-time buyer to borrow on would be around 25 years, with this recently creeping up to 30 years.

But the boundaries are being continually pushed. More and more lenders are offering longer mortgage terms of 40 years – which reduce payments in the short-term, but increase the interest you pay overall – and some institutions are lending well above the traditional loan-to-income (LTI) ratios.

Some are stretching these ratios to around five times income, but others, buoyed by the fact that with long-term deals people have capacity to afford higher monthly payments, are pushing this to six or even seven times annual income.

In some cases, this could even mean buyers paying more than half of their income towards a mortgage.

If this is the key out of the broken rental market, I’d rather keep the door shut – for now at least.

I simply can’t be persuaded that pulling out all the stops and stretching myself to my financial limits with the single-minded goal of getting on the property ladder is worth it.

There are several reasons why.

Taking on borrowing that takes up a huge portion of your income is extremely difficult to manage at the best of times, but if things go wrong – let’s say you lose your job or have to take on extra financial responsibility – then you are left up shit creek without a paddle.

The advantage of being in control of your own home – being able to make renovations and decorations on a whim – simply is not there if all your money is going on to your loan payments. And what happens if you need to afford serious repairs?

Also, if you’re on the edge of being able to afford your mortgage, then the security of tenure – a huge advantage of home ownership – does not exist, and is displaced with a turbo charged anxiety about whether you will be able to meet your payments in the future.

This could happen when you are renting too, and there’s no denying it would also be an awful experience – but you do have a little more flexibility. You can move homes with slightly more ease to cut your costs, without going through the costly process of selling.

The upsides of owning an asset via a long and expensive mortgage also seem seriously reduced to me.

With a longer term – like a 40-year mortgage – you accrue equity far more slowly, so the idea of getting on the property ladder and then trading upwards through building a bigger deposit becomes something of a false economy.

Although many may intend to shorten their term once they have pay rises and enough money to overpay, this is not guaranteed, and creates an extra pressure for you to climb in your career at break-neck speed.

With house prices not expected to rise in a way they have in decades gone by, according to experts, this is particularly important.

You’d possibly get a better return from investing in equities or even a top-performing cash account.

In the past, I got frustrated when people – who almost always own their own home – question the ‘obsession of home ownership’.

But in some ways I’m in partial agreement. Owning your home is invariably better then renting, but doing so at the sacrifice of everything else is simply not worth it.

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