Choosing whether to buy or rent a property can be a difficult decision, and it is a debate that has been ongoing for many years. Buying your own home is often the biggest financial decision you will ever make, so it is vital that you get it right.
This choice doesn’t just affect the amount of money you will have left at the end of every month, but also your lifestyle and amount of savings you can accumulate for the future. Buying and renting both have their own advantages and disadvantages that should be properly considered.
3 Pros Of Buying A Property
1. An investment and an asset
When you buy your own home, it belongs to you and becomes an asset of yours. You can choose to sell it or rent it out as you please, and once you pay off the mortgage, you own the property outright.
Once you have paid back everything you have borrowed to buy the property, you will only need to pay taxes and insurance. If you choose to sell the property then you will receive all the funds from the sale, so each of those mortgage payments is adding up towards something of your own.
2. Make your own home improvements
Buying your own home means you are free to make any changes to that property that you like. You can redecorate, add an extension, remodel your kitchen or anything else you choose without having to ask a landlord’s permission. Compare home improvement loans on Lending Expert.
3. Build your equity
If your property increases in value after you buy it, then you will make money on your initial investment. You can use the equity from your home to help you buy a bigger home or put it towards a comfortable retirement. Once you have built some equity in your home, you can often use it for whatever you please.
Any investments you make in a property you own will likely pay off if you choose to sell your home later.
4 Cons Of Buying A Property
1. Less mobility
Once you have purchased your own home you cannot just up and leave when you feel like it. If you decide you want to move to another city or country, then you will need first to sell or rent out your property. This can be a lengthy process as there is no guarantee you will find a buyer or tenants quickly.
2. Ongoing maintenance
As soon as you own your own property, you are responsible for all of the maintenance that needs to be done. If the boiler fails or a pipe bursts it is your responsibility to arrange a plumber and pay the bills. There are many things that can go wrong with a property, and all of these things can add up quickly.
Often owning a home can become much more expensive than you first think because of all the ongoing maintenance costs that you might not consider.
3. Property market uncertainty
At some point in the future you will likely want to sell your home and move on to another property. The housing market changes regularly, and there is no guarantee that you will get as much as you bought your house for when you come to sell it.
If you do not have enough equity to cover your moving costs and the mortgage payoff, then you will need to find the money to cover the difference.
4. Expensive upfront costs
When you decide to buy your first home, you will need to have a lot of savings available to pay upfront. You will need to cover the costs of the deposit, surveys, stamp duty tax, legal costs and removal costs before you even begin to think about your mortgage repayments and monthly bills.
Buying a home is a big commitment, make sure you can reasonably afford the ongoing costs as well as the upfront costs.
3 Pro Of Renting A Property
1. More mobility
If you choose to rent a property to live in, you will have the flexibility to up and move when you like. Unless you have a lengthy lease, you will not be tied down or committed to staying in one place for too long, giving you the freedom to move around as you please.
2. Low maintenance
When you are renting a property, your landlord will be responsible for the maintenance of the property. If something needs to be fixed, you can just inform your landlord, and they must arrange for it to be sorted and also pay for the repairs or replacement.
3. Low upfront costs
Renting a property will usually be cheaper than buying your own. Upfront you will often have to pay a deposit and possibly some estate agent fees, but this will be much less than the upfront costs involved with buying a property.
Always double check your contract before signing it to make sure there are no unexpected fees. Some landlords may add in clauses that give them the right to charge you or raise your rent to cover maintenance costs for the property.
2 Cons Of Renting A Property
1. No freedom for home improvements
Most landlords will not allow you to make any changes to the property you are renting. You might not be able to redecorate to make the property feel like your home. Some landlords might allow you to make changes to the property, but you should be aware that you will be footing the bill and not benefit from the investment.
2. Paying someone else’s mortgage
When you are renting you are essentially just paying someone else’s mortgage and property tax on their behalf. They will be the owner of the property and could sell it whenever they please and keep all the proceeds from the sale.
If you are renting and want the security of knowing you can stay in your home for some time, then speak with your landlord about the length of your tenancy. Some landlords will only offer short-term leases, while others will provide long-term contracts.