Deciding whether to rent or buy a home is a common issue for many.
One that has no right or wrong answer. There is a strong case to be made for both options and ultimately, it all depends on your personal circumstances and desired choice of lifestyle.
Generally, buying a property is seen as more cost effective but as house prices rise, the gap between the cost of renting or buying a home is narrowing. At the moment, low interest rates are keeping the cost of mortgage borrowing low, which is attractive for those looking to buy but lending criteria can be strict.
Making the right decision means working out what you would be most comfortable with and can afford. Here are some further questions to ask yourself, in order to reach the right decision:
Is investing in property a priority for you?
Owning your own home through a repayment mortgage means that you are investing in a valuable asset – your home, as well as investing for the future. This is in contrast to paying a landlord and not owning the property in any way. Whilst the value of your property can go up and down, eventually, at the end of the mortgage term, you will own the property. That said, some people have other priorities and rather that invest in property, they may choose to invest in other things or spend thier money in other ways. Consider how important it is for you to ultimately own a property and which sacrifices you're willing, or not willing, to make.
Are you ready to bear the maintenance costs?
It is great to be able to make any adjustments you want when you move into a new home. But owning a home also comes with financial responsibility in regards to maintenance. In contrast, if you are renting a property, the landlord will pay for all decoration and maintenance.
Another advantage is that you cannot fall into negative equity if you are renting and are not subject to the conditions of the housing market.
Have you considered your household budget?
Renting and buying are very similar in the sense that once you have a property, you will need to create and manage a household budget to manage all the costs of running a home, including building a contingency for unexpected costs. You must therefore ensure that mortgage payments or rental amounts are affordable to allow you to pay for everything else. Therefore, ensure you compare and contrast mortgage payments with rent levels, to help make the right decision when you consider your personal finances and circumstances.
How much flexibility do you need over location?
You may know exactly which area you wish to settle in but if you're new to an area, how do you know whether it will suit you? A great aspect of renting is that it enables you to try out living in different areas to see which ones you prefer. If you're happy to move on and try new locations, renting can be a great way of testing an area before you commit to buying or you may feel that it suits you for the long-term – the choice truly is yours!