If you have some money saved up and you’re ready to move out of your family home, you are likely facing an important dilemma – to rent or to buy. Sure, renting allows for more flexibility while buying gives you more freedom, but there are plenty of other considerations you shouldn’t overlook.
A recent survey found that no matter where in the UK you live, buying is cheaper than renting in the long run. What’s more, if you opt to buy, you could save upwards of £2000 within just one year. However, despite the long-term financial benefits, buying a home may not always be the right choice, even if you manage to find cheap online estate agents and secure a great deal on the property.
Here we’ll take a look at the key things you should consider before making a decision.
The Pros and Cons of Owning
Owning your home comes with its fair share of benefits and downsides.
Of course, the main benefit is that, once you have completed your repayments and the mortgage term has ended, you will fully own your home and be able to live in it rent-free. When you have your own home, you can live by your own rules. This means that you can have pets, invite guests to stay with you, and make changes to the property without having to ask someone else (e.g. a landlord) for permission.
Buying a house can also be an excellent investment property. If the prices of real estate in your area rise or if you add to the value of your house by renovating and making changes to the interior and the exterior, you could sell your property online for more than you what you originally paid for it.
Still, you should keep in mind that owning a home comes with certain upfront costs like mortgage fees and stamp duty. If you get a flexible rate on your monthly payments, you could also end up paying more if your interest rate increases. What’s more, if you fall behind on your repayments, not only can you generate a sizeable debt but you could even face bankruptcy and have your new home repossessed. It is thus very important to thoroughly analyse your finances before deciding to buy a home.
The Pros and Cons of Renting
As already mentioned, renting allows for a certain amount of flexibility that you don’t get when you own a house. Namely, if for any reason you need to move house, you can do it quickly and with little-to-no paperwork involved. When you’re renting a property, you also don’t have to worry about its market value or invest in repairs and renovations to add to its value – your landlord will take care of that.
Renting a home is also often easier to budget, seeing as rental payments rarely change. Also, in the short run, renting is usually cheaper than buying. This means that, as a tenant, you may be able to live in a bigger house and/or a nicer neighbourhood than you could afford to buy on your current income.
Like owning, renting is not without its downsides.
For one, each month, you will have to set aside money to give to your landlord. Sure, if you buy a home, you’ll still have to make monthly payments, but at least those will go towards owning a home at the end of your mortgage term. Also, every penny you invest in a rental property will be lost if your landlord suddenly decides to get new tenants or to stop renting it out for whatever reason. That’s not to mention that you’ll have to get your landlord’s permission to keep pets or have guests for longer periods of time.
3 Tips to Help You Decide
If you’re still wondering whether or not you should buy a home, here are three tips that will help you make the right decision.
1.Consider Your Savings – When buying a home, you need to pay a deposit, which usually amounts to about 5% or more of the total value of the property you’re buying. In addition to the deposit, there may also be stamp duty and other upfront costs, so you need to make sure that you’re able to pay them before you decide to purchase a home.
2.Consider Your Income, Too – Apart from the upfront costs, you also need to be able to make monthly repayments for the duration of your mortgage term. You thus need to make sure that your salary and other sources of income will be able to cover those costs while still leaving you with enough money to cover your living expenses.
3.Determine Your Needs – If you tend to move house quite often – whether for work or some other reason – you might want to consider renting instead of buying. After all, renting is typically cheaper on a per-month basis and doesn’t involve the extra cost like mortgage and valuation fees and stamp duty. Plus, it’s easier to move to another house when you’re renting.
If you want to save money in the short term and/or tend to move house periodically, renting may be a better option for you. If, however, you are ready to settle in one place and don’t mind paying more upfront in order to save money in the long term, buying your own home could be a good choice.
Buying your own home can also be an excellent investment opportunity if you decide to sell it in the future. If you have decided to sell your house online, Doorsteps can help. Our team of online property agents will work hard to help you get the best deal possible on your property.