Buying Versus Renting a Property
Buying a property is considered one of the biggest financial decisions one will ever make. Is it the right decision for you right now – or would you better off renting a property than buying it? Buying versus renting a property to call own home is a huge decision. So it’s important to weigh up the pros and cons of buying a property to decide whether you’ll be pursuing it or drop the plan and rent instead.
Benefits of buying your own property
- Once mortgage is paid off the property will be yours and you won’t have to worry about paying rent and to constantly look for a place to live
- If the property increases in value, you could use the equity to help buy a bigger home or add to a comfortable retirement fund
- Spend money improving your home can increase its value without having to ask a landlord when renting
- If you find a good property with a good price, you will find that it can be cheaper to buy a home than rent
Potential downsides of buying and owning a home
- It’s a big commitment – you need to be sure you can afford the mortgage and the maintenance of the property you’re taking on.
- When interest rates rise, your repayments will go up. It’s important you’re prepared for a rise, and that your income can also cover it.
- It might not always be easy to sell your home, depending on what’s happening in the market
- You need to be sure you can afford maintenance costs like fixing a broken boiler or leaky roof
- Stretching your budget when you buy you might not have money for meals out, holidays and entertainment – that means budgeting in other areas will be affected.
- If you’re living with someone and split up, deciding what to do with the property can be complicated and expensive
- If the value of your home falls, you might be unable to sell if you owe more to your mortgage lender than your home is worth
- You have less flexibility than when renting. For example, selling up and moving is more expensive as you have estate agency and legal fees to pay
Can you afford to buy?
The first step towards buying a property is working out whether you can afford it. Compare this with the upfront and ongoing costs of renting when deciding whether to rent or buy. If you can’t afford the costs right now, think about setting up a savings plan to help you reach your goal. But in the meantime, renting a property is your best option.