If you are looking to move to a new house, you will be faced with the question of whether you should buy or rent, particularly if you’re moving out of your parent’s place for the first time.
As buying property is a huge investment and commitment, it is not something you should consider lightly and therefore it makes sense to figure out if renting may suit you better.
In the following post we aim to help you make that decision easier by looking at the pros and cons of each option.
Pros of Renting
First let’s look at the positives aspects of renting a property.
- Could afford renting a larger property in a better area than if buying
- Rental charges normally stay the same and are usually cheaper
- It’s your landlord’s responsibility to pay for renovation and repairs
- There’s no risk of losing any money if the price of the property decreases
- Finding a rental property normally takes less time than buying one
- It’s easier to move quickly into a rental property than buying one
Cons of Renting
In addition to the pros, it’s important to think about the cons of renting a property, so you have a more balanced view.
- Property price could increase with improvements, but will benefit only to the landlord
- Landlord is responsible for increasing rent and may decide to do so
- You are required to pay a deposit part of, or all may not be refundable
- It is up to the landlord whether you can make changes, and they set out the ground rules
- You will need to move out if your landlord decides to get new tenants or sells up
- If you never own a property, you will be paying rent for the entirety of your life, even during your retirement
- Rental payments are paid directly to your landlord and do not help you own property
Pros of Buying
Now we’ve looked at the pros and cons of renting, we’re going to look next at the same with regards to buying. First up, it’s the pros of buying.
- Buying in some scenario’s costs less than renting, particularly if you’re a first time buyer.
- No landlord can make you move out because they want to sell
- You can make changes/improvements to the house or flat if you’ve bought it, including landscaping the garden and redecorating the interior
- You are free to follow your own house rules and no a landlord. So, you can have pets if you like and let people stay when visiting you
- It’s possible to make a profit if the prices of properties rise
- Once you finish paying off your mortgage, the property is yours and you have the benefit of rent-free living
- Following nicely from the above, the repayments you make each month go towards the purchase of the house and is not for someone else’s benefit.
Cons of Buying
Now, let’s look at some of the downsides of buying.
- If you miss payments, it could lead to debt, if you miss too many repayments on your mortgage you could be made bankrupt or even have the property repossessed
- If you suffer financial issues, you it may take a long time to move to a cheaper home
- Moving into a bought property takes longer because you must sell the current one first
- Repairs are your responsibility
- If you don’t have a fixed rate, interest rates affect the repayments
- With stamp duty and mortgage fees its more expensive than renting
Overall, there are arguments for and against both. I’d always say buy if you can, so that you own your own house and won’t have the possibility of your landlord asking you to move on, meaning you have to pay all the fees/find somewhere else to live, change your address etc.
Whatever works best for your financial situation will determine which route to take, but it’s good to see both sides before making a decision.