Should I rent or buy my home?
August 1, 2017
If you are considering your next move you may be wondering whether it is best to carry on renting or get on the first rung of the property ladder. There are some advantages and disadvantages to both, and which is best for you will depend on your own personal circumstances, so we hope our guide below will give you some food for thought and help you decide.
Advantages of renting
- Renting gives you the freedom to be upwardly mobile. It is quicker, easier and could be less costly to move home again if you rent, which could be an advantage if you are not sure whether you will like living in a particular area, or you need to be flexible to move where the best job opportunities are.
- You don’t need to worry about home maintenance. If a pipe bursts or the boiler breaks down, simply phone your landlord and they should fix any issues for you.
- If the value of the property drops, this is not your problem, your landlord has to take the hit.
- It will be easier to go your separate ways if you move in with a partner or housemate and things don’t work out.
- You won’t have large costs associated with moving – all you will need is a deposit, normally one month’s rent up front in most cases, which as long as you take good care of the property you should get back at the end of the tenancy.
Disadvantages of renting
- The obvious disadvantage is the property will never be yours, and you are paying the rent to line your landlord, with no long-term financial gain for yourself.
- You will probably have very little, if any, say in how the home is decorated.
- The landlord could increase the rent at any time, or serve you notice and ask you to vacate the property.
- Some unscrupulous landlords may not be reliable about things like addressing maintenance issues in good time, or having the right health and safety checks in place, which could put you and your family members or housemates at risk.
- If you are an animal lover, you might find it hard to find a landlord who also loves your pets and will allow you to keep them at the property.
All things considered, it may be time to buy…
Advantages of buying
- Buying a house is an investment that will normally gain value over the years. Even if the property market takes a dip, over the long term most property will make a profit, and with interest rates currently low on savings accounts, property could give far greater returns in the future. If you buy in the right area at the right time, you could get lucky and make a lot from a house purchase that gains a lot of value over the years.
- It may seem a long way off, but if you take out a mortgage you will eventually (normally in about 25 years) own the property, and then there’s no more mortgage payments, the home is all yours! This will give you financial security and less pressure to earn a lot of money in later life, so as you get older you can slow down and take things a little easier.
- If you own the home you can make the rules. You can do whatever you want to it (planning permission allowing of course). You can own pets, decorate it however you like, knock down walls and extend the home to create more space and add value.
- Your home is an asset that forms part of your estate, which if you have children will be something to leave to them in your will.
Disadvantages of buying
- There are lots of costs involved in buying a home, so you will need to ensure you have enough funds. Most mortgages will require a deposit of between 5% – 10% of the value of the property. On a home worth £200,000 that can be £10,000, then there’s stamp duty, solicitor’s fees, estate agent fees and surveys – it all adds up to quite a significant sum, so you will need to do some serious saving.
- Home maintenance is your responsibility, so if something goes wrong it is you who has to arrange repairs and foot the bill.
- You may have found your dream home but can you really afford it? Mortgage lenders will want to see proof of a regular income to demonstrate you can afford to buy the home. To check whether or not you can afford to pay a mortgage, try this online checker.
- If interest rates go up, your mortgage payments will also go up, so if you want to avoid this you might want to consider taking out a fixed rate mortgage.
- If you decide to move home again, it takes a lot longer and costs more money if you own it than if you are renting. You will have all the fees outlined above to pay, and for most people you will need to sell your home before you are in a position to put an offer in on anywhere else.
- If you have bought with a partner or friend and then one of you wants to get out, things could get complicated!
In the worst case scenario, if you get into financial difficulty and fall behind with your mortgage payments, you could become bankrupt and your home may be repossessed.
We hope the above guide has been helpful, but if you need some further help and advice, why not call us for a chat? We’d be happy to help.