Renting vs buying is a question people find themselves going over and over again. One one hand they see the flexibility in renting and on the other hand they wonder what their money could potentially buy them. This brief guide will put the case for each and allow you to make up your own mind on what you think is the best option.
Can you afford to buy a home?🤑
In so many ways the easiest way to go about this is to discount the options before you. Can you even afford to buy a home? If you needed a mortgage then can you afford a mortgage? And if you can't afford a mortgage how long will it take you to get on the property ladder and is it worth the wait?
So many questions and indeed so many things to ponder but luckily there are also sufficient home buyer government schemes to help you get on the property ladder.
To check if you can afford a home you should use a mortgage affordability calculator which will give you an idea of how much you need to save and when you will be mortgage ready if you aren't already.
Home ownership costs✔
Mortgages aren't the only road block to getting on the property ladder. In fact there are other costs to consider such as:
You can use a mortgage cost calculator to see what the total cost will be for the specific property price you are aiming for.
But that's not all, if you have no credit or your credit score is low you will need to build credit to an acceptable level before mortgage lenders will even consider giving you a mortgage.
Once these are done you now have to consider the ongoing costs associated with running and maintaining a house
Once you have done this you will have a good idea if you can buy and when. If buying looks like it is years ahead for you then you should start a property ladder plan and begin saving away your mortgage deposit.
What's the benefit of owning a home?🏡
Owning a home means you own an asset. This is something you can sell if things ever go bad and you end up in a financial dilemma. Assets are critical parts of wealth building.
Owning a home gives you freedom to do as you like to it. Most tenants can't paint or buy new kitchen boards without getting written permission from their landlord as they are on a leasehold agreement.
Owning your home mean you don't have to pay rent. You will of course have paid substantially more than you would have paid in rent prices but this means you don't have to rent all through your whole life. It gives you somewhere to call home and takes any stress away from your shoulders. In some cases it is even cheaper to buy a home than renting for 30 years.
.If your home increases in value you will benefit from this but if your landlord's home increases in value you will see no benefit.
What's the disadvantage of owning?😿
Owning is expensive as you have to pay so many of the costs upfront.
Owning is like an investment, you have to watch the movement of interest rates to avoid getting caught out. If interest rates rise your monthly mortgage repayments will rise if you are on a variable rate. This means you can end up not being able to afford to make the mortgage repayments and losing your home.
If you look at your home as an investment then you might have issues selling it if the housing market tanks
Owning a home comes with much more maintenance costs than renting.
The ongoing costs can be very expensive e.g council tax, home insurance etc.
Homes can become a hassle if you split with your civil partner, wife or husband. The legal ramifications could be enormous and you should seek legal advice before getting into a joint mortgage.