For some individuals, deciding whether to rent or buy can be a dilemma. While many believe buying is the superior option and that paying rent is a waste of money, it may not always be the best choice for everyone. Buying can be a mistake for certain people.
What's Included?
The pros of buying
By purchasing a property, you are investing in an asset that has the potential to appreciate. Additionally, you can reside in your home for as long as you choose. You can decorate, extend, or renovate the property as the owner.
The cons of buying
Paying a mortgage is a long-term commitment, and failure to do so could lead to losing your home. Securing a mortgage can be tough due to the high cost of homes. Negative equity is also possible, meaning your home’s worth could fall below what you owe on the mortgage. Additionally, saving for a deposit takes time and improving your home requires funds.
The pros of renting
If your job is unstable or you’re considering moving, renting can be a good option. Renting allows you to move easily without the expenses of buying and selling a home. Additionally, if you’re uncertain about your current relationship or where you want to live, renting allows you to explore different areas and neighbourhoods without committing to a purchase. Renting may also allow you to live in areas that you cannot afford to buy in. Plus, landlords generally cover maintenance, repairs, and building insurance.
The cons of renting
As a tenant, you must pay rent to your landlord monthly, which may increase over time. Your landlord has the right to ask you to leave at the end of the lease. You are not allowed to make any modifications to the property without permission. Additionally, you will probably have to pay fees to the letting agent.
First time buyers
Saving up for a deposit before applying for a mortgage can be challenging, especially for first-time homebuyers who are also paying rent. Check out our guide on how to save for a deposit to start your journey towards homeownership.
Additional costs of buying your first home
When purchasing your first home, you should be aware of additional charges and expenses apart from the mortgage. These include the deposit, mortgage arrangement fee, valuation fee, legal fees, and stamp duty. Some mortgage agreements may cover some of these expenses for you.
Prepare yourself
Purchasing a house is a significant event that can bring security and freedom to you and your family. However, it is important to ensure that you do not exceed your financial capabilities since failing to make monthly mortgage payments could result in the repossession of your house.
Banks have a limit on how much they can lend you based on their assessment of your ability to repay. However, do not assume that this means you can afford the mortgage. Being truthful about your financial constraints and calculating a realistic budget for your expenses is important.
