The Rent Vs Buy A Home Debate: Which Is Right For You?

The Rent Vs Buy A Home Debate: Which Is Right For You?

The Rent Vs Buy A Home Debate: Which Is Right For You?

Buying a property is often a major thing every adult has on his life goals checklist. The Rent vs Buy dilemma may occur in two scenarios, let’s consider them. You recently got married and want to move out of your parents’ home. You’re currently living in a rented accommodation and are thinking of investing in a home. Now, if you want to buy, you’ll usually have to take out a mortgage for the funds. If you rent, the headaches are a lot lesser. There’s no long-term commitment and more money in your pocket. To help you come to a conclusion, we compare the Rent vs Buy a home trade-off.

 

Calculate The Costs Of Living On Rent

Tenants enjoy many benefits in regard to finances than home-owners. If you rent a property, rent is likely to be a fixed cost for the entire term of the lease. Any costs arising from home repairs like a leaky roof or a burst pipeline are taken care of by the homeowner. It’s not your responsibility to fix the issues. Also, the landlord will pay monthly water, gas, electricity and internet bills so you don’t have to worry. However, all is not as sweet as it seems. Most leases require you to pay one or two months’ rent and a sizeable amount as a deposit which can total thousands of pounds. With every renewal of the lease agreement, the landlord may increase the rent or decide to sell the property if they have other plans.

 

Calculate How Much Mortgage You Can Afford

The other side of the rent vs buy debate is investing in a property of your choice. As hardly anybody has so much money to buy a house outright, people normally resort to a mortgage. To be eligible for a mortgage, you should have at least 10% of the value of the house as savings. Unless you’re a first-time buyer, significant costs and fees- most notable of which is stamp duty- arise. A mortgage calculator is a functional tool that lets you calculate your monthly interest payments and principal outlay on a particular deal. You can also see for yourself whether you’d still be able to afford repayments if interest rates went up. But, the cost of buying a house doesn’t end with a mortgage. You’ll have to pay utilities (water, gas, electricity, internet) from your own pocket else you risk getting their supply cut.

 

Pros & Cons of Rent Vs Buy

Let’s look at what pros and cons both renting and buying have.

Renting

Pros

Cons

Negligible upfront costs and less paperwork

Landlord may raise the rent or sell off the property

Freedom to move houses and localities easily

Limited choices depending on vacant homes

No responsibility of maintenance and repairs

Packing up and moving home more frequently is a hassle

No worries about falling property value

 

Can’t build equity

Opportunity to build up credit rating (in some cases)

No need to pay property tax

 

 

 buy vs rent

Buying

Pros Cons
Build equity and credit

Requires a deposit, upfront paperwork
No pesky landlord

 

Stand to lose if home prices decline
More stability of schools

 

Utility bills plus mortgage payments
Renovate or modify home to your tastes

 

Paying for repairs and renovation

 

 

Rent vs Buy? – 3 Indicators You Should Rent a Home

Though owning a house gives a boost to your self-esteem, sometimes you may have to lean towards the former in a rent vs buy decision. For one, getting into a lease gives you more leeway than signing up for a property. Indicators you should rent a home are:

  • You’re unlikely to remain in the same place due to a new job, family circumstances or other reasons
  • You either can’t afford or don’t want to bother about maintenance and utility bills
  • Your finances are in a poor shape making you less confident of keeping up with mortgage payments

 

Rent vs Buy? -3 Indicators You Should Buy a Home

If property prices in your area are rising, the rent vs buy dilemma is actually quite clear for you. You should act fast to prevent a home from getting out of hand. Even if you don’t stay long-term, you may earn a huge profit when you sell. Indicators that show buying the most appropriate option for your circumstances are:

  • You can’t move often because your kids go to a nearby school
  • You’re eligible for the best mortgage deals with affordable repayments
  • You would rent whole or part of your home if your finances change

 

Solving the Rent vs Buy Debate

Are You Ready To Buy?

  • Can you pay the 10% deposit from your savings?
    YES- Go to next question
    NO- Look for a Government scheme

 

  • Do you have enough cash to manage stamp duty and legal fees?
    YES- Go to next question
    NO- You’ll need to live on rent till you can afford these extra home-buying costs.

 

  • Do you want to settle down in a house for the next few years?
    YES- Go to next question
    NO- If you wish to have flexibility, you’re better off renting a house.

 

  • Would you like to decorate and renovate your house?
    YES- Go to next question
    NO- Then, stay on rent and leave the costs to your landlord.

 

  • Do you want the security that a home can give in future?
    YES- You’re ready to buy! Why not look at our mortgage deals?
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