Many people believe that renting is ‘throwing money at the wall’ and would rather buy but there are various things to consider while deciding whether to rent or buy?
So, is it better to rent or buy?
Let’s start with listing out the pros of buying first, followed by the cons.
The pros of buying
- You are investing in an asset which may increase over time
- You have the security of living in the property for as long as you want
- You can change and decorate the property as you like
The cons of buying
- You are committed to a mortgage payment which is a big responsibility
- There are potentially more costs to arrange a mortgage such as stamp duty and solicitor’s costs
- The property may reduce in value leaving you with no or negative equity and a loss of savings
The pros of renting
- Easy to relocate if you want to move
- Landlords assist you with repairs and maintenance
- Gives you the chance to get a feel of an area before committing
- You may be able to rent in an area where you cannot afford to buy
The cons of renting
- No investment aspect so you will not benefit from property value increases
- The landlord controls how long you can stay in the property
- You are generally limited as to changes you can make to the property
The costs of buying
As well as your monthly mortgage payment you will also need to consider a deposit, arrangement fees, valuation fees, solicitor’s costs and stamp duty.
First time buyers
Buying a house is a big commitment and you must be honest with yourself about how much you can afford. Banks will have their own affordability guidelines but you must consider what is realistic. If you cannot keep up repayments then your property may be repossessed.