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When you’re house hunting for the first time you might be wondering – should I rent or should I buy a property? Making this choice is a big decision. Affecting the amount of money that you have each month, how much you can save over time and your lifestyle, it’s something that needs to be thoroughly considered before you take the leap.
The decision that you make will very much depend on your individual situation; some who have savings might opt to invest in a property because they have the initial down payment and want to put down roots in the area – whereas others might not have the money upfront and want the flexibility of renting. If you’re still unsure as to which one is right for you, here’s some information about both options, along with the pros and cons!
Millions of people around the world rent properties – whether it’s a condo, apartment, house or another type of building. A popular choice for first-time buyers, it’s ideal for those looking to ‘own’ a property for a fixed amount of time. So what are some of the pros and cons of renting?
When you buy a house, you’re responsible for all of the repairs and maintenance that needs to be carried out over time. However, when you rent a property, you don’t have to worry if something goes wrong within the house. If something needs to be fixed, you can contact the landlord – as it’s their responsibility to keep the property well maintained.
However, you must be careful when signing the lease to read all the fine print – as sometimes, landlords will insert a clause that states that you’re responsible for any costly repairs or that they will raise the cost of your rent each month to cover the costs of them.
As aforementioned, people love the flexibility that comes with renting. If you love to travel or don’t want to be in one place for a long amount of time, renting gives you the freedom to do so – as long as you’re not trapped in an extensive lease of course.
This flexibility also allows you to move freely without any penalties when your lease has come to an end. However, one thing to consider with this option, is that your landlord could suddenly sell the property – meaning that you have to find another place to live asap.
Many people think that renting is ‘throwing money away’ each month. And although you won’t, of course, have much savings after renting, you need somewhere to live – so you’re going to have to pay for it in one way or another. By renting, you won’t have to save a huge down payment for your home. You can simply use your monthly income to pay for rent each month.
When you rent, you can have the peace of mind that you know exactly how much you’re spending each month. Usually, your rent will include the cost of the property as well as fixed energy bills – making it easier for you to budget each month.
However, you will also want to consider the other costs associated with renting, including ground rent and renter’s insurance (a type of insurance which protects both your personal belongings, liability and additional living expenses). For the latter, there are plenty of affordable options, including that offered by Amistad Insurance Services, Inc.
One of the biggest pitfalls that come with renting is the fact that you can’t remodel or decorate the property. This inflexibility might make it feel as though it’s not your home. This is perhaps one of the main reasons that people turn towards buying a property – rather than renting. Especially when they plan on raising a family in the home.
You’re Paying For Someone Else’s Home
Another downside of renting is the fact that you will technically be paying for someone else’s property taxes and mortgage. Although rental prices tend to be less than a mortgage payment each month, paying for someone else’s property can be a hard pill to swallow. Even if there are updates/upgrades made to the property when you’re there, you won’t benefit from the return.
Buying a property, whether it’s on your own, with a friend or with your partner is a big step to take. A long-term commitment, it’s something that you need to be certain of before you sign on the dotted line. Here’s some pros and cons that you should consider before making your final decision:
Your Very Own Property
When you opt to buy a property, you can rest assured that it will be all yours. Somewhere that you can add your own touches to, you can truly make it feel like a home. Whenever you want to make any changes you won’t have to worry about asking the permission of your landlord; you’ll be your own boss. This is a very tempting benefit that comes with choosing this option.
You Can Add Value
By making any renovations you can add value to your home. Increasing its resale value, you can reap the extra revenue you get from the sale. You can then use this money to put into your new property. The benefit of this investment makes a very convincing argument when deciding whether you should rent or buy.
It’s A Big Commitment
Although there are many benefits that come with buying a home, as aforementioned, the commitment that comes with it puts off a lot of people. As real estate is considered as an illiquid asset, you might find it hard to sell when the market isn’t favorable. This makes it incredibly difficult to move to a new location quickly.
If you share the mortgage with a partner or friend you should also make sure that you’re both in it for the long run – as some mortgages can last as long as 35 years.
Your Home Can Also Lose Value
Over time, a house could also depreciate. This can be for a number of factors, including the possibility of your neighborhood’s status declining and inflation. Whereas if you’re renting, chances are that the property won’t depreciate over time.
There Are Other Costs You Have To Consider
As a homeowner, not only will you have to budget for your mortgage payments each month. You’ll also have to think about the other costs that are associated with this choice. Here are some of the expenses you’ll have to pay:
Another cost that people don’t often think about is the interest that accrues on your mortgage. Resulting in you losing thousands of dollars, it can be a very expensive additional cost to consider. Which is why it’s so important to calculate your predicted mortgage payments each month by using a mortgage affordability calculator before agreeing to the mortgage terms.
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