When we get to the point where we want to leave the parental home or we have just left university then we will need to think about whether we want to rent a property or buy one. It is a very important decision because there are advantages and disadvantages to both.
Buying a Home
- If you buy a home, once you finish paying for it you will not have any regular payments to make. This means that when you retire, for example, there will be no concerns about having to pay money out each month for rent. It will also mean that it is likely that you will pay out less during your lifetime compared to someone that rents a property.
- If you own a home you will be committed to a mortgage. This could be quite big and you will have to repay it each month or else the house will be repossessed. You will need to make sure that you do not take on a mortgage that is too expensive for you, that you will be able to afford the repayments. You will also need to be careful that you take on one that you will be able to afford even if the interest rates go up. So when you are looking at mortgages make sure that you find out how much you will be repaying each month and work out whether you will be able to afford those repayments and whether you could afford them if they go up.
- If you own your own home you can decorate it how you wish and do refurbishments and things like that which means that you can really put your own stamp on it.
- If you buy a home you know that you will not be moved on suddenly if the owner decided to sell up, which can happen with a rental property.
Renting a Home
- When you rent a home, you will not have anything to show for the money that you have been paying out. However, if you do not know an area well or feel that there is a possibility that you may relocate, then it can be much more convenient to give a few months notice rather than having to sell a property before you can move. Sometimes having a house can actually be quite a burden.
- Rent may go up from time to time but you will have to be given notice. This means that you will have chance to be able to move to a different rental property that is cheaper. If you have a mortgage, you may be able to change to a different lender, but this will take time to organise and you may be tied in to the one you are with anyway. You might also find that rent may not go up when interest rates go up anyway, but it is very likely that mortgage will unless you have a fixed rate.
- Although you cannot do refurbishments in your home, you will save money by not doing this. You might be allowed to decorate in neutral colours and your landlord may even pay for the paint if you ask them first. Refurbishing may not be necessary anyway in your rental and you may prefer not to have all the hassle and dust when doing it.
- There is a possibility that you can be move don if the owner wants to sell, but you will usually get a reasonable amount of notice for this. It is likely that there will be plenty of rentals around so you can find something that will suit you. It might even be an opportunity to find something nicer.