When you are looking for somewhere to live, it can be difficult to know whether it is best for you to buy or rent a property. Unless you are wealthy enough to buy a property fully upfront, you will have to apply for a mortgage, which has its own terms and conditions. There are both advantages and drawbacks to both choices, and we will explore them here in this article.
Mortgage or Rent?
One advantage of owning a home over renting one is that mortgage payments are usually fixed and agreed upon when you first sign the contract. Rent, however, can change without warning. Landlords can increase rent at any time they want, often exceeding your monthly budget for housing and forcing you to look for somewhere else to live. If this has happened to you, you can contact tenants’ unions for advice.
Taking out a mortgage has the advantage of you not having to deal with the whims of a landlord with regards to rent costs. However, mortgages can in some cases be more expensive than paying rent to live in a similar home. Renting often also includes utility costs (such as electricity, gas, Wi-Fi, etc) included, which can be more convenient for you if you would rather pay all of these bills in one lump sum rather than making calculations for each individual cost each month.
One advantage of taking out a mortgage is that the interest and property tax portions of your mortgage payment are tax-deductible. If you are interested in purchasing a home that is not your permanent residence, such as a holiday home, check out https://www.holidayletmortgages.co.uk/.
Unfortunately, it is not just utilities like gas, electricity, water, and Wi-Fi that make up regular expenses when you own a home. Home insurance is also a regular cost that you will have to pay (if you want your home to be insured against damage, burglary, or other events, that is), and this includes homeowner’s insurance and mortgage insurance. Property tax is another cost that will vary based on where you live and the specifics of your property.
It is not just taxes and bills that you will need to factor into your expenses, however. Unexpected events such as broken boilers, burst pipes, or leaks in the roof can throw a spanner into the works of your finances. When you own your own home, keeping the property and its utilities well-maintained is your job and nobody else’s, and you have to foot any unexpected bills!
Furniture and Contents
Renting a property that is already furnished is pretty easy and common. In comparison to this, buying a property usually means having to supply furniture and utilities yourself – and most mortgage lenders do not offer loans on these expenses! While doing this does give you more control over how you choose to decorate and furnish your home, it also means that you may need to pay significant costs for new furniture. If you already own your own home and furniture that you want to keep, you may have to pay removal costs to move your existing furniture into your new home.
If you choose to rent a property, you may have the option to choose a fully furnished property. This means two things: that you will not be able to choose the furniture, and you will not have to pay for it (unless you damage it, of course). Consider what your priorities are – if your priority is to save money in the short term, renting a fully-furnished property is ideal, but if you are planning to live somewhere for many years and want to really make it your own, renting an unfurnished property or buying your own home may be preferable.
The Housing Market
The housing market is well-known for being unpredictable. At one time in the past, owning your own home was a fairly future-proof financial investment; however, this is no longer the case, and economic shifts over the last couple of decades have made this kind of investment much less stable.
Buying a property is a commitment. If you are in a position where you want to live in the same place for many years, owning your own home can have many benefits. In the long term, mortgage payments can take less from your wallet and leave you the option to sell the property in future. However, if you are in a less stable life situation, such as in a job or relationship that may only be for the short term, renting may be preferable as it is much easier to move away at short notice.
There are pros and cons to buying and renting, but whatever you choose, you should do plenty of research beforehand!