The Telegraph has recently released a calculator, helping first time buyers figure out if financially it's better for them to buy or rent. There are undeniably many benefits of owning your own home, but with the recent housing prices being extraordinarily high here in London, we here at NeighbourBlog thought it best to weigh up some pros and cons for our lovely users.
Buying a home
The main reason we all want our own home, stability. Being able to call somewhere your own, and not having the constant doubt that your Landlord could decide to sell at any time. Owning your own home means you don't have this constant worry, something that with renting we all have in the back of our minds.
2. Live by your own rules
Buying your own home gives you a sense of privacy that you don't necessarily get from renting. You aren't bound by monthly checks from the Landlord/Agency, you don't have to panic if you get a slight mark on the wall and you can hang what you want, where you want! You can live in it exactly how you want to, have as many pets as you can fit in, paint the walls crazy colours and furnish it with your own things. You can live by your rules, rather than an agents or landlords.
3. Cost effective living
Renting over long periods can become crippling financially. With inflation inevitably rising the rent each year, it just ends up costing you more each year.
Where as with a mortgage you are paying it off, rather than the money going to a Landlord. And rather than your mortgage going up such as rent does, over time it will go down. Also, financially owning a house has huge benefits, such as being able to take out secure loans, and being considered more stable by potential lenders. Not to mention, if you have a spare room or an annex, you can rent it out, providing you with an extra source of income.
4. Investing - Not spending
Another bonus of buying your own home is that you aren't paying rent each month to a Landlord or Agency - money you will never see again - you are paying off a mortgage and building equity, so at the end of your mortgage term you can live rent and mortgage free.
Renting a home
1. Flexibility
If you aren't ready to settle down, or if you don't plan on staying in the area long - then renting is the best thing to do. When you buy a home you make a huge commitment to staying put. If something changes and you need to move, it's much easier to wave goodbye to your Landlord than it is to try and sell your home.
2. Budgeting
When it comes to renting you have a fixed rate that you pay each month, you look at it and figure out if you can afford it. If you can? Great! You know exactly what your housing will cost each month (excluding bills!). You know exactly what will be coming out of your account and when. You won't have to deal with additional costs, additional interest like you would when you buy a home. This makes it far easier to build your savings in the long run.
3. Less expense initially
When you go to rent a property, you do have some pretty hefty expenses to pay up front. Usually these include a deposit, reference checking fees and then the agents fees. Say you are renting a property for £1000 a month - the initial costs could get up to £2500 before you've even moved in. This can sometimes be a pretty large amount to cough up out of savings, but the benefit is that the deposit you get back (as long as you return the property in good condition!), so this cost if you continue to rent, should always be pretty much covered by your previous property. And the best bit? It's A LOT cheaper than the initial deposit to buying a property!
4. Less risk
When you take ownership and responsibility for something, there's always a risk of losing it. If anything happens and you can't make your mortgage repayments, there's the possibility of your home being repossessed. Where as with renting, if something happens you can just move to somewhere more within your budget. When buying a house a big mistake people make is they take on a mortgage that they can afford at the time - but not necessarily for the future. The same goes if you take out a loan against your home, you're putting it at a big risk if you can't keep up the repayments. With renting you can keep to below your budget, making sure each month you know you will still have a roof over your head.
5. No maintenance costs
When renting a property, it's the landlords duty to keep the building in good condition. It's not your duty to fix the leaking tap or the crack going down the wall. This saves you from any costs coming up in a case such as flooding. Also if you are provided with furniture, as long as it isn't damage you have done, it is also the landlords duty to replace and or fix the item. When you have your own home, if the boiler goes down - that's something you personally are going to have to find the money for. With renting the only thing you need to care for will be your personal objects - so contents insurance is always a good thing to look at.
Buying a home
1.Stability
The main reason we all want our own home, stability. Being able to call somewhere your own, and not having the constant doubt that your Landlord could decide to sell at any time. Owning your own home means you don't have this constant worry, something that with renting we all have in the back of our minds.
2. Live by your own rules
Buying your own home gives you a sense of privacy that you don't necessarily get from renting. You aren't bound by monthly checks from the Landlord/Agency, you don't have to panic if you get a slight mark on the wall and you can hang what you want, where you want! You can live in it exactly how you want to, have as many pets as you can fit in, paint the walls crazy colours and furnish it with your own things. You can live by your rules, rather than an agents or landlords.
3. Cost effective living
Renting over long periods can become crippling financially. With inflation inevitably rising the rent each year, it just ends up costing you more each year.
Where as with a mortgage you are paying it off, rather than the money going to a Landlord. And rather than your mortgage going up such as rent does, over time it will go down. Also, financially owning a house has huge benefits, such as being able to take out secure loans, and being considered more stable by potential lenders. Not to mention, if you have a spare room or an annex, you can rent it out, providing you with an extra source of income.
4. Investing - Not spending
Another bonus of buying your own home is that you aren't paying rent each month to a Landlord or Agency - money you will never see again - you are paying off a mortgage and building equity, so at the end of your mortgage term you can live rent and mortgage free.
Renting a home
1. Flexibility
If you aren't ready to settle down, or if you don't plan on staying in the area long - then renting is the best thing to do. When you buy a home you make a huge commitment to staying put. If something changes and you need to move, it's much easier to wave goodbye to your Landlord than it is to try and sell your home.
2. Budgeting
When it comes to renting you have a fixed rate that you pay each month, you look at it and figure out if you can afford it. If you can? Great! You know exactly what your housing will cost each month (excluding bills!). You know exactly what will be coming out of your account and when. You won't have to deal with additional costs, additional interest like you would when you buy a home. This makes it far easier to build your savings in the long run.
3. Less expense initially
When you go to rent a property, you do have some pretty hefty expenses to pay up front. Usually these include a deposit, reference checking fees and then the agents fees. Say you are renting a property for £1000 a month - the initial costs could get up to £2500 before you've even moved in. This can sometimes be a pretty large amount to cough up out of savings, but the benefit is that the deposit you get back (as long as you return the property in good condition!), so this cost if you continue to rent, should always be pretty much covered by your previous property. And the best bit? It's A LOT cheaper than the initial deposit to buying a property!
4. Less risk
When you take ownership and responsibility for something, there's always a risk of losing it. If anything happens and you can't make your mortgage repayments, there's the possibility of your home being repossessed. Where as with renting, if something happens you can just move to somewhere more within your budget. When buying a house a big mistake people make is they take on a mortgage that they can afford at the time - but not necessarily for the future. The same goes if you take out a loan against your home, you're putting it at a big risk if you can't keep up the repayments. With renting you can keep to below your budget, making sure each month you know you will still have a roof over your head.
5. No maintenance costs
When renting a property, it's the landlords duty to keep the building in good condition. It's not your duty to fix the leaking tap or the crack going down the wall. This saves you from any costs coming up in a case such as flooding. Also if you are provided with furniture, as long as it isn't damage you have done, it is also the landlords duty to replace and or fix the item. When you have your own home, if the boiler goes down - that's something you personally are going to have to find the money for. With renting the only thing you need to care for will be your personal objects - so contents insurance is always a good thing to look at.
