Rent or Buy? What is right for you?

Here is the most important question faced by many first time buyers – should I be buying a house at all, or is it a better idea to rent?

This decision is a deeply personal one, and there isn’t one right answer. We all are different individuals, and have different needs, motivations and realities. It ultimately boils down to what matters more to you. One way to think through this choice is to go through the key benefits of owning vs renting -

Owning a home

It’s often a daunting feeling when you first sign up to paying a mortgage for 20+ years, but here are some things that you do get in return –

Stability

Maybe you are aspiring to put down roots. Perhaps you want your partner/ family to have a stable lifestyle, not having to move every now and again because your landlord has had a change of plans. Maybe you are employed in something that you enjoy doing and want to continue doing for a while. All of these are great reasons to consider owning a home.  

A sense of belonging

Feeling a part of the community around you. Going down to your local for quiz night. Being part of a running club.  Watching the kids make BFFs at school or at football.  Or simply being close to family or friends. 

Most of us are social, and owning your home can give you a true sense of belonging and foster long lasting, meaningful relationships.

Being able to put your own stamp on your home

Your home is your personal space. Many of us like to add our personal touch to our homes. Dabble in a bit of DIY, decorate your baby’s nursery, paint the walls in bright pastels, add a bedroom in the loft or even get the Dengineers over! Or plant a sapling in the back garden and watch it become a tree? Unlike renting where there are loads of restrictions and do’s and don'ts, with owning - you are the master.

Saving money on an ongoing basis and not throwing it away

This one really hurts personally. Even after I started working and had a good enough income, I rented, …for 12 years! I only wish I knew better then, how much money I was wasting.

Your monthly rent pays for three things. First - repairs and maintenance of the property; Second - interest on the mortgage against that property; Third - paying that mortgage off bit by bit each month. Put differently, your rent is paying all of your landlord’s bills! 

On the other hand, your monthly mortgage amount usually includes a capital repayment component and an interest component, so over time, you end up paying off what you borrowed and owning all of your property outright - a great way to save money. 

At the moment, while interest rates are low, it can actually work out a lot cheaper to buy than to rent. 

Ability to gain from house price increases when held over a long term

A review of UK Land Registry house price index over the last 50 years suggests that although there can be ups and downs, house prices in this country have always appreciated over any 10-year period. So, if your goal is to hold on to your home for a while, there is historical evidence (although we are no crystal-ball gazers) that buying your own home is, financially speaking, a good decision. 

Renting a home

However, there are also some great reasons to rent, rather than buy, which some may be able to relate to better - 

Not being tied down

Renting can be a simple, hassle free and practical option with limited commitment.  

This can be especially attractive if you are yet to find your dream job, are experiencing wanderlust or are waiting to find your perfect plus one and do not want to commit to living in one location.

Ability to change your neighbourhood

Maybe you want a livelier environment. Or live closer to friends. Or perhaps, closer to work, or a particular school for the kids. Or, maybe you just don’t like your neighbour!

When you are renting, these things can be changed with minimal fuss. When you own, it’s harder.

No hassle of repairs/ upgrades to your property

Owning a home brings with it the trappings of having to maintain it – repairs, changes/ modifications, decorating over and over again, and once all is done and dusted, repairs again! 

With renting, there is none of these tasks to do, so there are no extra costs (the rent covers it), no workmen to chase, and you can use your time to do the things you like doing!

Not having to save to put down a deposit

With property prices having risen the way they have since the crisis 10 years ago, it does take a while to build up enough to put together a deposit on your home…often, even after visiting Bank of Mum and Dad…

In such cases, its best to rent longer, save up and wait for house prices to stabilise.

Investing your money elsewhere or simply, living it up! 

It may be that you believe in investing your savings in your business or in other investments. 

Or, you prefer renting in a locality where you want to live and simply can’t afford to buy (Banks typically lend between 4 and 5 times the borrower's predictable annual income).

Or, you simply wish to live it up, and really don’t care about owning, building home equity, or saving for later by scrimping now. 

So, what is right for you?

It’s your life, you have to decide – if the reasons listed immediately above for renting appeal more to you, maybe renting is the right answer for you. We agree, life is more than just obsessing about home ownership, or about what makes more financial sense!

If on the other hand, the reasons listed for owning a home appeal more to you, there is never a right or wrong time, I suggest you see home ownership as a long term choice, and take the plunge. 

Give us a shout if you want our help.  We can help you get a Decision in Principle from one or more lenders, which will give you peace of mind and instant credibility with both agents and homeowners. 

Once you find a property that you love, we can help you complete your mortgage, and you can get on with enjoying your new home!

Thanks for reading!

//05.XI.2018