The biggest financial decision you will ever make is to purchase a home and you need to take a number of things into account when deciding to purchase. For some people renting can be a better option, while for others buying is the way forward. We look at what you need to weigh Up.
Buying a Home
Buying a home is a significant commitment and there are so many things to consider when purchasing a house. Let’s look at the pros and cons:
- It will be your home and you will own it and can sell it as an asset once you’ve paid for it
- Homes often increase in their worth and this allows you to get a larger home, or downsize if you sell it and fund a comfortable retirement.
- Homes are rent free when you retire and so you won’t have to pay any rent and can live for a lot less when without a source of income
- You can invest in the property and increase its value. You can’t do this if you’re renting
- It’s often cheaper to buy than rent over a period
- It’s a large financial commitment and you need to be certain you can afford it
- Maintenance costs can also be significant and you need to be certain you can afford these also. You don’t want to stretch your finances and have no luxuries in life
- It’s harder to sell up and move on than move when renting and there are so many more costs and personal issues to take care of
- If you are married to someone or share a mortgage a split up can cost a lot of money and take a lot of sorting out. In short, it’s a complex legal and financial process.
Of course, you are not always going to be better off financially from buying. Property prices have been known to fall sharply over short periods of time and this can cause all sorts of problems and subsequent need for advice on selling your house quickly. If properties fall they may often return to negative equity. This is where the home is worth less than the mortgage that’s being repaid on it. Alternatively, house prices do quite often make good investments and people tend to do well from them.
Can you Afford It?
You essentially have to make sure that you can buy the home and that it is affordable. There are all sorts of other costs out there aside from the price of the house itself. You will also need to ensure you can afford:
- Legal Costs
- Survey Costs
- Stamp Duty
All of these things add to the price of a house and make it more costly than renting. However, there are plenty of schemes in place to encourage home buying and investing.
So, there is no absolute answer on whether a house is better to buy or to rent, it depends on the individual so look at your own status before you make a decision on this. That’s the most important thing.