With so many complexities, grants, schemes and information out there, it’s no wonder the decision to rent or buy can feel so hard and conflicting.
3 things to consider when it comes to buying vs renting.
- Flexibility.
Want to live by the beach? Big kid gap year on the horizon? Once you have a mortgage it could be more costly to do these things. You might not have the freedom that you had before. With renting, you can usually just give one months notice to your landlord and the world is your oyster.
However, say you’re looking to upgrade your kitchen, give the house a fresh paint, or build that walk-in wardrobe you’ve always dreamt of. If you don’t own the property, the likelihood of this happening is pretty slim (unless of course your landlord trusts your interior design skills).
- Long term goals.
Purchasing a home can mean more financial security and stability. You’re paying off the mortgage to one day own your home, while building up equity. When renting, you are showing financial discipline by paying your rent on time every month but is it for your financial gain or your landlord’s?
Depending on the market, state of the economy and how well your home is maintained – owning your own home could give you a financial gain if you decide to sell. But having a mortgage could also be considered a risk. If your property has decreased in value since you purchased it, it would result in a loss when you come to sell (as it’s worth less than what you bought it for). Meaning you have to find the shortfall from your own resources. So, renting could also be the way to go if you aren’t ready for a long term commitment to the property ladder.
- Cost.
Buying a home isn’t cheap. In addition to the property itself, you need to think about stamp duty, lenders mortgage insurance (LMI), legal costs – the list goes on!
At least when you rent, your landlord takes care of different costs for you, such as the maintenance costs which can stack up quite quickly. Houses don’t stay clean and pristine forever! However, bear in mind that mortgage repayments can often be cheaper than your rent.
So what should you do?
If you think that buying is right for you, getting pre-approval will put you one step ahead of the game. It will help you understand your borrowing capacity and get you an indication from a lender that they will loan you up to a certain amount.
TFC can help you get started today, contact us today.