To coincide with the online publication of “How to Buy a Flat” – a book providing advice on buying a flat – HowTo.co.uk takes weighs up the pros and cons of renting and buying property.
One of the biggest decisions people will make in their lifetime is whether to rent or buy a property. If you’ve decided on buying a flat or house, there is nothing more rewarding than moving into your new home, but what are the advantages of buying in comparison to renting?
Buying a home
From your very first mortgage payment onwards, you will start to own a percentage of your property. For example, if you pay a 10% deposit, you will own 10% of your home. As you continue to make your monthly repayments, you will gradually start owning more and more of your property. In time, this equity can even be used as a loan for valuable home improvements or that dream holiday of a lifetime but if you do not want to use your capital, you are sure to pick up an excellent low APR loan. Home owners are offered significantly better loan deals than renters.
What’s the best time to buy?
The best time to buy a house is in your twenties or thirties as it is an ideal way to invest for the years ahead and will free you from having to make any monthly mortgage payments in your retirement.
The Benefits of Owning your Home
There can be nothing more gratifying than owning your own home as it grants you the freedom to make any changes to your property without having to gain consent from a landlord. A home owner is also entitled to some good tax advantages as the interest paid on a mortgage is tax deductable and furthermore the interest rate also decreases over time thus making payments towards your future even more affordable. This huge saving could be used towards a better quality of life in your old age…
Renting a Home
On the other hand, rented accommodation does offer more flexibility and allows a tenant the freedom to relocate quickly and easily. Renting also frees a tenant from footing the bill for hefty maintenance costs.
The benefits of renting a home
For those who earn a relatively low salary or have other financial responsibilities, renting a property can work out much more cost effective than a mortgage and will provide a secure roof for many years.
Many renters feel disgruntled at the fact that they are not contributing towards an investment in the same way as a mortgage payer but the money saved from renting could be used to invest in other profitable areas which in some cases could offer an even better return than a property.
No Negative Equity
Renting accommodation also alleviates the risk of negative equity. This means that if the property market should take a downfall, a mortgage payer could subsequently end up paying more for a home than it is actually worth.
Fixed Monthly Payments
Another advantage to renting is the fact that payments to a landlord are usually fixed for a set period of time whereas a variable interest mortgage will incur fluctuating monthly repayments. These could prove to be a severe strain on finances especially with rising inflation.
On Balance
Many people rent accommodation all of their lives because they like the freedom of relocating at short notice and the reassurance that they will not incur hefty maintenance charges. Others prefer to commit to a mortgage because they want to be part of a long term investment and have the flexibility to mould their homes to their exact requirements.
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