When it comes to finding your first home, or even a new home, you will be faced with 2 clear choices, rent or buy, it can be a difficult decision to make and one that should be carefully considered from both a financial and lifestyle standpoint. The decision whether to rent or buy will very much depend on your home life, your finances, your location and your plans for the future. If you aren’t sure which way to go then here are some pros and cons of renting vs buying a new house.
Many will tell you that renting a house is ‘dead money,’ that after years of staying in a rental you have nothing left to show for it, whilst this is true in a sense, it doesn’t tell the whole story, let’s take a look at the pros and cons of rentals:
- No responsibility for maintenance or repairs, you may pay a monthly fee fro maintenance but everything will be covered by the landlord or housing agent.
- No worries about property value, it can go through the roof or collapse and you will be entirely unaffected.
- Easy relocation, if you decide on a new place to live or want to move away then you would usually just need to give a month or two notice.
- Credit check for renting is less strict than when you buy a house.
- Lack of control over what you can do inside the property, renovations or redesign rules may be strict.
- You won’t be gaining any equity, at the end of the rental you will have spent a lot of money and end up with nothing.
- You have no say over an increase in housing costs.
- You aren’t guaranteed an excellent landlord so if problems arise you may have to wait a while to have them fixed.
For many, owning their own home is a dream come true, not only will you have a great asset from a financial point of view but you will also have a place that you can call your own. Location is very important here and some who live in bigger cities simply can’t afford to buy, with that in mind let’s take a look at the pros and cons of buying:
- Option to boost equity, not only do your mortgage payments decrease over time, giving you more equity but you also have the option to add equity to your home through renovations.
- You have full autonomy over any changes that you wish to make.
- Potential for rental income if you so wish.
- Sense of belonging and a sense of community, you will have put your flag down somewhere and will become part of the surrounding community.
- Potential to make money on the sale of your home if property prices increase.
- Potential to lose money should property prices fall.
- All maintenance and responsibility to fix things in the home fall on your shoulders.
- Required to buy all furniture and decorations, a lot of cost in your first few months in the home.
- Lots of up front costs to be paid if you’re opting for a mortgage.