To rent or to buy? It can be a tricky decision for some. The costs involved in buying can be too steep for a lot of people, but others may see it as an investment. So which is the cheaper option?
The pros of renting
When it comes to renting, it can seem like the more affordable option. You'll mainly be responsible for your rent, bills and council tax. The good thing is that if your boiler breaks or another disaster, you won't be have to front the cost, it'll be up to your landlord. There are lots of other pros to renting as well, such as:
- It can be easier for those who can’t afford to save up a huge deposit for a mortgage
- your landlord should be responsible for dealing with any repairs that are needed
- the process of renting is a much quicker process than buying
- you may be able to rent in an area that you wouldn’t necessarily be able to afford to buy a house
- you won’t be tied to a location, so if prices change you could move somewhere more affordable more quickly.
The cons of renting
The main thing that puts people off renting is the feeling that the money they pay in rent will be an investment for someone else, which they could be putting towards a home of their own. There are other cons to renting such as:
- if your landlord decides to sell the house, then you’ll have to move out
- you’ll still have to pay an upfront deposit, which could be a few hundred pounds or more
- you won’t usually be allowed to make changes to the property, such as painting and decorating
- if your landlord does let you make improvements to the property it will only benefit them in the long run
- your landlord can decide to increase your rent.
The pros of buying
The most attractive part about buying, is that you’ll have full control over your home and be able to make improvements whenever you feel like it. Other pros to buying a house include:
- your monthly payments go towards investing in your own home
- once the mortgage is paid off you’ll own your home outright which will lower your living costs later down the line
- any improvements you make can add value to your home should you come to resell
- if you sell your house later down the line you could make a profit
- your family could inherit your property.
The cons of buying
The most obvious downside to getting on the property ladder, is how expensive the process can be. There are a lot of fees involved before you even start living in the property, and these can stack up.
The main costs include:
- the deposit – a deposit on a house is usually 10-15% of the cost of the house.
- stamp duty – this is tax you pay when buying a property, but it is currently only applicable if you are buying a property that costs £500,000 or more.
Aside from the financial aspect, there are other cons to buying a property:
- you'll be paying off your mortgage for usually between 20 and 25 years.
- you’ll need a good credit rating to be considered for a mortgage
- you’ll be responsible for all repairs - which can be pricey
- when you move into a property you may need to pay for repairs or maintenence work to get the place into a good condition
- if you have a joint mortgage it can get complicated if you decide to sell the property and go separate ways
- if you fall behind on mortgage payments there can be big financial consequences
- it can often be a long and stressful process.
The bottom line…
It could be that in the long run, buying may be cheaper as it’s an investment. What you pay towards your mortgage and any money you put into your home, are likely to help the property build in value should you come to resell.
When it comes to it, location and the type of property you buy are a huge factor in the cost.
Renting can be more affordable when it comes to the monthly payments, but again, it depends on where you live – and you won’t get a return on what you pay in rent.
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