Growing up, we’re often painted this picture of the perfect things to aspire to in life, and one of things remains to be buying our own home.
Though that may have been the most sensible thing to do 30 or 40 years ago, more people are now looking at other places to invest their money, and while property is still one of the best places to actually invest, that certainly doesn’t mean that you have to take on a 25 year mortgage and then only see the financial benefits in your retirement after you’ve finally paid it off.
It’s actually pretty unheard of in a lot of places, such as countries in continental Europe to buy a home before ever starting a family, and even then, it’s more common for people to rent.
While some may look at it as throwing money away every month, others look at it as not overstretching themselves to a massive financial responsibility.
First let’s look at some of the pros and cons of buying, before moving on to the same for renting.
Buying Pros:
- You know your money is going towards your future;
- You don’t have to worry about a landlord changing things or deciding to sell;
- You can do as many renovations as you want;
- Once you own your first property, it’s easier to buy another;
- If you sell, you can make a profit and put it towards a bigger place.
Buying Cons:
- You typically need at least a 20% deposit for the down payment, so you may have to save a while to get this before even going to ask about a mortgage;
- If you have a poor credit rating, you may find it difficult to get a mortgage;
- For the first couple of years, most of your monthly payments will be mainly interest, so you won’t really be any closer to paying off your mortgage;
- If you want to move, you have to deal with either selling your place or finding someone to rent it, which may not always be so easy;
- Houses are expensive to run and if anything goes wrong, then you’ll be responsible for fixing it.
Renting Pros:
- More flexibility in deciding where to live – not just what you can get a mortgage for;
- Although a deposit will be needed in most cases, it’s usually only one or two months rent, so nowhere near as high as the 20% needed for a mortgage;
- Credit rating isn’t as important for renting because you’re not borrowing money;
- If you decide to move suddenly, you have to give a little notice to your landlord, but don’t have to worry about a quick house sale or being responsible for the new tenants if you decide to rent it;
- The landlord is responsible for any maintenance and upkeep of things like wiring, plumbing and any major work that needs done in the property.
Renting Cons:
- You’re limited to what you can do in terms of renovations and decorating;
- You’re paying money each month that goes towards someone else’s mortgage;
- Renting is highly competitive depending on the location, so you may not get the place you want right away;
- Renting can be expensive;
- Although you’re protected to a degree, technically the landlord can terminate your lease with reasonable notice and reason at any time, so you may have to move even if you’d prefer not to.
When trying to decide whether or not you should buy or rent a place, there’s no easy or right answer, but there are some things you can do to help you decide the best approach for you.
For example, take into consideration where you are in your life right now, and if buying or renting makes more sense for the short term. If you think you may have to relocate with work in the next year or two, then maybe it would be best to consider renting for a while until you’re ready to make roots somewhere.
On the other hand, if you’re at the stage where you’re getting ready to start a family and you know exactly where you want to live, then the idea of committing to buying your own place may be more appealing to you.
The point is: there is really no one size fits all solution when it comes to buying or renting. It truly doesn’t matter what society tells you to do, what your family or friends think – it’s most important that you do what works for you and suits your lifestyle.
It simply doesn’t make sense to land yourself with a mortgage right now if you don’t think you’ll be living in the same place a year from now.
Sure, you can always rent it out if you have to move, but even that isn’t quite as simple as posting an ad on Craigslist.
Other things you have to consider when deciding to buy or rent is, obviously the cost. As mentioned above, a lot of people are attracted to buying because they feel like renting is simply throwing money away, but if you’re not careful, then buying can be, too.
Buying a condo in the middle of a city is obviously going to cost you far more than a house in the countryside, but if you value the city life and even need to be there for work, then you could consider renting there until you find a place you really want to buy.
Although rents in the city will be far higher than the country, the cost saved in daily commutes may just help you break even, and will certainly be less stressful.
You may also want to consider the type of property you want. If you’re looking to buy an older property you can renovate, then maybe hold off on getting a mortgage in the city for now.
Hopefully these points will give you a better idea of the differences in renting and buying, so you can make the right decision for you. It’s never an easy thing to decide, but as long as you take the different aspects of your lifestyle into consideration, set yourself a budget to work with regardless of whether you’re buying or renting, then you should be able to find the right solution for your needs right now.
