To buy or rent? What you need to consider
Buying your own home is a big financial decision and one you need to approach with your eyes wide open. There are many things to consider and you’ll need to weigh up the pros and cons carefully before opting to become a homeowner.
RENTING GIVES YOU FLEXIBILITY, BUT YOU PAY FOR IT
Renting your home gives you a roof over your head, the flexibility to move on pretty much when you choose and has the added benefit that you aren’t generally liable for any maintenance costs. However, the downside is that you aren’t building up valuable equity in your home. Buying gives you a growing stake in your property and means that if it increases in value you make a profit. You also have the satisfaction of knowing that when you’ve finally paid off your mortgage, you’ll own your home outright. Is buying a property right for you? Here are some questions that can help you decide.
IS IT CHEAPER TO RENT OR BUY?
In the short term, it can be a cheaper option to rent. The rent you pay could be cheaper than the cost of a mortgage. Also, the deposit for a rental property can often be much less than the deposit required to purchase a property. However, the mortgage market is currently very competitive and there are some good deals available. We can advise you on what type of deal might be available for someone in your financial circumstances.
WILL YOU BE ABLE TO AFFORD TO OWN?
Saving up for the deposit is only the first step. You and your mortgage lender will need to be certain that you can budget wisely and will be able to afford the monthly payments now and in the future. You will also need to have enough cash available for other home buying expenses like survey costs, legal fees, stamp duty (payable on properties with a purchase price of more than £125,000 in England and Wales, and LBTT above £145,000 in Scotland), plus moving costs. You’ll need to consider all the ongoing expenses that come with home ownership, like buying furniture, utility bills, insurance and maintenance costs.
WHAT ARE YOUR OTHER FINANCIAL GOALS?
Whilst buying a home is a major goal, it won’t be your only one. Everyone should have a financial plan in place that takes care of important things like saving for the future and making provision for retirement. For instance, if you’re thinking of setting up your own business or pursuing other interests or dreams, you might want to prioritise these goals over buying a home for now.
If you would like some professional advice, do get in touch.
Note: as a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.