Living costs such as rent rates and housing costs have been on the rise recently making both options costlier than they were before. Naturally, many people are contemplating the two options with a view to figuring out which is best. Open Property Group, who help homeowners sell house fast, have helped us answer the question: Should people aim to rent or buy a home in this current climate?
Long Term Plans
While both options are commitments that need serious consideration, renting a house is clearly less permanent than buying one and for at least the short term, renting can be cheaper than buying as you often don’t need to factor in additional expenses such as home insurance, and potential development management fees. You also don’t want to rush into a purchase and end up dealing with buyer’s remorse. Therefore, if you only plan to stay in a particular location for a short time, it may be better for you to rent instead of signing up for a mortgage that you will only use for a short time.
Your Budget
Your present financial situation may not be ideal for taking on a mortgage. In order to buy a home there are costs such as deposit (usually 5% – 10% of the total cost) and closing costs that must be covered. Perhaps you could rent for a while until things improve and then decide to purchase.
But it isn’t always true that renting is cheaper than buying. In fact, for many renters the accumulative rental they pay over years could purchase a home and leave surplus. It is also true that depending on the price of the home and the mortgage and other factors can be lower than mortgages. The average mortgage in the UK for instance is £750 monthly. But the rent rate paid in some cities is higher than that. What does this mean? Well if you choose to give up a higher priced rental (like those in the cities) with a view to paying a mortgage that falls below the rent rate, you may need to look into a buying a home in a different area.
Additionally, with some landlords now asking for as much as a year’s rent in advance, buying may start to look more manageable to some people. Especially if that payment could cover a deposit and closing costs.
Your Needs and Desires
There are some restrictions that come with rental properties that may conflict with some people’s needs and desires. If for instance you are looking for space that you can remodel and adjust at will, you definitely need to buy instead of rent as most rental agreements will restrict modifications to the property.
Ultimately, the decision to rent or buy a house will depend on your own unique needs, desires and budget.
