Is Renting or Buying a Home Better for Your Financial Future

Is It Better to Buy or Rent a House?

Deciding between renting vs buying a house is a tough choice. Of course, for many people, there is no choice – affording a home deposit is increasingly out of reach for lower-income households or single people.

If you have the funds available, it is a big decision to choose between buying and renting. It will impact your financial health and future, as well as your lifestyle. Where you live has a huge impact on your future and there are key differences between renting and being a homeowner.

The choice between the two isn’t always simple, and there are big advantages and downsides to each. There’s no simple answer to the question of whether it is better to buy or rent a house. The choice must be made by each individual and requires careful reflection of your lifestyle, goals, and future plans.

Renting a Home

Renting a home is great for flexibility, allowing you to move from place to place with ease. There are many different styles and types of rental property to choose from, so you have ample choice in deciding what is the right place for you at different stages of life. It’s also easier to try out living in different places to see which suits you best. It’s definitely a myth that renting means throwing your money away each month; it is an investment on the flexibility you receive and the peace of mind of knowing you just have to make a call to your landlord for any issues to be sorted out. It is also a fixed payment each month, unlike mortgage payments which can fluctuate depending on interest rates. Owning a home means all the responsibility is on you for maintenance and this can mean big expenses if something goes wrong.

Of course, there are some downsides to renting too. Rents may increase at the end of your tenancy which can be frustrating. You also don’t have the same security as a homeowner, as the landlord may choose to sell the property at any time, leaving you to find a new place to live. There is also the risk that the landlord will put up your rent above your affordability. This is an unfortunate downside to the flexibility you’ll enjoy as a renter. It is also worth noting that your landlord or letting agent will make a massive difference – a responsive and dependable landlord is invaluable. Many people who rent report issues with their landlord, such as slow response times to maintenance or no-fault evictions. However, it is not always possible to know before you sign a lease how dependable your landlord will be.

Owning a Home

Owning your own home has some big benefits – you can make your own decisions on what to do with the space. Landlords often object to even the smallest of aesthetic modifications like painting a property, so being able to put your own stamp on the property is a big plus. You’ll also have the peace of mind and security of homeownership – there’s no one that can make you leave your home and the only person who can decide to sell your house is you. Of course, this depends on you making mortgage payments on time and in full.

Mortgage repayments do tend to be more expensive than rent, so this is worth considering. It is a long term investment and selling a house isn’t always easy. It can take time, particularly when the sale involves other homeowners forming a chain. Though you won’t be answerable to a landlord, you will be answerable to the bank. This means if you fail to make payments on your mortgage it’s possible that the bank would repossess and sell the property to recoup the mortgage funds.

Renting Vs Buying a House

There’s no simple answer to the question of buying vs renting. It all comes down to your own personal goals and future plans. Some reasons you might choose renting over purchasing include:

• You move location frequently, for instance, for work.
• You want to travel – this is often the case for younger people.
• You don’t want to take on debt – a mortgage is one of the largest debts many people ever take on.

On the other hand, buying might be the better option if you:

• Have plenty of savings
• Want to start a family
• Want to put down roots in a particular area
• Want to make the place you live your own with customisation and personalisation
• Want to build your personal equity and wealth

So, making this decision is deeply personal. Many people rent before they buy and so can get a good idea of whether it is right for them.

Buying Vs Renting: What Is the Cheaper Solution?

Again, there is no simple answer to whether renting vs buying is cheaper. Rent is predictable for the duration of your lease, and you know that you won’t be saddled with the cost of repairs if something goes wrong. This is particularly beneficial if something costly occurs, like a water leak or structural repairs. However, your landlord can raise your rent when your lease ends, which may impact affordability.

Owning a home, though it comes with more risk and costs at times, is an excellent way to build your personal wealth. House prices have risen consistently over the years, so within just a few years of homeownership, you will have made a profit on your initial deposit.

Should You Invest in a Home?

There’s no one-size-fits-all approach to whether it is better to buy or rent a house. Ultimately, it comes down to what individuals need. Buying and renting houses both have clear upsides and downsides. Buying a home can be a good investment, but there’s a lot to think about before choosing the right place to live. You’ll also have to be confident you can afford the maintenance and upkeep of your home. It’s not a choice to make lightly – take your time to really think about if it is right for you.

Once you’ve decided if you’re ready to take the leap, it’s a good idea to see how you can manage your finances better – this will help you keep up with mortgage payments while still setting aside money for maintenance. Our blog post on how to lower household bills can help with that. If you need more advice on things like buying and renting houses, home improvement loans or other financial help, contact us today! At Fast Loan, we’re always ready to lend a helping hand.