Ultimately, whether you should buy or rent really depends on your lifestyle. Here are a list of advantages and disadvantages for renting and buying property.
Advantages of Buying:
If you buy a property with a 25year mortgage you will own it by the time you finish the mortgage. If you rent, you will own nothing, or at least not the property/properties you have been renting.
Buying a house can be a wise investment for the future because property value will increase over time due to economic growth.
As you pay off your mortgage, you are building your equity. The equity ios the portion of the property you own through your payments. Inflation will also increase your equity.
There is a psychological effect of â€œownershipâ€ when you own property; life may seem more secure.
Owning assets like property provides stability and financial collateral- can help with credit rating, especially for when borrowing money.
You can leave your house in any condition you please. The scope for interior design is limitless, as you can decorate your own property to your own taste, regardless of how extravagant or extreme it may be.
Disadvantages of Buying:
Owning a house can be expensive; electricity, water, insurance, council tax, gas and mortgages are all common expenses that come with a home. There may also be unforeseen circumstances that can add to expenses, like labour/materials when something needs repairing.
Economic growth usually causes inflation, especially with interest rates. Your costs can spiral out of control with mortgage interest rates rising. Other utility bills have also increased due to inflation in the recent years.
most people have to get a mortgage to buy a house. Mortgages have very high interest rates, so you end up a lot more for your property than it was actually valued at when you purchased it.
there are no guarantees, the property market can crash at anytime, and you may end up paying more for your house than itâ€™s actually worth. Moreover, you end up selling your home for a lot less than you purchased it for.
Financial trouble from illness or loss of a job
if you canâ€™t keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you’ve built.
Owning a home means you are committed to that property, so picking up and moving away isnâ€™t an easy option. Essentially, flexibility regarding living areas isnâ€™t so great. This can be particularly tough if the environment around your house becomes unpleasant.
Advantages Of Renting:
Cheaper than buying:
Your monthly costs can be less than owning a home. Plus, you didnâ€™t need an initial lump some to move into your rented accommodation, as you do with mortgages.
Moving from location to location is easy; flexibility is on your side. Most tenancy contracts are 6-12months, so the longest you will ever have to stay in one place is 12 months.
Responsibility of maintenance is your landlordâ€™s responsibility. If the heating packs up, or the water pipes burst, your landlord will need to take full responsibility, including the payment of the repairs.
No financial risk
If the property market declines in price, you donâ€™t stand to lose a penny, because youâ€™re not investing in the property.
It is usually a quick process to move into rented accommodation. Landlords want their properties occupied as soon as possible. You can probably move into rented accommodation 2 days after viewing, whereas buying a house could take months.
Disadvantages of Renting:
Shorthold tenancy contracts eventually run itâ€™s course, and the landlord may not want to renew the contract, then youâ€™ll be in a position where youâ€™ll be forced to move out.
Lack of freedom
Youâ€™re living in someone elseâ€™s property, so your landlord may limit how you personalise your house. If you have extreme or obscure taste, you may be preventing from expressing that.
No equity growth
If the value of the property increases, you will never gain equity.
No financial return
No matter how much money you pay towards the rent or decoration, you will never be able to gain any of the money back. Unlike homeowners who have mortgages, youâ€™ll never get a return when the property is sold.
No tax benefits
There are no tax benefits with renting property; only the landlord can get all the tax breaks that are available.
If anyone can think of more points for any of these issues, please let me know. Maybe you could add something based on more “personal” experiences, rather than the common advantages and disadvantages. Thanks!
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.