At some point in our lives, we begin to ask if it is time to rent or buy property. Whether you are moving to a new city or starting a family, there are many reasons behind buying your first real estate. While both will require paying off a mortgage, there are certainly pros and cons to each. HomeLendingPal can help you research and apply for a mortgage easily. They use a well-developed platform to hide any information that will identify users and ensure that lenders share accurate guidelines upfront.
Renting Vs Buying
This is an age-old debate that you have probably heard from your parents and relatives. However, the reality is most people have a tight budget that they might not even be presented with the choice to rent or buy their own property. Since the boom of capitalism and globalization over 20 years ago, the housing market followed suit and the price of housing increased drastically. In fact, this increase is probably higher than your wage growth at the same time.
But if you find yourself in the fortunate position to have your own home, there are many considerations to be made. Buying your own home has the appeal of having a land title under your name while renting keeps you free from that commitment.
In this article, we will break down the advantages and disadvantages of each to hopefully shed some light for you regarding your exciting decision.
Advantages To Renting A Home
- It’s a Short-Term Commitment. Being a tenant allows you a short-term lease, even as short as four weeks. This allows you “wiggle room” if you are moving to a new city or country and scoping out the location first before making a long-term agreement. If you don’t like this apartment, whether it’s because of the features or the location, you can easily move to a new one after your contract ends. Better yet, you can sign it for a longer one if you happen to like it a lot. You can also move out fast from any rental vs. selling your own property.
- You Don’t Have to Worry About Maintenance Costs. Since you are just renting, you are not responsible for the long-term maintenance costs of appliances, furniture, basically everything in the house. More often than not, you can come to your landlord for assistance regarding a broken appliance and they will assist you in repairing it vs. you having to replace it completely.
- Renting a Furnished Place Means No Added Costs. One of the best things about renting is not having to worry about building a house from scratch. If you get a furnished place, all your essentials should be there and you can just bring in new things you like, such as plants, more pillows, beddings, and the like.
Disadvantages To Renting A Home
- You Could Have a Difficult Landlord. Unfortunately, some landlords can be dishonest and make it difficult for you to get your full deposit, or pay for extra costs, or increase your rent suddenly.
- No Freedom to Renovate. With most rentals, you are not allowed to make changes to the place such as painting the walls or refurbishing certain rooms.
Advantages Of Owning A Home
- You Have the Security of a Long-Term Home. Of course, nothing beats the security of having a home with your name on it. You can build, decorate, and repair it to become the home of your dreams. All renovations are up to you should you want a home office, a pool, a game room, basically anything, and you don’t need a landlord’s approval to do it.
- You Have Control Over Repair Works. Contrary to renting, you have full control over any repairs in your home. It can also be done faster because you are the one directly organizing it and having a hand on the schedule.
- Land Generally Appreciates Over Time. This is pretty much the biggest selling point from buying a home. If you buy property in an urbanized city or better yet, one that’s on the rise, then your land and property will appreciate and gain value as the years go by. Property prices generally increase over time and you will greatly benefit from this should you decide to rent or sell your property. You have the potential to earn more than what you spent on your mortgage!
Disadvantages Of Owning A Home
- The Mortgage is a Big Commitment. Most people are scared of having a mortgage tied to their name. You will have to factor this in your monthly expenses for the next 15 or so years so you are certain that you can pay off your mortgage on time.
- It Takes Time to Save Up and Get Pre-Approved. Getting pre-approved requires a good credit history from your end, and this takes time. It also takes time to save up for a deposit which goes up to thousands of dollars by now. With house prices rising, deposits are also going up.
- It Can Take Months to Sell a Property. This definitely depends on where you are, but generally, it takes time and effort to sell an entire property. Think of it as the other side of the coin from when you were scouting for a property and a mortgage at the start of all this. So if you need a cash flow urgently, selling property might not be the fastest way to liquidate an asset, unless you are in a city with a high demand.
Generally, first time buyers will opt to rent a house first before buying one. This is mostly because of the smaller renting costs and not having to shell out a large sum of money for a deposit. On average, rent is also cheaper than mortgage repayments (yes, even over the course of 25 years) because of the rising housing market.
There are many risks involved with each decision, so always do some research and consult with professionals before signing your contract. Afterwards, you can enjoy the benefits of renting or buying your new home!