Thursday 18th April 2024
(information contained within was correct at the time of publication but is subject to change)
It’s a difficult question to answer – whether to buy or rent a home in today’s world. With many different factors that can influence a decision, there’s a lot to consider.
For many, the decision to buy or rent a home is an incredibly significant life choice and both options offer different advantages and disadvantages. Ultimately, what you decide will come down to individual circumstances, life goals, and financial capability. While this article cannot answer the title question for you, we hope to equip you with an understanding of the reasons for and against both renting and homeownership, allowing you to take the necessary steps on your housing journey.
Buy or Rent a Home: Reasons For Buying
Becoming a homeowner certainly is a goal of many in the UK with more and more people taking the appropriate steps to buy their own home. Some benefits of owning a home are obvious, whereas others require more thought and communication to identify. If you would like a clearer understanding of the benefits that come with homeownership, consult a mortgage broker who can advise you further beyond the points highlighted in this article.
Building Equity Towards Complete Home Ownership
Unless you will be buying a home outright, you will require a mortgage to purchase a property. After paying your deposit and moving in, your mortgage term will commence. With every mortgage payment you make, you will be building your equity in the property. Eventually, you will achieve full equity and you will own the home.
This means that at the end of your mortgage, after all of the payments, you will be left with a valuable asset (your home) that is completely yours.
Make It Your Own
When you own your own home, you have the control and freedom to make this space your own. Whether that’s through interior designing, a full house renovation or extension, or just general personalisation. This freedom to control how your home looks and feels, creates a greater sense of belonging and ownership, and is a massive factor for some when deciding if they should buy or rent a home.
Stability and Security
As opposed to renting, homeowners are not burdened by a landlord whose decisions could greatly affect their way of living. This creates a sense of stability and security for an individual, couple or family. Being able to root yourself in a home that you can call your own is a definite advantage that can provide peace of mind regarding finances and lifestyle.
Buy or Rent a Home: Reasons Against Buying
While buying a home instead of renting is seen as the ideal option, there are still some potential challenges that can come with homeownership that must be addressed.
High Upfront Costs
A mortgage deposit is a common challenge among first-time homebuyers and one of the main roadblocks to homeownership. The deposit needed for a house will vary depending on the property and mortgage type but can see hopeful homebuyers paying tens of thousands of pounds. Other upfront costs include solicitor fees, mortgage advisor fees, moving company, and any surveys.
Financial and Lifestyle Commitment
A home is the largest purchase many will make in their lifetime, and it’s usually not a one-off payment to buy a home – it’s a long-term financial commitment in the form of regular mortgage payments. Keep in mind that when borrowing on a mortgage, you will end up paying more than the house's worth due to interest rates. As well as the financial side of things, buying a home is a big life commitment with most mortgage terms being 25+ years long.
Maintaining and Running Your Home
Having and not having a landlord is a big factor in buying or renting a home, and while not having a landlord is seen as a positive thing, it can also be a downside. With no landlord, you will be responsible when there is an issue with your home. This can not only be a financial downside but also take up your valuable time as while you may not be the one physically repairing or maintaining the property, you will have to arrange such assistance.
Buy or Rent a Home: Reasons For Renting
When a person is deciding whether to rent or buy a home, buying is believed to be the best option – and it is what most Brits hope to achieve. To many, renting can seem like a “financial pitfall” on the road towards homeownership. However, for some, renting a home is more ideal than buying, so let’s take a closer look at why that may be.
Low Upfront Costs
As opposed to buying a home, renting a property comes with much lower upfront costs. While you will still need to pay a deposit to rent a home, the price will be considerably lower than that of a deposit to buy. As well as the significantly lower deposit amount, you will typically avoid any costs that are associated with standard property purchases.
Greater Flexibility
When it comes to flexibility, there can be a difference of opinion on whether to buy or rent a home is the better option. With that being said, it may be renting that provides greater flexibility in consideration of certain changes in a person’s life. For example, if you find yourself needing to relocate for your job; needing to move house for a growing family; or would simply like to live elsewhere, renting offers the flexibility to move freely.
Landlord Responsibilities
A big difference between renting and buying a home is the presence of the landlord. Running and maintaining a home isn’t always smooth sailing. Such problems can arise seemingly out of nowhere, leaving homeowners responsible for fixing them. Whereas with renting, it is typically the landlord who is required to deal with such instances.
Buy or Rent a Home: Reasons Against Renting
With the potential advantages of renting highlighted, we must also consider the drawbacks of renting, allowing you to consider if you should buy or rent a home confidently.
No Ownership
The main disadvantage of renting is the fact that if you rent a home, you do not own it and you are not building any equity. Essentially, you are paying someone else (the landlord) for the benefit of having a roof over your head. This fact can lead some to label renting as “pointless”, leaving little to show for a considerably large financial commitment.
Less Security
It’s true that owning a home doesn’t provide 100% security – if a person fails to keep up repayments on their mortgage their home may be repossessed. However, renting a property is typically less secure. While rental agreements and the law keep tenants protected – to a certain degree – there is always the risk that a landlord may decide to sell the property, leaving tenants forced to relocate. Equally, tenants are at the mercy of landlords when it comes to rent increases, which could be raised upon a renewed rental agreement.
Lack of Control
Making a house a home is a massive perk to homeownership – with equity in the property, you can customise, renovate and improve all you like. Unfortunately, the same cannot be said for renting. When it comes to altering a property, tenants are subject to regulations set by their landlord. Usually, if you want to make a change to your rented property, this will have to be agreed upon with your landlord first.
So, Should You Buy or Rent a Home?
Ultimately, to answer this question, it comes down to the individual and these three factors – financials (what you can afford), lifestyle (how you want to live), and personal goals (what you hope to achieve).
Weighing the pros and cons of buying and renting a house is all well and good, but it’s how these points affect your individual circumstances and aspirations that really matter.
What Else Can Help You Decide?
It’s not ‘what’ could help you decide but ‘who’ could help. If you’re split on deciding if you should buy or rent a home, consulting a mortgage advisor could be hugely beneficial. This is because your mortgage advisor can not only assess such factors as the property market and current deals or prices, but they will also get to know you and your unique circumstances.
Norcutt Mortgages: Advice You Can Rely On
We are an award-winning mortgage broker and protection advisor that helps our customers understand their own financial situations and homeownership goals. We can help you explore the topic of renting or buying a home in the UK, leading you to an informed decision that works for you.
Schedule a meeting with one of our expert advisors to get started on your journey to happy home living.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE