Buying or Renting? Which Makes the Most Financial Sense

The dilemma facing many of us at the moment is this: to buy or not to buy? The costs of buying a house are huge, but so are the costs of a lifetime of renting. So what are the positives and negatives of buying and renting, and which is right for you?

Buying or Renting

The Positives of Buying

We’ve been sold the idea for a long time that buying a house is one of the best investments you can make. This remains one of the most compelling reasons to buy. Owning your own home means that you can add to its value by upgrading it. So if you do want to sell, you’ll get more than what you put in. In theory.

Another positive of owning your own home is that it’s yours. Unlike renting you own that property. This is great from the point of view that you can decorate and redesign at will. More importantly, though, it eliminates the need of having to pay for housing.

If you need a loan to pay off your mortgage you need to work out how much you need to borrow. Use a home loan repayments calculator to accurately gauge what you can afford to borrow. Once you know how much your monthly mortgage repayments are, you may find they are similar to renting prices. The difference is, you’re investing in something that yours, rather than someone else’s.

The Positives of Renting

One of the main reasons that people like to rent is the flexibility that it affords. Renting doesn’t tie you down the same way that mortgage repayments do. If you need to move for a new job, or you like to travel, renting somewhere temporarily can make a lot of sense.

Renting also makes more areas available to you. Buying a house in an affluent neighborhood may be out of your price range, but renting is often far cheaper. You also don’t have to pay for any of the work that needs to be done on a property. Most reasonable landlords will replace and mend and broken furniture or sloppy paint jobs. In general, there is a lot less risk and responsibility involved in renting.

So Which is Right For Me?

It really does come down to personal circumstances. There are significant pros and cons of each of the options.

You need to ask yourself some important questions about what the future holds for you. First, consider if you have the savings to afford a deposit and cover legal fees and stamp duty charges. If you don’t, you need to continue renting until you do. Next, ask yourself if you are ready and willing to stay in the same place for several years. If you are then buying a house is a good idea, if you need more flexibility then renting is the right decision for you. If you don’t like the thought of carrying out your own repair and renovation work then renting could be the best option. Finally, consider is security is important to you. If the landlord needed you to move in a month would that upturn your life, or would it be doable?