Home LifestyleHome, Design & DIY Renting Or Buying A House – Which Is The Best Option For Families?

Renting Or Buying A House – Which Is The Best Option For Families?

by Author: Jade Lloyd

Which option is best for you, renting or buying?

The world and their mother are buying homes.  And, you’re wondering if you should stop renting and buy a house too. There’s no quick answer to whether you should rent or buy. Some people can’t wait to get on the property ladder, whilst others prefer to rent. There are strong arguments for both. When making big life decisions it can be helpful to devise your own scoring method for making balanced decisions to weigh up advantages and disadvantages of each option. You can then add up the total and see if this gets you any closer to helping you decide.  Don’t think of it as a chore, and you can get the family involved. For example, Solution made a fun example of choosing what superhero would make the best guarantor for a loan. Not all pros and cons have equal importance and make sure you also do your research.

The benefits of both renting and buying will vary depending on your circumstances.

#Consider your personal circumstances.

You should consider the following when deciding whether renting or buying a home. is best for you.

Job stability. How secure is your job? Do they have sick pay and redundancy? Are you likely to want to change positions in the next couple of years? Make sure you have enough income to pay for the mortgage.

Are you considering relocating? Are you likely to be transferred in work the next two to three years? Are you considering emigrating? Would you prefer your children to attend school in a different area? If you don’t love where you live, why would you buy a house there?

Life plans. The future may be vague but do take into account if you are planning any big changes, like weddings, more children? Buying is long-term choice.

Check your bank account. Buying a house is a big financial decision, and you need to make sure that it is the right choice to make.

#Can you afford to buy?

Before you start the homebuying process, work out if you can afford all the costs that are involved.

If you can afford to buy will depend on:

  • How much you can borrow for a mortgage.
  • How much you can put down for a deposit.
  • Probably the biggest barrier to homeownership is the upfront costs that come with it i.e. legal fees, stamp duty, survey costs etc.
  • If you can afford your monthly repayments. If you are thinking buying in the current market you must keep in mind how rising interest rates would affect your monthly payments. Fixed rate deals remain the best way for borrowers to protect themselves against this uncertainty, but they don’t suit everyone’s financial situation.
  • Owning your home also means you’re responsible for ongoing maintenance costs.

#Let’s weigh up the pros and cons of renting or buying.

Here are some reasons to consider when looking to rent or buy:

Benefits of owning.

  • It is an investment. If you own your home and have a repayment mortgage, rather than interest only you are creating an asset rather than ‘dead money’ going to a landlord. Whilst the value of your property may go up (building equity) as well as down, at the end of the mortgage term you will own the property outright and live rent free.
  • You can spend money improving your home and increasing its value without having to ask a landlord’s permission. You will never have to move because the landlord is selling. Read our post on the must have tools you need when buying a home. 
  • Sometimes it can be cheaper to buy than rent. Even though house prices have risen significantly over the past few years, average rents have also soared while the cost of mortgages has fallen.

Downsides of owning.

  • It’s a big commitment – you need to be sure you can afford it. The deposit, the upfront costs, the monthly coasts. When interest rates rise after the fixed term, your monthly payments will go up. You also need to be sure you can afford maintenance costs like fixing a broken boiler or leaky roof! Is it best to buy an old or new property? 
  • You have less flexibility than when renting. For example, selling up and moving is more expensive as you have estate agency and legal fees to pay. It might not always be easy to sell your home, depending on what’s happening in the market.
  • If you’re living with someone and separate, deciding what to do with the property can be complicated and expensive.
  • Moving can take a long time, especially with second steppers because you have to sell your home first.

Benefits of renting.

  • Renting allows you the flexibility to choose where you would like to live. There are a lot more choices in the rental market. Once your minimum tenancy period expires this allows you to move to a new property or new location.
  • Finding and renting a home is quicker than the process of buying.
  • It is a better option if you do not have a lot of savings. You are not tied into a mortgage and therefore cannot fall into negative equity. Deposits are smaller, usually the same as one month’s rent + £100. A Guarantor can agree to cover any rental payments you miss if you do not pass credit checks. Some rentals are furnished, and many include white goods.
  • As a tenant it is the responsibility of your landlord to maintain the property, pay for decoration and its upkeep. Though if you do want to decorate, get permission and check out our 8 tips to transform your living room. 
  • You may be able to rent a bigger home in a nicer area than you could afford to buy.

Downsides of renting.

  • A Landlord can raise rent whenever your tenancy agreement ends which often happens annually and there is the risk, they may wish to sell the property. Once the minimum term lease ends some agencies only need the landlord to give a months’ notice to evict tenants. You may then have to move multiple times. Each time you will have to pay the estate agent an initial fee.
  • Your landlord can set rules and restrict changes you can make to the property. Also, some landlords won’t allow pets or children, so starting a family when renting might be tricky.
  • If you’re renting, you will not be building any equity. The money you pay in rent is going straight into the landlord’s pocket. Over the years, you’re paying a lot of money towards something you’ll never own.

Rental is usually cheaper short term but it’s worth looking at the average costs for both options, to decide which is best for you. Use an online mortgage vs rent calculator to help decide. When you do decide on renting Or buying, we have some handy tips on making moving home with a family easier. 

By keeping the points above in mind and making informed, strategic decisions, you will have a much easier time finding a terrific home.

 

 

 

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