Is it better to rent or buy a house? Most of us aspire to owning our own home at some point, but it´s the most important purchase we´ll ever make. So it´s important to make the right decisions. Surprisingly, perhaps, there are some reasons why renting is better than buying, depending on your financial and personal situation. So here are some circumstances when it´s better to rent.
1. No Deposit
One of the top reasons why renting is better than buying is when you don´t have a deposit saved. These days, the best mortgage deals are offered to those applicants who have a substantial deposit; without one, you´ll either be offered unfavourable rates, or be unable to access any offers at all.
2. Little Savings
As well as having a decent deposit (parents are often very generous here), when buying a house you will also need to have plenty of money put by. Not only do you need to factor in the thousands you´ll spend on fees and purchase taxes, but once you “own” a home, you´ll need savings for repairs and maintenance of the house as well. So if you don´t have this, or you´ll have to use all your savings for the deposit, now is not the time to buy.
3. Possible Move
Are you really sure that you will want to live in a particular area, city or house for years? Is there the possibility that you or your partner might have to move for work? It´s a lot easier to end a rental contract than it is to sell a house, so if there is any chance that you might move in the next few years, consider whether renting is more appropriate for now.
4. Market is High
Generally speaking, it´s better to rent if house prices are high. They don´t keep moving upwards, so if you buy at the top of the market, you´ll almost certainly lose if you then need to sell. It´s best to wait until prices drop, so that you can get value for money and don´t have to worry so much about the value of your home falling.
5. No Big Difference
People often want to buy because they see renting as money being “thrown away”. They think that for their rental money, they could be paying the same on a mortgage. If you don´t save a lot by buying (having factored in interest, purchase costs, maintenance etc), then you may be better off continuing to rent.
6. Not Long Term
Never buy a house thinking that you can move in a couple of years. It´s a purchase that should only be made with a view to staying there in the long term. Sell relatively soon after buying, and you´ll lose a lot on moving and selling costs. Plus your house may not have gained in value, or may even have gone down.
7. Job Insecurity
It´s definitely better to rent if your job is not secure. Of course, job security is hard to find these days, and if that´s your situation then buying a house should be the last thing on your mind. Never buy unless you´re sure that you can comfortably meet the repayments under all circumstances, and you´ve taken steps to cover unemployment or long-term illness.
Some people work hard, buy a house when they´re still young, and have an asset when their peers are still out partying. This can turn out in hindsight to be a very smart move. For others, though, buying in their early twenties is not the right thing to do. Saving is smart, but the major commitment of a house purchase is often best left until you´re older and more mature.
There are lots of reasons why renting is better than buying, just as the reverse can also be true. It depends on a number of factors regarding your personal situation and how the employment market and economy are going. Never be carried away by the thought of owning your own home; make sure you have considered every facet first. Do you think that it is better to rent or buy?
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