To Rent Or Buy? The Eternal Question
To rent or to buy? It is a question that every person in their twenties has had to answer at some point. Even if you’re a professional slacker that loves living at home, you know the pros and cons of renting or buying. It is part of growing up, but, unfortunately, it doesn’t get any easier the older you get. There are benefits and negatives to both, and they are almost impossible to separate. Alas, you will have to separate them at some stage. With that in mind, this post deals with the pros and cons of both to help you make an informed decision. You might still not have a single clue what you want to do after reading this, but at least you are on the right path. Here are the most important things to consider.
Do You Want To Own Or Borrow?
Firstly, you need to decide whether you are comfortable living in a house you don’t own. There are lots of people, so you wouldn’t be the first, that don’t like the idea, plain and simple. Instead, they would rather spend a bit more on a property they can call home. After all, you are at the mercy of your landlord if you rent, and that might be a difficult proposition to swallow.
Do You Have The Cash?
The bank will help you to a degree, but you still need a substantial amount of money to secure a mortgage. It is called a deposit, and you can’t secure a loan without a deposit. So, the simple question is: ‘do you have the liquidity?’ If the answer is no, you might have no choice but to rent. If the answer is yes you have more options available. Before you make a final decision, make sure you understand your finances.
Rent Or Mortgage?
A big reason why a lot of people look for houses for rent is because of the mortgage. Unless you’re a millionaire or have millionaire parents, you more than likely won’t be able to pay for a property in cash. And, if you are, why would you want to rent? The odds are high that you will need to ask the bank for a loan, and this scares people. It isn’t hard to see why after the crash in 2008 and the subsequent bad press. Mortgages are complicated, and you need to understand them before you sign on the dotted line. Even scarier is the fact a mortgage ties you down for 25 to 30 years. Once you sign in your twenties, you will have to pay off the mortgage for a long time. As a twenty year old, a mortgage doesn’t reflect a sense of flexibility.
How Much Flexibility Do You Want?
Speaking of flexibility, it is important to think about how much you want in your life. Buying a house not only ties you down from a financial standpoint but also from a geographical one. Anyone that owns a house outright can’t wake up one morning and decide to leave on a whim. As a homeowner, you have a responsibility to your home and mortgage. This might seem a little trivial, but it is far from trivial. People in their twenties are notorious travellers. After all, you should explore while you are still young. If you have any plans to move, or you have a bucket list, to complete, renting is your best option.
Do You Believe In Dead Money?
There is a phrase that you will constantly come across with regards to renting: dead money.’ Dead money is the belief that money you spend on a rental property is money you could spend on a mortgage. As a result, it is a waste. Of course, there is some truth to this theory. Indeed, if you want to buy, why waste money renting a property? But, there is also a rebuttal. The flip side is it isn’t a waste of money if it allows you to do what you want at that time. Sure, you will probably own a house in the future. But, why worry about that when you live in the present? This is without a doubt the biggest obstacle you will have to tackle because both sides make valid points. In the end, it is your decision what you choose to believe.
Everyone dreams of their dream home, and they aspire to their goal every time they view a house. You are probably the same, and it isn’t a bad thing. But, it can affect your decision. After all, you don’t want to buy anything that isn’t up to your standards. The problem comes when you don’t find anything worth buying as your options suddenly become limited, which isn’t uncommon. Instead of making a purchase you don’t believe in, though, you can rent. In this case, it is a good way to keep your options open until you see the perfect listing. Property doesn’t always play ball, so you’ll need patience.
How’re Your DIY Skills?
It might sound like a weird question, but it is an important one. Renters don’t have to worry about DIY and the potential downsides. For example, DIY takes a lot of effort and costs a lot of money. However, a renter just needs to inform their letting agent and they will solve the problem. Owners are different. If you own your house, you have to solve the issue. That means investing in tools, materials, and the manpower to finish the job. Renters don’t always get off easy, though. Yes, it is easy to pick up the phone and make a call, but it doesn’t always work out how you might think. Landlords can take weeks to turn up, even with constant badgering. After all, it saves them money and they get paid in the process. A small issue isn’t a problem, but a boiler breakdown is catastrophic. DIY shouldn’t be a problem, but it is often a problem for owners and renters alike.
So, what do you prefer?