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Owning a home has clear advantages over renting, such as the benefits of having made a long-term investment. But getting on the property ladder remains beyond the reach of many people and, even if you can, it's important to pick the right type of property, a good location and to get your timing right. Of course, owning a home can create huge additional expenses. A well-managed rental property, on the other hand, will be maintained by your landlord or real estate agent. Though for some people, this is small compensation compared to owning their own property. There is no denying many people would prefer to own a home. |
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While there are no guarantees with owning a property, there is the likelihood it will rise in value and, even if you decide to leave it, you have the option of selling or becoming a landlord yourself, and hopefully making a good profit. Of course, there are reasons why it makes sense to rent. If you are uncertain of where you want to live or are about to move jobs, renting is far more flexible. Renting for around six months can also be helpful if you want to get to know an area and to investigate schools, for example. If you have sold a property and decide to rent, you then attain first-time buyer status and are not trapped in a chain, which can be beneficial. If you do decide to do this and if your rent is cheap, it may make sense to stay there for the purposes of saving for a large deposit, meaning you will be offered a better mortgage deal. It is impossible to say when is a good time to buy. With the economy being in a state of uncertainty, some people are waiting to see if prices will fall. But, nobody has a crystal ball. If you have a deposit saved, then it is still worth looking around now. The experts constantly talk about prices going up, remaining static or about to crash - in the current climate nobody knows. In the meantime, you are just spending more on rent. The best you can do is just keep an eye on interest rates - if they rise significantly, there could be a crash and a likelihood of cut prices and possibly repossessions. Rents can also increase in a downturn - again this is a good reason to have a good-sized deposit so that you can obtain the best mortgage. If you do put down a sizeable deposit (over 5% for example) you are less likely to have to pay a mortgage indemnity guarantee (MIG), which, if applied, could cost you thousands of pounds extra. Choosing the right location is important. If you are looking for a home in a popular area, you are likely to find property is scarce. The trend towards people buying second properties as buy-to-let investments has led to a shortfall in many locations. In London, for example, homebuyers are also competing against professional landlords and overseas buyers, which pushes up prices. But buyers should also be careful about buying any property just to get on the ladder. In the last recession (in the late 1980s), some buyers were left with virtually unsaleable studio flats, because most people wanted to purchase properties with at least one and, ideally, two bedrooms. |
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Should You Buy or Rent? |
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