Owning a home is a dream that many people would like to realize in their lives. However, at some point in life, you may be in a dilemma over whether it is actually better off to buy a home, or to simply rent one. Well, both of these options come with their pros and cons. The trick towards making the right decision on this is dependent on several factors. At the end of the day, you are looking at the better option which will guarantee you peace of mind, comfort and probably save you some money, among other advantages. This article takes you through five factors that you will need to consider in determining over whether to buy or to rent a home.
It is wise to consider how long you plan to live at a place, or how long you are likely to live there. It could be that you have landed a short contract at a certain neighborhood, after which you plan to go back home. All you need to do is fulfill a one month notice period then leave. In such a case therefore, just rent and stay for the duration as opposed to buying.
Calculate the cost of buying home vs. that of renting. While buying a home comes with a heap of advantages as it is an asset already, check out if you can afford it at that particular time, considering your income and the current basic expenses. When renting a house you will be expected to pay the first month’s rent and a deposit which is normally used to cover for any outstanding rental cost or any damaged to the property that may be incurred in during the term of the lease. On the other hand when buying a property, the startup amount is high as you may be required to pay for the home loan deposits, agency fee, bank fees among other expenses.
- Access to Mortgage
Check out if you qualify for a mortgage. If you do, is wise to take advantage of this facility and buy a home as opposed to renting. In any case, as it may turn out, your monthly mortgage payments may be equal to your monthly rent expenses. This makes buying a win situation.
- Current vs Future Plans
While you may have current plans like getting better education, consider also future plans. You may want to advance your education with a view of getting a promotion and later buying a home. This would be a great plan and you may opt to rent a home as you continue with education. On the other hand, by the time you get to be promoted, it could be that property prices will be much higher. In this regard, you may opt to buy a house immediately. You will have to put into consideration current and future personal plans.
Buying and eventually owning a home comes with a sense of pride and freedom without restrictions. As an owner you can alter the design of your property to suit your taste and style because you have total control over it. You may even decide to sell the property and make profits.
When you rent a property, you are bound by the rules of the tenancy agreement which can limit a number of things. For example, you cannot make any changes or remodel the house without the consent of the owner. You have no option but to comply with the annual rent increment affected by inflation. The saddest part is, you are not guaranteed a lease renewal when it expires.
- Taste and Preference
Your preferred estate neighborhood may also determine whether you will buy or rent a home. You may be able to pay rent in a high end estate, which you may not afford to buy a home. In such a case, you may invest in a home in a lower end estate for example, where you can afford, and rent a home in your estate of choice.
Why buying or renting a home is more of a personal decision, it is wise to do some real estate consultation and involve your financial advisor and close family members before making such a decision.
While making the decision to either buy or rent, it is wise to consider the option that at the end of the day, will give you lasting joy and inner satisfaction.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.