Homeowner Vs. Renting?


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Given the substantial amount of money associated with purchases a house, historically, most young people when they leave home, start off by renting an apartment and gradually as they progress in life, they earn their way up to a home. But, which one of the two is better? If you are someone who wants to move out, you will need to decide which option is best for you. To buy or not to buy, that is the question.

Mortgagor or Tenant?

Firstly, countries around the world offer two ways of living; as a homeowner or tenant (renting). As a homeowner, you take a loan against your intended home known as a mortgage from the bank to buy property or land and you as the mortgagor pay the loan back slowly with interest over a period of (usually) 25-30 years to the mortgagee (lender). As a tenant, you are renting and paying a monthly fee for a place from a landlord usually over a period of 6-12 months, depending on the agreement signed. In this case, the landlord is the homeowner. There are advantages and disadvantages with both methods and it’s up to the person in question to decide what best suits them.

Renting a home?

The Benefits.

One of the major benefits of renting a home as opposed to buying one is that it can be easier and quicker to move to a new place/home if you want to. This option is usually popular for people such as students and those who are not planning on staying in the specified area/city for too long. It’s obvious it’s not exactly ideal for them to make mortgage payments or even buy a property upfront if they’re not planning to stay there permanently. Furthermore, they may not have a stable income so this might be a better option.  Also, finding or renting is much quicker process compared to the process of buying a house and you may find that it’s more affordable to rent a bigger place in a nicer area than to just buy one.

There are also benefits of not owning a property such as the fact that there is no risk of losing any money if the value of the property goes down and the landlord (not you) are responsible for such things as repairs and renovations. So, if they are any damages to the property and maintenance, it is the responsibility of the landlord to get it sorted out in a timely manner. This is especially advantageous to those who live a busy lifestyle and it saves them from wasting any unnecessary time. Furthermore, it is often much cheaper payment wise to rent and the rental payment hardly change which mean it is easier to budget.

Disadvantages.

Unfortunately, all your rent payments will go to your landlord, not towards owning a home as is the case with mortgages. So fundamentally what this means is that if you never buy a house, you will be paying rent for the rest of your life, including even after retirement! There is no long-term investment involved. Moreover, since your landlord owns the property, they are in charge so if they decide to sell the house, you will have to move out. Your landlord can set certain guidelines and restrict any changes you can do to the property. Therefore, you are not free to renovate, decorate or make fixtures without their consent. In addition, your landlord can increase your rent as they wish, and you have to pay a deposit which the landlord may keep some if not all of it at the end of your tenancy.

Buying a home?

The Benefits.

Firstly, the monthly repayments to the bank go towards buying your home, not the landlord. As the mortgagor, after the end of the mortgage, you will fully own the home and live rent-free. You’ll be listed on the deeds on the home so by law, it is officially yours. You are free to do as wish and are not restricted to rules, so you can make changes to the property or landscape without restrictions (with permission from your lender of course!). This can be especially beneficial to people who want pets or own pets because usually, you would need the landlord’s permission for such things. If the value of the house rises, then you can make a profit so any renovations or changes you make can increase the value of the home. This just means no one can make a profit from your home but you. Additionally, no landlord can force you to move from your house because they want to sell. Finally, believe it or not, but buying can at times be cheaper than renting.

Disadvantages.

Control of the home can also be disadvantageous as you are now in charge of your own repairs. By example. If something urgent goes wrong like a leak, it’s your sole responsibility to pay for it yourself. If you want to move, it can take a long time because you have to first sell your home before ideally moving out. With the housing crisis happening in U.K it means that it’s easier to buy a home than to sell it. This also means that if your finances are low and you can’t afford the mortgage, moving to a cheaper property can take a long time. This can have serious repercussions because your home acts as collateral. You can fall behind on your repayments and end up getting into debt, which could eventually lead to bankruptcy or repossession of your home.

Making your decision.

Whether you buy, or rent will depend on several factors. You need to ask yourself a number of questions before deciding and those factors will influence your choice. Factors such as how long you are planning to stay, your finances (can you afford a mortgage?), do want more freedom? Capital? Is the home for you or will others be living with you? Etc… This will need to be considered before making the decision.  Regardless, in the end, the decision is all yours!

Written by shalom from Housinganywhere.com


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