Buying vs renting
Helping you make an informed decision
Should you buy or should you rent? There's no right or wrong answer to this question because so much depends on your own personal situation, aspirations and financial circumstances. To help you decide which could be the better option for you right now, we weigh up some of the main pros and cons of buying vs renting.
Buying: the upside
Investing in your future
Once you've paid off your mortgage, you'll own your home outright. And if property prices have risen, it could also be worth more than you paid for it.
Live your way
Because it's your home, you can do exactly what you want with it. If you want to decorate it, extend it or refurbish it, you don't have to ask a landlord's permission to make any changes. Don't forget, you might need to obtain planning permission for extension work.
Moving on up
If your home increases in value, you could use the equity to move to a bigger house or a more desirable area. You also have the freedom to release some of the equity for home improvements or to fund a large expense.
Buying: the downside
Saving for a deposit
Most mortgage lenders will ask you for a deposit of at least 10%. So if you're buying a home worth £100,000, you'd need a £10,000 deposit. It takes time and commitment to save such a large lump sum.
New affordability rules
Before a mortgage lender can decide how much they can offer you, they need to know about your everyday outgoings. This includes things like; student loans and gym memberships.
The extra fees and expenses can soon add up, so you'll need to factor these in to your budget. They include, but are not limited to; solicitors' fees, valuation reports, Stamp Duty and moving costs.
Mortgage repayment rate changes
Depending on the type of mortgage rate you have, you may have increases to your monthly repayment amount.
Renting: the upside
Lower upfront costs
Your landlord will often ask for an initial refundable deposit and one or two months' rent in advance. This lump sum cost is significantly lower than the deposit and fees needed to buy a property.
Freedom to move
If you're not ready to settle down in one place, or need to have the flexibility to move around with work or family, dependent on the terms of your lease, it could be quicker and easier to leave a rented property.
Repairs and maintenance
If there's a leak in the roof, a broken boiler or faulty washing machine, depending on the terms of your lease, it could be your landlord's responsibility to fix and pay for it.
Easy to budget
Your rent is usually a fixed monthly amount for each rental contract with no interest charges, so it's simple to work out what you have to spend each month. Any ups and downs in the housing market won't affect what you pay and you'll never be in negative equity.
Renting: the downside
You don't own the property
You won't get any financial return on your money as your rent is essentially paying off someone else's mortgage. So you won't benefit from any potential increase in property's value in the future.
There's no guarantee that your rent will stay the same as your landlord has the right to review and increase charges in the future.
It's not a home for life
Many landlords will only offer tenancy agreements of 6 to 12 months at a time. If they decide to sell, they'll give you notice, meaning you'll need to find somewhere else to live.
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