To Buy Or To Rent? Parrys Generic Guide..

Buying or renting a home can be daunting and confusing, whether it be getting on to the property ladder or just moving out of the family home and into rented accommodation. There is a lot of new information to take on board and, as a result, people often have no idea of the implications involved before making the decision as to which route may be best suited to them.

When thinking of buying a house, most people will have saved incredibly hard for a deposit or received some form of gift passed down from family. But even with the deposit ready there are always going to be the doubts as to whether buying a home and entering into the perceived long-term commitment, is the right thing to do.

At Parrys, we have broken down the main pros and cons that come from renting and buying, so you will feel able to make a more informed decision before your next move. 

The Pros Of Buying A Property

Cheaper In The Long Term

Whilst it may seem unfathomable that a mortgage is actually cheaper than renting, what with the upfront costs of stamp duty, deposit and legal fees, over time you will actually save more money than if you were to rent. When renting you will typically pay at least 125% of the landlords mortgage, this means that if you rent for a long period you will actually be paying more than you would if you were to be paying the mortgage on your own place.

Owning Something

Once the mortgage is cleared you will of course own the property outright. However, even as the mortgage is being paid off each month, your payments will be gaining you equity, which means you would receive money if you were to sell the property. You could also use that equity to move to a different place in the future. Owning equity in a property also means that you benefit greatly from any rises in the housing market.

No Limitations

If you have rented in the past, or are renting now, then you will know all about the various stipulations a landlord may put in place. These can be anything from no pets, to regular inspections, and also limits on what you can do to the property in terms of decoration. If you really want to make a home in your mould then generally this will only be achievable if you own the property.

Peace Of Mind

As mentioned previously, owning a property, even with a mortgage, means you will build equity. This gives you the added benefit of security should something happen to you or your livelihood, and allows you to leave behind security for family members. Even better, once you have cleared the mortgage completely it is yours to do with as you please.

Cons Of Buying A Property

Initial Expense

Most lenders will require a minimum of a 5% deposit, on top of this you will have to pay stamp duty, legal costs and you might have decorating or even building costs to factor in. Not to mention needing to furnish the place to make it habitable. Upfront costs are one of the main reasons that people are now buying a lot later in life, or not at all, and why a significant number of people have to live with their parents for much longer in order to save up the money required for these costs.

Maintenance

As the owner of the property you will be responsible for ensuring it remains in a good state of repair – this will be a condition of the mortgage. This means general maintenance is down to you to fix and could also uncover some unexpected expenses if you have more serious problems such as boiler failure or a leaking roof. These are not cheap to fix and can require the owner to use their savings or even need to take out a loan. Often some of these things can be picked up in a detailed survey before you buy the property but events, bad weather and time for example, can bring a host of new expenses worth planning for.

Commitment

Unless you have a big deposit you will likely be paying a mortgage for a number of years, this means you, and you alone, are responsible for making this payment each month. This is fine if you have a stable job and intend on keeping the property for some time, as the payments will generally be lower than if you were renting. However if house prices take a downturn, or for some unforeseen circumstances you loose your job, it may mean you have to hold on to a property for longer than you had hoped, or in some extreme cases, lose your home altogether.

Pros Of Renting

Cheaper, Initially

Renting is significantly cheaper than buying in the short term as it will usually only require one months rent and a similar amount for a deposit. This means it is usually a lot more feasible for people to rent.

Flexibility

While renting you will often only be tied in to a contract for six to twelve months with a one or two month rolling contract once the initial term has expired. This is perfect for people who move a lot, dont want to be tied down or are waiting to move into a place of their own. Renting is subsequently a lot more flexible than purchasing a property of your own. 

Limited Risk

Your only real concern when renting is that the rent could increase. This is generally controlled by external factors and outside of the tenant’s control. This means you are generally no worse off if house prices start to fall or if the property requires any repairs as the landlord will be liable for all of these costs.

Cons Of Renting

Paying Off Your Landlords Mortgage

Ultimately the landlord is benefitting from your monthly payments as they will either be clearing their mortgage or, if this is already paid off then they will be gaining a salary from your monthly payments. Whilst a mortgage does require a greater level of commitment and higher up-front costs, you are paying into something that you will ultimately own one day.

Limited By The Landlords Rules

As mentioned before there are certain stipulations when renting that must be adhered to. This usually means you cant own pets or alter anything in the home as mentioned but it also means that the landlord has control over your lease. This means that, once the contract has expired, they could actually end your tenancy at any time. This can lead to uncertainty around your living situation and can be very stressful if you urgently need to find somewhere else to live, uprooting family and bringing with it unwanted expenses associated with moving.

How To Decide?

Whilst this gives a brief summary of the pros and cons of renting vs buying a property, every case is unique. The main things to consider are if you have enough money for the up-front costs when buying, how long you would like to stay in the property and if you are in a stable enough position to take on the responsibility of a mortgage. Renting is generally cheaper in the short term but if you have a longer term plan, then owning a property is proven over time to be significantly more financially beneficial.

The best thing to do after reading this is to visit http://www.parrys.com/ and contact one of our friendly staff to discuss your situation and come up with a suitable solution that meets all your requirements.