Despite what you may have heard, the decision to rent or buy a home is always an intimately personal one, and will depend on your unique circumstances just as much as the housing market and other, more clear-cut factors. As you’re probably aware, there are a number of pros and cons to each choice, and if you rush the decision, it can really come back to bite you. If you’re on the fence between renting and buying, here are some important things to consider…
Your Local Housing Market
As you’re already aware, not all housing markets are the same. You’ll get much more space for your money in Yorkshire than you would in the London commuter belt, for instance. In most parts of the country, it’s generally cheaper to buy a home than to rent, provided you plan to spend five years or more in the home. Many areas of large cities like London and Birmingham come close to the verge of being more favourable for renting, but you’d still be extremely hard-pressed to find a property for rent that’s actually more cost-effective than a mortgage in the same area. Unless you don’t want to be tied down to your property indefinitely, buying a house is always going to offer you better value than renting.
Your Financial Goals
You probably already know that buying a home can be a great way to build your equity, but it also introduces a range of new expenses to your personal budget, such as taxes, home maintenance, insurance and so on. The costs of owning a home extend way past the actual purchase, and can vary greatly from property to property. It’s absolutely essential to have a decent cushion of savings to fall back on in case of unexpected expenses such as a roof leak, windows needing replacement, and any other nasty surprises that could be dropped in your lap. Needless to say, covering these kinds of expenses can be very difficult when you’re trying to keep on top of other things, like paying down student debt and raising children. Obviously, it’s not completely impossible to do these things while you’re still saving the money for your home. However, it means that a solid budget and financial plan are more or less necessities.
Your Desired Lifestyle
Renting can make it relatively quick and easy to just pack up and move, whether that’s to chase the job of your dreams, or just because you want to change your neighbourhood. On the other hand, owning a home is a major commitment, and you need to be ready to settle somewhere if you’re planning to buy. The transactional costs of buying and selling property also tend to be high, and can even rub out any gains you’d make from market appreciation if you don’t live in the property for a long enough time. Depending on where you are with your career, what you want for your children, and other quality-of-life factors, you may want to keep yourself flexible by renting for a while longer.