Why Buying is better than Renting
Should you buy or rent the place you live? Should I rent or buy? We’ve been told for years that it’s better to buy than rent. Renting is just throwing money away and paying someone else’s mortgage off for them. Now I don’t personally think it’s as clear cut as that. You have a lot more obligations as a homeowner than as a renter, but this article is going to explore the reasons why you might want to buy instead of rent a place to call home.
Reasons to Own your Home
If you own the place you live in, so long as you pay your mortgage and your council tax, then there isn’t really anyone who can make you move. In rental accommodation, you are at the mercy of the Landlord serving you with an eviction notice. When you own, you’re in charge and you get to decide when to move.
A lot of the time you’ll find that the mortgage you would pay to live in a property will be a lot less than the rent you’d pay to live in the same property. Now there are a lot of factors that come into this, but as an exercise, you can do the following.
- Go to Rightmove and find the cost to rent the kind of property you want to live in
- Go to Rightmove and find the cost to buy the kind of property you want to live in
- Divide the cost to buy the property you want to live in by 300
- Which one is higher?
Hopefully, otherwise I’ll look stupid, the number you come out with is lower than the cost of renting the property.
I won’t bore you with the calculations behind these numbers, but it should give you a fairly accurate estimation of what you’d likely pay as an owner instead of a renter.
The sense of ‘home’ and security you get from owning your own property is hard to measure. Being able to settle into a place and put down some roots is a natural desire in most of us at some point. Knowing that you are nearby family members (or far away from them if that’s your preference), can be a compelling argument for buying a place near your loved ones.
So long as you aren’t moving locations every five minutes, then buying a home near where you work makes a lot of sense. Gone are the days of a job for 30 years with the same company, but we often find ourselves working in the same city and location for that long. Now, to be honest, there’s little practical difference between renting and owning with this one. Both will have you able to commute to your place of work.
This is often the most important reason for a lot of people to buy their own property. Historically house prices have gone up over the long term, and there’s not much on the horizon that would suggest this trend is going to stop over the long term. Shorter term, who knows!
Now while I don’t think you should view your home as an investment, it’s hard to dismiss the fact that whatever you buy today, will probably be worth four times as much in 20 years’ time. And if you pay off your mortgage over that same time period, the £20,000 you put down as a deposit on a £100,000 house today could be worth £400,000 with no debts on it. That’s not a bad return!
Now the only way you benefit from this is if you sell the property and move into rented or buy a smaller property. This is a lot of people’s plan, and it’s kind of why bungalows became so popular. Personally, I choose to use investment properties to achieve the same goal without having to sell the place I live in, but that’s a topic for another day.
You won’t turn the rent you pay each month into anything other than the right to live in someone else’s house for a month. So this is a huge argument for “investing” in the bricks and mortar you call home.
But what if you can’t afford to buy?
All is not lost. If you want to get all the benefits of the above, then you need to do two things.
1. Save up money for a deposit
2. Have a decent paying job so you can get a mortgage
By doing these two things you’ll be able to buy your own place. While you are in rented, if the goal is to save for your own place, then here are a couple of suggestions for you:
- Live at home with the parents
- Rent a room in a shared house
- Move to a cheaper part of the town / city you live in
- Move to a cheaper town and travel to work
- Work a part-time job to supplement your income
- Move to a part of the country where the cost of living is lower than where you are now
- Move to a part of the country where you’ll get paid more for doing what you do now
Now not all of these will be practical or even possible. But hopefully one or two of them will be options for you and you can save a little quicker and get on the housing ladder!
Should I rent or buy? If you do want to discuss what kind of property you can buy at the moment, or if you’re ready to take that step onto the housing ladder, then get in touch and I’d be glad to help steady the ladder for you, as you climb on (not quite sure that metaphor works, but whatever I’m sticking to it).
I am here to give you a … leg up … on your property buying journey. OK I’ll stop.