Is Buying a Home Better Than Renting?

Jul 01

Is Buying a Home Better Than Renting?

Depending on how you’ve been brought up and what you have learned over the years, you may have a belief or a preference on whether you should rent or buy a property.

When you pay off your mortgage you are paying off something that will most probably be worth more in the long run than you initially paid for it. Granted you will be paying back more than what the property was worth at the time of purchase, as that’s how loans work, but at the end of it you will own the property outright, at which point you won’t need to pay anything to keep a roof over your head. Of course there are costs such as taxes, but these you would pay regardless of whether or not you owned or rented.

On the hand, when you are renting you are paying someone else in order to live in that particularly property and may even be paying off their mortgage that they have for that property. Once you, or other tenants who have stayed at that property, have paid off the mortgage, the landlord will own the property outright. This means that any future rent the landlord gets will be an additional source of revenue or income for him or her.

In short, getting your first mortgage to buy a home is far better over the long run. Of course this doesn’t mean that there aren’t any risks involved. While property prices generally continue to rise at a better rate than inflation, it is possible for the market to crash and for you to end up in negative equity. What this means is that the mortgage, or loan, you took out to buy the property in first instance could end up being for more than your property is now worth. This isn’t typically an issue if you’re prepared to live in the property for a longer period of time. However, if you were to lose your income and can no longer afford the mortgage repayments, you may need to sell off your property at a loss, end up owing the bank money with nothing to show for it.

There are many factors to consider when getting a mortgage, which is why it’s always a good idea to get qualified mortgage advice before jumping in the deep end. Thankfully, in the UK, free mortgage advice is readily available from companies like First Mortgage, making the whole process of buying easier and ensuring you’ve got all your bases covered.