To Rent or To Buy - What Your Best Option?

In Britain, there is considerable controversy around the rising of rentals and the availability of residential homes. British people are obsessed with homeownership, yet does this pay off? Most other countries in Europe have a nation of renters. The desire to be a homeowner is simply rooted in the British way of life.

There are financial benefits to both homeownership and renting, but it’s working out which one works best for your lifestyle and current situation. It’s essentially a numbers game, and working out the cost difference and as to whether you’re ready to own a house or not. If you find yourself asking “Should I rent or buy?” take a look at this quick guide below. It will most likely help you decide if you should look at buying a house or if you’re better off renting. Nothing is set in stone either. You can easily change your mind in a few years if one option doesn’t suit you.

What can you afford?

Think carefully before jumping in to purchasing a home or renting. It’s essential to consider your finances and what you can comfortably afford. Work out your income (combined if you’re thinking of moving in with another person), and the outgoings you have. After this, you may able to work out which suits you more. You’re only able to buy a house if you can get a mortgage, afford the monthly repayments, and have a deposit or guarantor.

 A mortgage calculator is a useful tool to work out how much you can borrow. Typically, renting will cost you more, but unlike a mortgage, you’re not tied down to a contract that is longer than 6 or 12 months. Rental payments can be upwards of £700 per month for a city centre location, whereas mortgage payments can be as little as £300 a month. However, it is all dependent on how stable your income is, and whether you’re ready to commit to such a long-term investment.

What sort of property are you looking for?

Before deciding whether you want to rent or buy, consider the sort of property you’re looking for. Rentals usually are apartments or flats within the city or sometimes houses in the suburbs. However, it’s more likely that you’re going to get a mortgage on a home outside of the city as they’re more affordable and often bigger too. Property companies like RW Invest showcase the rising demand for housing within the UK, especially cities in the North West. Their properties are investment only opportunities, but they know how the property market works. Deciding on a type of property is a crucial step to start your search.

Which is cheaper?

Fast-rising home prices and higher mortgage rates have inevitably made it cheaper to rent a home than to buy one. In terms of pricing, they don’t differ too much. One of the most significant differences is that with renting, you’re not putting your money into something you will eventually own. However, with a mortgage, you can finally pay back and own the home for yourself. Neither is necessarily more expensive or cheaper. It’s simply that they have different price points.

Do you have a deposit?

Renters will need a smaller deposit when they want to move compared to anyone who wants a mortgage. The minimum deposit on a mortgage is typically 5% in the UK, but 10% is preferable. Even if you’re opting for a property that is £200,000 (an average figure in Britain), you’ll need £10,000 for a 5% deposit. That’s a considerable amount of money if you’re only young. However, renting only requires a month or two of rental payments as a deposit. If you’re going to be paying £1,000 a month for your rental, then the maximum deposit you’ll need is between £2,000 or £3,000.

Making your decision

Unfortunately, the decision is up to you and despite any advice or tips, you will have to decide whether you want to rent or buy. It is a difficult decision but believes that you’ll make the right choice.