There can be nothing more exciting than moving out of the family home and setting up on your own. The basic choice that you need to make, however, is whether you are going to buy your first home or rent a property.
With the growing price of houses in many areas of the UK, buying can be a challenging option because you need to get the initial finance together. This is especially true if you are first time buyer and just starting out.
In the longer term, however, you have a strong investment that should prove cheaper than renting over time and accrue in value.
For those who want the flexibility of being able to up sticks and move when they want, renting is certainly the better option, though you don’t get the return on investment that comes with owning a property.
The Pros and Cons of Buying
For new buyers, getting together the money required to buy a home is the big challenge. While it can work out more expensive in the short term, over the years it should prove much more cost effective than renting.
- You will need to get a mortgage to cover the cost of the house, minus your deposit.
- You need to be confident that you can afford the monthly repayments for the mortgage.
- You will most likely be asked for a deposit of between 10 and 15% of the value of the property and mortgage companies may ask for a guarantor if you are a first time buyer.
- If you are struggling to put together your deposit, there are various programmes designed to help, including the government’s help to buy scheme.
The big pro of buying your own home is that you can later sell it and potentially profit from the sale or purchase a bigger home. The big disadvantage (if you view it as such) is being tied into a large financial agreement that you have to meet each month for the next 25 years or so. You are also responsible for maintaining the property and all that involves.
The Pros and Cons of Renting
More and more of us are renting rather than buying a property outright. The reason is down to the rising cost of the initial deposit and ancillary costs. Renting also makes sense if you are not yet ready to settle down and want the option of ending your tenancy and moving on whenever you desire.
The disadvantage for many people is that the future is less certain with renting than it is buying a home, though the security of both depend on a number of different factors. The good news is that many landlords offer long term tenancy agreements, especially when they’ve found someone reliable who wants to rent their property.
The big benefit, of course, is that you don’t have to find the large sums of money needed to purchase a property. While there can be certain overheads such as finding a deposit, this is far less than the deposit for purchasing a flat or house. You generally don’t have to worry about the maintenance of the property either as most of this is the landlords responsibility, so you shouldn’t expect sudden costs for repairs, but you will be expected to keep the property in a good state or risk forfeiting your deposit.
One issue that does worry some tenants is that the place they rent is not their own home. That means any changes or improvements have to go through the landlord, even if you’re in a long term tenancy.
The key with choosing either buying or renting is to make sure that you can afford it in the first place before you start searching around for properties. If you are looking to buy, the Money Advice Service has a useful mortgage affordability tool you can use to see how much you can borrow.
For specific advice about renting or buying a home, talk to a local expert. Northwood have branches throughout the UK and our helpful knowledgeable team are always happy to chat.