To rent or buy my first property? That’s a popular question amongst many newly-weds or those who are planning to move out of the family home.
Should you rent or should you buy? Read on below for pros and cons of both alternatives and which might work out better in the long run.
High Up-Front Costs
Buying a home often involves large up-front costs for the deposit and legal fees which may make purchasing a home too expensive for newly weds who might have just blown a huge amount on their wedding. However, it is also important to remember that renting also has up-front costs (two months rental and a utilities deposit) which you will need still to budget for.
Take Advantage Of Lower Interest Rates
The recent economic crisis which subsequently pushed down interest rates worldwide have made the cost of debt cheaper for new house owners. So there is really no better time than now to take advantage of these low rates to own your own home. Many often cringe at the word debt and are hesitant to owe the bank lots of money, however, do remember that each monthly payment made on your loan installment is equity invested in your own home which will one day be your asset.
Purchasing A Home Offers Stability
Renting a home often places you at the mercy of the landlord and while most rental contracts are valid for a year, the landlord is entitled to take possession of it at any point during the contract, with sufficient notice. Hence, with renting, you can never be sure if you can have the house for a long term period or if you might be required to pack your bags and move again in the near future.
Furnishing Your Home
You are often bound by various terms in a rental property which means no built-ins or any form of furnishing that might destroy the property. Some contracts even require permission before you nail or drill a hole in the wall! If you don’t like rules and have grand interior design plans for your home, renting is definitely not for you!
Rent Now, Buy My Dream Home Later
Many often prefer to rent in the short term until they find their dream home. Not tying up your money in a housing loan means you would have more debt ratio available for a bigger housing loan when you find your dream home. However, having your own property now might provide you with some leverage to upgrade in the future when your current property has appreciated.
Rental vs Buying, Which Is Better?
Ultimately, it is your choice on which you prefer. Rental often benefits in the short term as you save on upfront costs and may have access to properties in prime areas which may not be within your purchasing budget. However, in the long term, purchasing your home may be a better option as monthly rentals may be better put towards owning a home which is an appreciating asset. However, do weigh both options and your plans carefully before you commit to buying or renting your first home!
