Whether it is better to purchase or rent a home is a question that has been debated by experts for a while. The option that is best for your family will depend on various factors, such as your career, budget, and family size and where you want to live.
Both options have their own set of pros and cons that should be considered carefully when deciding which option is right for you and your family. Here is a closer look at both buying a home and renting to help you determine which option may be best for you.
Purchasing a Home
Buying a home is a dream to some and not so much to others. Some view it as a huge debt and liability where as others think of it as an investment and some form of security. There are several great advantages and several disadvantages of purchasing a home.
- Your property may grow in value
- You have the flexibility to make changes to the home – renovations
- Based on how you set up the loan you can have a predetermined repayment schedule which doesn’t affect your family budget – variable vs fixed rate loan
- You have overall pride in knowing that you own a home
- Once a home is paid off you eliminate one large monthly expense
- Instead of paying rent to someone, you are paying towards something to own
- You will be responsible for all maintenance and up keep
- You have lots of ongoing expenses including; mortgage repayments, homeowners insurance cover, property tax, etc…
- You risk having your home lose value over time
- Initially there are a lot of up-front costs
- The money spent on your mortgage could be better invested elsewhere
- Moving quickly can be more difficult
- If you have issues and need to sell you can lose a lot of money, in addition if you have issues with the repayments your home can be repossessed
- If stuck with bad neighbours, there aren’t many easy options to eliminate the issue
Renting a Home
Renting is obviously less of a commitment than purchasing and can be somewhat cheaper. There can be a bit more flexibility with renting a home. As with purchasing a home, there are various advantages and disadvantages to renting.
- You are not responsible for making repairs to the home.
- You can live in properties and areas that you wouldn’t normally be able to.
- There are fewer expenses with renting.
- Insurance costs are generally cheaper (just contents if you want it).
- You do not need to have a large down payment to get into a place.
- Cash saved from renting vs purchasing can be invested elsewhere
- Your rent may increase on an annual basis.
- You may be forced to move if the property owner sells the property.
- You cannot make changes to the home or apartment without the property owner’s permission.
- Depending on your property owner, home repairs may not be completed as quickly as you would like.
- If you never have plans to purchase you will never own a property outright, rent will be an ongoing expense till death.
- You have to abide by the rental agreement
Things to Consider
The main thing you may need to consider when making your decision to rent or buy a home are what your needs and future plans are. Purchasing a home can be a long term commitment with less flexibility than renting. Buying is not as easy as just saving up the initial funds and then purchasing – location is very important, affordability, neighbourhood and market status to name a few things; you don’t want to buy in an overpriced market.
Renting can avoid a lot of the above and is definitely more flexible, yet it has its pros and cons as well. Deciding on your housing preference really comes down to your individual or families plans; it’s a matter of what’s comfortable.
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