What are the drawbacks of renting a property?
Although there are a lot of plus points in renting a property, it’s not without its downsides, and you should consider the following before signing any tenancy agreement:
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You’re not investing your money
One of the major downsides of renting is that the money you spend on rent is not going towards your own mortgage, meaning you’ll have no investment to show for all the cash you put in.
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A lack of security
While renting offers the freedom to move around when and where you like, the flipside is that there’s no guarantee you’ll be able to stay in a property once your contract expires. You could find your contract won’t be renewed as the landlord wants to sell the property, meaning you must move from your home at the end of the agreement.
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Decorating could be a problem
As you’re living in a property that you don’t legally own, you won’t be able to make changes or redecorate without permission. And if you are given permission to make any improvements to the place, you’re paying to increase the value of someone else’s property, effectively using your money to increase the value of their asset.
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There could be restrictions
Landlords are largely free to choose who lives in their property, so you might find that you’re not able to move into a place that has restrictions on pets living there, for example.
What are the benefits of buying a house?
Owning a property is a long-term ambition for many of us and, given that house prices always seems to be on the rise, it’s understandable. If you’re deciding between buying and renting, upsides to owning that you should bear in mind are:
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You’re making an investment
The most obvious benefit of buying a home is that you’re investing in an asset that could well appreciate over time, and one you’ll own outright once the final mortgage payment has been made.
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You could make money
Property prices usually increase, and if the value of your home rises over time, any additional money is yours once the mortgage is paid off. Known as equity, this money can be used as a deposit again if you trade up, or for you to pocket if you decide to downsize.
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You can remodel and redecorate as you please
When you own your own home, you can decorate it to suit your own tastes and even alter it to better suit your lifestyle. This means that your house can potentially grow as your family grows, as you can make extra space by converting the loft or garage, or by adding an extension. Always make sure any necessary planning permission is in place before making any alterations, particularly structural ones.
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You can live there as long as you like
So long as you can keep up with mortgage repayments, you’re free to live in your house for as long as you want it. This is why buying is often seen as more secure than renting. One exception to this is if you take on a leasehold property, whereby you don’t own the building outright, and only have the right to occupy it for a fixed period of time. Leasehold arrangements are based around a legal agreement with the landlord or freeholder, known as a 'lease'.
Things to look out for when buying a house
If buying sounds like the route you want to take, you’ll need to be aware that there are also some potential pitfalls to consider, including:
Additional charges associated with buying
There are several additional costs you’ll have to cover to ensure the move goes through, including surveys, solicitor and conveyancing fees, alongside stamp duty if the property you’re buying is valued at more than £125,000.
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Market fluctuations
Although buying a house is generally seen as a solid investment, if your property depreciates in value, this can make it less worthwhile for you. That being said, most depreciations are shorter term and the wider market has tended to trend upwards.
What if I can’t afford to buy a house?
If you can’t afford to buy a house at the moment, it could be worth considering renting or living with parents or others who allow you to minimise your rent while you save up for a deposit.
Alternatively, there are a number of Post Office mortgage products available to suit a range of circumstances.
You should always explore your options and seek professional financial advice before taking on any mortgage products.
What are my next steps if I want to buy?
Once you’re in a position to buy, and know how much you’ll be able to put down as a deposit, you can begin searching for your ideal home. When arranging a mortgage, you’ll need to speak to a qualified mortgage advisor to make sure you’re taking out the right type for your circumstances.
Once you’ve started your search, you should think about appointing a conveyancer or solicitor who can help make sure the whole process runs as smoothly as possible.
When you’ve found the property you were dreaming of, you’ll need to make an offer on it. It helps to have a mortgage agreed in principle when making an offer, as this shows the buyer and their legal representatives that you’re serious and in a position to buy.
All that is left then is for the contracts to be exchanged, and once this is done, you can really look forward to moving in and making the place your own.