When it comes to finding a place to call home, one of the most critical decisions you’ll face is whether to rent or get a mortgage. In the United Kingdom, this decision carries unique considerations due to the country’s housing market dynamics, affordability challenges, and various financial factors.
Research has suggested that 86% of people in Britain want to own their own home, but many still choose to rent nonetheless. If you are considering whether to own or rent, it’s important to weigh up the pros and cons of both to give a really good sense of which is more suited to you and your situation. So we have laid them out here for you, so read on to find out more about whether you should own or rent!
Renting
Many people perceive renting to be a way of throwing money away every month, and while you aren’t building any equity with monthly payments of rent, not all of the entirety of costs involved in homeownership go towards equity building. Renting allows you to easily relocate or downsize without being tied to a long-term commitment. It provides the freedom to test different areas or neighbourhoods before settling down. Additionally, rental properties often include maintenance services, which can alleviate some responsibilities.
Finding a home to rent is also usually a quicker process than choosing to buy as well, and if the property requires renovations or repairs, you won’t need to fork out any extra cash for this. Renting also opens up the opportunities for living in a bigger property or more sophisticated area than if you were buying, as it may be more affordable in this way. Renting provides greater predictability in monthly expenses.
However, if you choose to rent, you may face the prospect of doing so for the rest of your life. This is because you will be making large payments sent to your landlord every month instead of putting some away for owning a home. Coupling this with the fact it is becoming more expensive to rent does not bode well, and you won’t reap the benefits from any property value increases that may arise as a result of economic housing market conditions.
If your landlord chooses to increase your rent you could also be in real trouble, and this is not an uncommon tactic since economic conditions can cause people to demand more money. But renting can be a more feasible option in areas where property prices are high, making it difficult to enter the housing market.
Owning
Homeownership brings with it a sense of ownership pride, stability, and creative freedom in choosing the aesthetic look and feel you want your property to have. The best part is that your series of monthly consecutive repayments will go towards buying your property, and not into an exterior landlord’s bank account.
If house prices rise you could make a substantial profit, and any changes or maintenance you make to the property will only increase the overall value. Many people like the idea that they have an asset they can pass on after they’re gone too, since you will fully own your home at the end of the mortgage’s term and won’t have to make any further payments.
With a mortgage, your monthly payments go toward building equity and potentially increasing your net worth. Depending on the type of mortgage, interest rates, and market conditions, your monthly payments may vary. It’s essential to consider additional costs, such as property taxes, insurance, maintenance, and potential repairs when budgeting for homeownership.
Remember though that if you separate from your partner or get a joint mortgage, it can get very complicated when it comes to selling the property. Interest rates dependent on the economic conditions of the housing market could also increase the monthly repayments you have to make (although getting a fixed-rate mortgage helps). You also have to consider that if your finances become challenged, making the move to a cheaper property may take time.
Buying a property through a mortgage allows you to benefit from potential property value appreciation over time, especially in a market with rising prices. However, if the housing market experiences a downturn, it can impact your investment, and selling a property might be challenging.
Conclusion
Deciding between renting and getting a mortgage in the UK involves a careful evaluation of your financial situation, lifestyle preferences, and long-term goals. Renting offers flexibility and lower upfront costs, while homeownership provides stability, potential financial growth, and the pride of ownership. Ultimately, it’s crucial to consider your current circumstances, future plans, and local housing market conditions to make an informed decision that aligns with your needs and aspirations.
If you’re a first-time buyer then, you might find it easier to rent. But looking long term, owning is the better option. If you need a property as soon as possible, renting is likely to be better for you. You won’t need to pay a massive deposit when you choose to rent as you might do when buying (purchasing a property through a mortgage typically requires a substantial upfront payment in the form of a deposit, typically around 5-20% of the property’s value).
Remember, both renting and homeownership have their pros and cons, and what works best for one person may not suit another. Assessing your priorities, consulting with financial professionals, and thoroughly researching the local market can help you navigate this significant life choice and embark on a path that suits you best.
If you’d like some more information, take a look at our website www.farrandfarr.co.uk or take a look at our local branches here.
