There is no right answer when it comes to renting or buying a house and buying. While it’s true that owning a house is the first step to building wealth in the long-term, it might not always be the right option every time.
Renting is also gaining popularity given the ever-changing demographics that have upset the dynamic.
Highlighted below are some important points to consider when you’re making a decision to reach a conclusion that goes well with your lifestyle.
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Pros and Cons of Buying a house
Let’s start with why you should or shouldn’t consider buying a house. There are many advantages and disadvantages of buying a house listed below.
Pros of buying a house
There are many advantages to buying a house and is something you should consider if you’re willing to squeeze your budget.
The most obvious advantage of owning a house is the permanent asset that you gain. A house gives you equity, which can be gained every time you spend money on the house. You can either sell the house for a profit or use that equity to finance loans for other projects that require a large sum of money.
The argument is that if you pay money for rent, you should pay that towards financing your house and you’ll end up with a house after a decade or two.
Owning a house gives you control over your home to make adjustments and live as you like. A rented house will never give you enough freedom as you are bound to the rules of a landlord. A lot of rented houses do not offer a lot of customisation options.
Your own house is only limited by your own imagination and budget, but before making any drastic changes, make sure to approve the changes by the relevant home association authority as some communities do not allow extremely drastic changes.
Your house offers you security and no one can force you out of it. Rented houses can also renew rental agreements without consulting you leaving you with little choice but to agree or leave the property. Owning a house is also the epitome of financial security.
If you have extra space in your house or housemates, you can charge them rent and use that to finance your house which will build you an asset and help take some load off of you. Extra space can also be used to generate income that can supplement your lifestyle.
Cons of buying a house
While buying a house may seem like a good idea, it does come with downsides that can not be neglected.
The significant amount of capital required to buy a house is very high and if you’re looking for home financing options, you can easily get lost in the number of sly tricks that banks implement to catch you off guard. A mortgage with interest can cause a higher burden than rent sometimes.
Being the owner, you have to be your own landlord and home maintenance and repairs can cause a fortune to do. Getting a new roof can cost you a fortune so owning a house can quickly become very expensive.
If you buy a house in a bad neighbourhood or someplace where you do not want to live in anymore, you’ll be stuck as you won’t have a way out.. Moving houses is not as easy as renting, and selling houses is also a big hassle.
Pros and cons of Renting
Renting certainly has its advantages and disadvantages, and depending on your preferences, it might be the perfect option for you.
Pros of renting
There are several advantages of renting and can be the perfect option for young people who are just starting their careers.
The most obvious advantage is the sheer flexibility it offers. Renting allows you to move whenever the penalty period ends and allows you multiple options to choose the style of your home or neighbourhood.
Renting allows you to live in better neighbourhoods where you could not afford a house and everybody wants to live closer to the city centre. Renting gives you more options compared to owning a house.
Renting exempts you from taxes that a homeowner is expected to pay and that can help you to save money when you’re starting your career.
Maintenance and paperwork
Maintenance is handled by your landlord and there is significantly less amount of paperwork involved in renting as the leasing agreement does not involve much paperwork.
Cons of renting
Renting isn’t the answer and also comes with its fair share of flaws that can deter you from choosing it.
Although there isn’t any imminent threat of being thrown out of a rented apartment, however, the danger exists that an agreement can be altered without consulting you and that can significantly impact your life.
A rented home means that every month your rent payment is wasted and there is no equity for your payments.
Living in a rented apartment means that you’re bound to the restrictions of your landlord and that can mean a number of things, ranging from no customisation to no pets and much more.
Rent is increased over time and that can sometimes affect your financial budget. Rent is increased in steady increments every year which is a problem in an inflation-stricken economy.
There is no definitive answer to this age-old debate but hopefully, the above-stated points can provide you with some clarity in answering this question.