No matter where you live, you will have to contend with the question of whether to rent or to buy your home. On the surface of things, it would seem that buying is most definitely the better option. But also one that is out of reach to everyone who doesn’t have the money for a deposit.
Buying allows you to gradually accrue ownership of the property that you live in. While renting is often referred to as a “bottomless pit”, simply because you pay to live in your home but don’t own it. So, which option is cheaper for you and your lifestyle in the short and medium-term? Read on to find out.
Mortgage Payments vs Rent: Which is Cheaper?
Historically, monthly mortgage payments have tended to be cheaper than monthly rent payments. This means that your monthly outgoings from owning a home can often be lower than if you were paying rent to a landlord every month. However, this is not the full story. For one, there is the simple fact that you’ll need a deposit that could easily be worth six figures before getting the mortgage in the first place.
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Another barrier is mortgage interest rates. Buyers can end up paying more than renters every month if they are locked into an unfavorable mortgage with high interest rates. That’s why more and more buyers are turning to free online mortgage brokers to switch their mortgage providers and secure lower interest rates. With lower interest rates and more reasonable monthly payments, buying can be much cheaper than renting.
Hidden Costs of Owning a Home
That being said, there are hidden costs to homeownership that are often not discussed. Chief among these are repairs. If you are renting a house, it is not your problem if the roof suffers some wear and tear or if your toilet breaks. This is something that your landlord is supposed to pay for and get fixed.
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However, when you own a home, you pick up the tab for anything that needs fixing. A roof repair, for example, can cost you upwards of $10,000, while a new central heating installation can easily cost five grand all in. These are expenses that renters rarely have to think about.
There are also hidden opportunities for buyers that are not available to renters. Chiefly, you can rent out your home to others or even make money by letting out a spare bedroom while you continue to reside at the property.
This can help towards paying the mortgage – something that a renter is rarely permitted to do. In addition, homeowners are able to build up equity in their homes that they can then use to receive loans or credit from the bank to invest how they wish. This is one of the main perks of buying your home.
On the face of things, buying can be more expensive than renting overall. This is something that is true in virtually every housing market in the country. However, when you look at the bigger picture, things are different. Buying a home provides an opportunity to build equity and security throughout your life.