Can’t decide whether you want to own or rent? Propertymash.com gives you the low down on the plus and minus of each.
PROS
If you buy a property, then within reason you can do what you want to it. Want to knock down that wall? Change the paint colour? Rip up the carpet? If you own the property you can truly make it your own. There comes a time in all our lives when this becomes important to us.
When you buy a home, you are purchasing an asset, an asset that may increase over time. Who doesn’t want that? The current market trends have shown home prices consistently rising over the long term. The other big benefit (but also a con) is that almost certainly need a mortgage to buy your home. Their is no better incentive to save them a mortgage to a big, bad bank. Providing you don’t pay too much when you buy, owning your own home has proven year after year to be the best way to invest and save.
In laymen’s terms your home equity is the amount of your home you own. If the value of your home is increasing as you make repayments, your equity will continue to rise. You can then, possibly use the equity to fund other investments such as shares, or an investment property.
CONS
You will almost certainly have a mortgage, so you will have repayments to make. This is a big financial burden and the stress and worry that brings to many should not be underestimated. As we pointed out above, being forced to make repayments is often a good thing for many as it forces you to implement a saving regime, but for some the stress and burden out ways the benefits.
This is the issue of having your money tied up in property. If you were renting, the money you would have had for purchasing your property could be used for other things such as travel, study or other investments the quite possibly yield higher and quicker returns than real estate.
The transaction costs to buy and sell property are high, so when you buy a new home you are committing yourself to the location for quite a significant amount of time unless you want to risk loosing money. As a renter of course you may only be locked in for 6 months. we always say property should be a minimum 5 – 7 year investment by comparison.
Rent will steadily rise over time if the past is anything to go on, mostly due to inflation and increasing property prices. Initially, in the majority of situations, having a mortgage repayment will be higher than rent in the short term, but as you pay off more and more of your loan the interest price subsides. The typical mortgage is paid off in 30 years or less. Once you hit retirement and your income is reduced, it may be difficult to find a large sum of money each month for rent.
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