Money

Do I rent or do I buy as a first time homeowner?

May 19, 2015

celeb homeWhen moving out of our parents place to live on our own, we don’t generally think of renting a beautiful home with a white picket fence. Instead, we are proud to think about owning our very first property. But with homeownership comes a whole bunch of concerns for some, and for others it’s more financially sensible to rent. But is it really?

Pros of renting

Renting a place is normally seen as a less significant commitment than buying. When you sign a lease, you don’t have to worry about selling the place if you have to move.  Also, you will have greater flexibility if you have a job transfer. There’s less stress involved in the maintenance and repairs of the home, because the landlord has to see to those things.

Cons of renting

A noteworthy disadvantage of renting a home is that the payments won’t produce investment benefits like a housing payment does. Renting a home leaves you with limited control in upgrading or making changes to the property as the landlords make these decisions. You normally pay a security deposit when renting and you have to sign a lease for a specific rental period. Meaning there is really no stability, because sudden changes could occur.

Pros of buying

There is no greater feeling than having pride in your first home purchase. Financially, you can also benefit significantly, because you build up equity value in the property over time. A bond repayment calculator will give you a clear inclination of how much you owe on the bond. By the time you have reached the end of your loan term, you completely own the property. Homeowners also get tax deductions on mortgage interest and property tax payments. As a homeowner, you also have more independence on property upgrades and improvements to your home, though you may have to gain approval from the city council for certain upgrades.

Cons of buying

The maintenance and repairs to a home can become a bit costly and there’s also less flexibility in moving because of the time and expense of going through a property sale. If you don’t intend to stay in an area for many years, the hassle and costs of buying and selling often aren’t practical.

Whether you are buying or renting, the choice ultimately relies on you and what your preference is at the time.  Choosing to rent or buy is not just about flipping a coin. If you are not ready to settle, then the best option would be to rent property instead of buying.

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