Advantages of being a homeowner
There is little doubt that purchasing your own home is the biggest and most important financial decision you will ever have to make. Buying a house is a huge commitment with long-term consequences that have to be considered carefully, and not just in monetary terms. The future pattern of your whole life can change with the purchase of a property. However, the long-term benefits of being a homeowner far outweigh any negatives, ensuring that the major financial commitment you make is a prudent one.
Getting on the Property Ladder
Taking that initial step on to the property ladder can often be fraught with difficulty. Currently, that difficulty has increased somewhat due to the shortage of homes within the UK. Current homeowners are less likely to move during a housing shortage, as many fear they will not be able to find a new property to move to. Demand therefore outstrips supply and leads to higher property prices. A recent report issued by the Royal Institute of Chartered Surveyors predicts that the average value of UK properties will have increased by 35% by the year 2020.
While these may not seem to be the most conducive conditions in which to be purchasing property for the first time, it is certainly not impossible to secure decent homeowner loans. First-time buyers can improve their chances of being able to choose from a range of mortgages by having a spring clean of their personal finances before making any applications. This reorganisation should include ensuring all of your household bills are paid on time, any old inactive credit card accounts are officially closed and that you have a healthy credit balance.
The Benefits of Being a Homeowner
If you can get yourself on board the property train, the benefits which present themselves to you as a homeowner are numerous and certainly have the potential of being extremely profitable in the long run. The biggest advantage that comes with owning a property rather the renting is the potentially huge savings that can be made over a long period of time. Recent research carried out by Barclays Bank has revealed that, on average, a homeowner will save a colossal £194,000 over a fifty-year period compared to those who rent. This figure even takes into account any maintenance costs which a homeowner may have to cover this period of time too. Although renting a property may be cheaper initially, rents are almost certain to rise over time, thereby negating any financial advantage that may have been gained.
Owning a home also gives you a lot more bargaining power when it comes to obtaining additional credit and this doesn’t just apply with secured lending, home ownership can also help with your ability to obtain unsecured borrowing too depending on who is credit scoring you. Without your own property as collateral, you are in a much weaker position when it comes to dealing with lenders.
Homeowners also benefit greatly from financial security when they decide to retire. Once a mortgage has been paid, the property will be owned outright. The same cannot be said, of course, for renting, when there is never anything concrete to show for a lifetime of payments. When someone who rents decides to retire, they still have to continue paying rent regardless. As inflation increases, so does the cost of paying rent. On the other side of the fence, once a mortgage has been paid off, the only payments required are for general maintenance and running costs.
Although renting a property may be the easier, more straightforward option in the initial stages, taking the more difficult path of obtaining a mortgage is the better option in the long run. Those people who own their own home have the luxury of looking forward to a more secure financial future.