To Rent or Buy A Home? The Argument for Buying!
Since the financial & housing markets crashed back in 2007/08 interest rates have never been so low! House prices have also fallen and those who are able to get a mortgage are wondering if they should make the leap and buy their first home.
In a previous article I discussed the pro’s of renting, now it’s time to point out the pro’s of buying!
Mortgages are a huge commitment! Due to the cost of moving, you’re pretty much saying that you love a town and property so much that you’re willing to live there for at least the next 5 years! For anyone who’s ever had a 5 year loan, you’ll know that’s a substantial period of time. One of the benefits that comes from committing to a mortgage though, is that it’s also an investment.
If you rent a property you may spend years paying rent to a landlord and you will never see any of that money ever again. This is what many people refer to as dead money! You’re basically paying for someone else’s investment! If you do make the commitment to buy, you will be paying into your own asset. You will not only see some of your money again at some point in the future, but if you view it as a long term investment it will likely grow substantially over a long term period.
When you rent a property you are at your landlords mercy. I’m sure many of you who read this article have felt the fear, or even felt the effects of having to move because your landlord has decided to sell your home! You might have already developed emotional attachments to a home, your children may be in a local school or you might not want to uproot. If you rent, unless you have a long term contract you have no choice.
With a mortgage you have a certain amount of security. As long as you keep up with your mortgage payments and other bills you will never have to move if you don’t want to. This kind of security can give real peace of mind. Your memories are secure, your kids wont have to travel for miles to get to their school, you can be truly secure in your surroundings.
Home ownership also provides security when you enter old age. We all love to think we will be forever young! There will come a time though when you’re no longer able to work, meaning you’re no longer earning a wage. As long as you pay your mortgage off, home ownership gives you the security of knowing that when you reach this age you won’t have to worry about where you’re going to live, your home will be yours! It could also give you a nest egg if your pensions or other investments don’t perform as you’d hoped. The option may exist to downsize and have a cash lump sum to live off.
The benefit system is currently set up to provide financial relief for older people if they can’t afford to rent their own home. With the current state of government finances it would be wise not to bank on this being the case in future!
Most of us view our home as an extension of our personality, we want to add our tastes and improve it. Sometimes the improvements that we make can add value. If you make these improvements to a rented property your landlord will reap the financial rewards, not you! This might stop or make you hesitant to make your home truly your own, somewhere you can present your personality to the world for all to see.
Something To Pass On
We all want to do our best to ensure our children’s financial future. In making the decision to buy a home you’re investing in your children’s financial future. Providing this inheritance may in future give your children the opportunity to buy their own home or live mortgage free in yours.
Taking out a mortgage may be a huge commitment, one which I would encourage you not to take lightly! It does however give a certain security now and for the future that renting never could.