Renting ( pros )
Allows you to save more money
You won’t have to spend your savings on deposits and other costs associated with homeownership if you choose to rent rather than buying. You’re freeing up funds to spend or put into other investments. You might obtain a better return on investment than buying a property, depending on where you put your money. You should carefully consider your investment objectives and strategy.
You may also be at a stage in your life where you aren’t ready to devote all of your money and monthly income to a down payment and a mortgage. Do you want to go on a trip or go to school?
It provides you with additional options.
Renting allows you to be more flexible. Once your lease expires, you have the freedom to move from house to house and neighborhood to neighborhood. Because of the high expenditures of buying and selling a house, you have less choice when deciding where to live.
It enables you to diversify your financial portfolio
Buying a home, especially for first-time buyers, frequently means devoting all of your savings to a single asset. Are you comfortable putting the majority, if not all, of your savings into a single investment? Renting gives you the flexibility to invest your money in a variety of ways. You may spread out any potential risk by diversifying your investments.
Renting(cons)
Renting may be more costly
If history is any guide, the cost of rent will climb consistently over time as a result of inflation and rising property prices. Your mortgage payments may be more than the cost of renting at first, depending on where you reside, but as the principal is paid off, the interest charged decreases. Many people are able to pay off their mortgage in less than 30 years. Sure, they’ll have to pay for house maintenance and council fees, but they won’t have to make hefty monthly payments to live in their home. You will always have rental payments if you chose a life of the tenancy. It may be tough to come up with a substantial chunk of money each month once you retire and your income is cut. You may also find it more difficult to endure rent hikes.
There will be no forced savings
A mortgage is similar to being obliged to save money. You must pay your mortgage on a monthly basis, putting money into an asset that is expected to appreciate in value over time. It’s easy to spend money you don’t have rather than save or invest it while you’re renting.
Buying (pros)
It provides you with security and independence
You have certainty when you buy a property since you are not at risk of being evicted by a landlord. Tenants have very little control over how long they can stay in a rental property once the lease term has ended. You also have the freedom to renovate and design your home as you wish when you live in your own home.
House prices have risen over time
It’s enticing to have an item that could appreciate in value over time. While property prices have risen steadily through time, they can occasionally experience periods of slow growth or even decline in value. Homeownership is a long-term investment strategy, so keep that in mind.
You can take advantage of your home’s equity
The percentage of your home that you own is referred to as home equity. As you pay off your loan and the value of your home rises, your equity will rise as well. You could then be able to use the equity to put money into something like stocks or a managed fund.
Buying (cons)
You’ll have to pay interest
The amount of interest and fees you pay over the course of a loan can add up quickly. Prepare to expect interest rates to change throughout the length of your loan, especially if you have a variable rate or if your fixed-rate period has expired.
Chance costs exist
The ‘opportunity cost’ is the cost of having your money locked up in real estate when it could be spent or invested elsewhere. You can use the money you would have saved for a deposit and mortgage payments towards anything else if you opt to rent. This could be for a variety of reasons, including travel, study, amusement, or your own company. It might also be utilized for other assets that could provide higher or faster returns than a home.
