“Should I buy or rent a home?” A question many people have asked themselves. In this blog post we will list a number of things to keep in mind when making the decision. Also, please bear in mind that this is not an exhaustive list of every consideration.
Buy or rent: When does it make more sense to rent?
When you have limited funds. In this case, renting makes more sense because buying a home involves additional costs, often including an initial deposit.
When your work or employment situation is uncertain. Renting requires no long-term commitment from you. It allows you to be flexible, which suits an uncertain employment situation. If your work is uncertain and things go wrong, in a rent situation you are not locked in to long-term debt from purchasing a house. Uncertain income is not suitable for a certain long-term expense.
When your foreseeable future is only short-term. Are you planning to move somewhere, for example, in the next couple of years? It would make more sense to rent in the interim. Are you going through a life transition such as a divorce or loss of your spouse? Renting would make more sense while you regain your stability.
Buy or rent: When does it make more sense to buy?
When you can cover the additional costs of owning a house. These days, it is very difficult to obtain a 100% bond to finance the purchasing of your house. One generally needs to pay an initial deposit, which is quite substantial for those entering the market. Additional costs include transfer duties and attorney fees.
When your work or employment situation is stable. It is important that your income is stable over the long-term. A standard term for a bond repayment is 20 years. That means 20 years of a consistent expense.
When you plan to live in the home for at least five years. That is, when your foreseeable future is more long-term. Consider your work and family commitments as well as any potential travel plans. These things considered, do you foresee that you will live in the home for at least five years? If you buy a house and can stay in it for five or more years, you are more likely to recoup what you paid in additional costs and could even generate a return on your investment.
Buy or rent: need advice?
If you need any advice or assistance on any of the above, please do not hesitate to contact us at [email protected].