Buy or Rent – Buy

Whether to rent or buy can be a tough decision. In a lot of ways, it is easier to rent than to buy. If a potential buyer has a low income, they may struggle to get a mortgage, they may also find it hard to come up with the initial costs of buying. However, if the choice is available then there are advantages and disadvantages of both renting and buying.

There is, usually, less financial outlay when renting a property. For example, assuming that the initial cost before regular rent payments included a bond or deposit plus a month’s rent in advance plus any fees, that might be a lot but the initial outlay for buying a house might be ten per cent, or more, of the mortgage which could, potentially, be twenty, thirty, even fifty times more than the initial cost for renting.

However, once the initial costs are settled, a mortgage can often costs less per month than might be paid in rent. In this way, it makes more sense to buy because the monthly costs will be lower.

Another advantage of buying over renting is that, with renting, it is “wasted” money. It is not going anywhere other than into someone else’s pocket and the tenant does not get anything out of it. If the tenant leaves a rented property, they have nothing to show for the money they have spent. Whereas, if they had bought a property, it would belong to them. It would be an investment. They could do whatever they liked with it, whether living their themselves, renting it out to someone else or selling it on in the hope of making a profit.

Disadvantages of buying over renting, though, include the fact that, when renting, the landlord is usually responsible for things such as reparation. Having bought a house, this would be the responsibility of the house owner. While this may be a disadvantage financially, there is the advantage that, if it is your responsibility, there are no arguments over who gets a job done, when it gets done and who pays for it. Renting often means having to rely on someone else to get things done.

Also, houses are often rented over a short term. If you have a good landlord who is willing to continue renewing the contract with you then that is fine but this is never guaranteed so renting could mean moving every six months or so and having to find money for the upfront fees every time. With buying a house, this will never be a problem.

So, while there are some advantages of renting, it seems more logical to buy.