Renting VS Buying: The Untold Truth
Chances are, you have stumbled upon or being a part of one of the most heated debate in the modern era; the pros and cons between renting and buying a house. Each person you met, will definitely have their own bias opinion towards the matter, confusing you even more, on deciding whether to rent or make the biggest purchase in your life.
In order to help you, we have listed the pros and cons of each, so that you can make that well-informed decision of what is suitable for you, at the moment.
Flexibility: The biggest advantage of renting.
You can enjoy flexibility when you rent. Moving from home to home as soon as your contract expires or when you have to move because of your working requirement. You can enjoy the ability to pick and choose the time or type of house and location depending on your needs and budget at that moment. Not having limitations on where you stay means you spend less time planning your life around the house, because renting gives you the power to adjust where you stay to your current needs.
Diversify your investments when you rent.
When you buy a house, most of the time, it means that all your savings are being channeled to only one asset. Most investors will advise you not to have all your savings in a single investment. Don’t put all your eggs in one basket. The risk will be too big. Renting allows you to have a more diverse array of investment, spreading and minimising the risk for each one while ensuring one investment can be a backup to the other.
Your savings will not be tied to only one investment.
As mentioned early, when you rent, you are no longer spending most of your savings on all the cost associated with buying a house. This means you can invest elsewhere and depending on where you decide to invest, you can get a faster and greater return on investment than what you can get from buying a house. You might be at that moment in your life when you want to continue study or travel, hence it is logical not to invest all your savings into just buying a house.
Rental costs consistently rises/fluctuates.
It is known that the state of the economy affects the price of everything. This include how much you need to pay for rent too. The rate of the rest you pay will steadily increase over the years due to inflation and rise the property prices. Many people pay off their mortgage in less than 30 years but if you choose to rent, you will always have to pay rent. When you retire, the sum of money you get each month is reduced and it may be difficult in the future for you to fork a large sum of rent money each month.
No motivation to have savings.
When you buy a house, you will constantly need to save money because you are obligated to pay you mortgage every month. With renting, you can be tempted to spend the excess cash that you have on unnecessary things rather than saving and investing it into something more useful.
Stability and freedom
When you buy a house, you are given a certainty, an exact place that is yours. There is no risk of the landlord asking you to vacant a house you rent because they want to sell the house. You actually have no say on the length of your rent. Having your own home gives you the freedom or power to do anything with it.
The price of a house rises in time
Buying a house means you own an asset that will increase in value, depending on how the economy is. There are moments where the value of your house decreases but most of the time, it will bounce back.
Tied to paying interest
When you have a house loan, the amount of interest and fees that you need to pay is very significant. Some of these interest rates also fluctuates depending on the economy. So be ready to be shocked because of this fluctuation.
It is more than just deposit and interest rates
In order to buy or sell a house, the process is not cheap and simple. There are other fees that you need to worry about. The legal fees, stamp duty, depreciation fees, conveyancing costs, repairs and a lot more incurred costs that you need to worry about. It is hard enough for you to fork out the deposit and the loan repayment. Having to pay these other fees and costs will surely burden you in the long run.
So, which one is for you?
It is a constant debate that will never be solved. Whether you are going to rent or buy a house, you need to weigh in on your current needs, investment options and risks. Hopefully the pros and cons listed with help you in making your choice.
Renting can be a challenge these days, hence, ease you renting journey with SPEEDHOME as we will assist you in the best way possible!