The answer to this question is not straightforward. In fact there is no right or wrong answer. It comes down to personal circumstances, market conditions and is always a hotly debated topic. The case for and against both options can easily be made. Fundamentally it depends on your choice of lifestyle and personal circumstances.
Recent record low interest rates have played a significant role in keeping the cost of borrowing low and driving down monthly mortgage payments. But lending criteria have been strict and inflation has been consistently above the Bank of England’s target.
The latest research from Zoopla shows that buying a property is currently 13% more cost-effective on average than renting a property (varies by location across the UK) however the gap between the cost of renting and buying is narrowing as house prices begin to rise.
So, because I don’t know your personal circumstances I cannot say which option might suit you best, so instead, here are some things to consider when deciding whether to rent or buy:
1. You’re investing in your future
If you own your home and have a repayment mortgage, rather than an interest only mortgage, you are investing in your future and creating a valuable asset. Your monthly repayments aren’t going to a landlord and creating ‘dead money’ for you. However whilst the value of your property may go up as well as down, at the end of the term of the mortgage you could own the property outright.
If you own your home you can do what you like to it (within the planning regulations of course). You can make it a home for your family or simply move in and carry on. You’ll also be in direct control of any problems with the property.
3. Discipline and experience
The house buying process can be a daunting one, but when you have done it once, the process is very similar for future purchases. If you’re a first time buyer, owning your first home can be a great way to kick-start financial planning for your future and help you to create a household budget to manage the costs of running a home.
An often overlooked advantage of buying your property is that you’re also becoming part of an existing community that makes up the local school, church or shops and create lifelong friends and support.
Renting allows you to choose pretty much where you’d like to live – subject to budget! In most cases you can break a rental contract after 6 months, allowing you to move to a new location or try a new location perhaps as a test before you decide to commit and buy in the area.
2. Free from financial responsibility
As a renter you are not going to fall foul of any housing market related conditions. You will of course have to pay rent but you’re not tied into monthly repayments on a bigger loan and therefore cannot fall into negative equity.
3. No maintenance costs
As a tenant it is the responsibility of your landlord to maintain the property, pay for decoration and its upkeep.
So, as I said, there is no right or wrong decision – it comes down to your circumstances and personal preferences, but these pointers might help you make a decision one way or another.
Viewing property is one of the most exciting elements of the house hunting process. It’s the chance to have a good nose around properties whilst at the same time hopefully striking it lucky and finding your dream home.
However there are a few things you need to do during and after the viewings which will help your property search going forward.
1. Have an open mind
Most things about a property can be altered – apart from its position and the amount of natural light it enjoys. Consider these first. Is it in a street in which you’d be comfortable? In which direction does it face? What does it look out on and how noisy is it? Make notes as you go and look for a sense of balance and proportion throughout.
Be aware that you will likely be seeing the property in its most attractive state. Assess the shell of the home – not the lifestyle or taste of the current occupant. Don’t be afraid and open doors and cupboards, check the water pressure in the shower and so on.
3. Irregular rooms
Watch out for irregularly shaped rooms and think about how you’d use each space. Is there enough space for all your belongings and will there still be enough space in a year or three’s time?
Don’t pretend to be interested if you’re not. Be polite but no need to be over-friendly – you might end up in a heated negotiation and it won’t help if you’ve upset them at the start. If you’re genuinely interested, start asking questions.
5. When to view
It’s best to try and do your viewings during the week rather than wait until Saturday – that’s when everyone else will be viewing. If it’s right for you, move fast.
6. Communicate with your agent
Always tell your agent what you thought about a property. Agents need feedback in order to develop a more detailed picture of what you are looking for.
7. If you’re genuinely interested, start asking questions
Have any alterations been made? What fixtures and fittings are included? Have there been any offers? If it’s a flat, how long is the lease? How is the building managed? Who’s the freeholder? Is there a service charge? The more information you have, the more confident you will be.
8. Second viewing
If you decide to go on a second viewing it should be at a different time of day from your original visit. In summer, when it is unlikely you will ever see a property after dark it can be an idea to make your second viewing as late into the evening as possible. It is not just light levels that alter with the time of day; so do traffic levels and neighbour noise levels. Take a walk past at night and talk to one of the neighbours.
Every month, Phil’s top tips will be published on the Zoopla Blog.
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