To rent or to buy?

Posted in Mortgages and Property on Wednesday, June 27th, 2012 at 13:47 by Sarah Evans.

As soon as young people are out on their own and earning an independent living, they must confront a basic financial question: should they be content to rent over the long-term, or should they do whatever it takes to be able to take that first step on the property ladder and buy their own home?

There is no doubt that it is much harder these days to become a first-time homeowner. Even though prices on properties in many areas have tumbled, so has the availability of credit. This has led to what even experts are calling a credit crunch, in which some individuals will probably never be able to borrow the significant sum that a mortgage on a house involves.

This is truly unfortunate because a lifetime of renting is a great deal less stable in several ways. The renter must always worry that the property will be sold and he or she will be told to find new lodgings. Over time the monthly rent on many properties will increase with inflation, making it difficult for renters to pull ahead of the inflation curve even with careful debt management.

Then there is the biggest disadvantage to renting: the payments never end. Those who buy a house can eventually pay off every last penny and live payment-free. Those who rent will always face a new payment, month after month.

The advantages of home ownership mean that young people should do their very best to find a way to buy – even if it means living longer with their parents so that they can save more money towards a deposit.

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