A three-point guide to buying vs renting and which is best suited to you

Here at Howes Estates we know how difficult it can be to choose between renting and buying. With mortgage rates low and rents high, and with lenders now claiming it is now around 16% cheaper to buy than rent a home, you should consider your options wisely.

According to Halifax, on average, a three-bedroom house will cost you £621 a month to own, but if you rent the same property it would cost you £741 a month. When you take an annual overview of this we can see that owning is £1,440 cheaper, which also includes household maintenance and insurance costs.

Obviously, we appreciate that specific calculations for you renting or buying are variable and depend on circumstances, including; the property you wish to live in, house prices and rent prices in your area and the mortgage rate you’re able to qualify for. To break this down a bit we’ve got five pointers for you to consider:

Obviously, we appreciate that specific calculations for you renting or buying are variable and depend on circumstances, including; the property you wish to live in, house prices and rent prices in your area and the mortgage rate you’re able to qualify for. To break this down a bit we’ve got five pointers for you to consider:

Calculate the cost to rent

Property portal such as RightMove or local estate agents will be able to help you find out how much the house you want costs to rent per month.

Calculate the cost to purchase

Using the same advice as point number one, you can compare how much a similar property would cost to buy.

Work out your monthly payments

Go to a mortgage calculator and calculate how much your monthly payments would be in accordance to the probable size and rate of your mortgage.

Figure out the amount of savings you have

Take the time to figure out how much savings you’ve acquired. Bear in mind that unless you are taking advantage of a help to buy scheme you will need a minimum of 10% of the property’s value to buy it with a mortgage.

Have you remembered the extras

If you buy a house there are additional costs you have to cover including: buildings insurance, service charge (if buying a flat), and securing an emergency fund to cover unexpected events, for example, a broken-down boiler.

Further to the above five points, there are some pros and cons that come with both renting and buying for you to think about, and these could help you in deciding what’s the best option for you: 

Renting Pros:

• More flexibility on where you live
• Less responsibility and less risk
• Forget about those costs associated with buying, stamp duty, for example!

Renting Cons:

• People can see renting as ‘throwing money down the drain’
• You can be asked to vacate that property at very short notice
• Landlords can be slightly frustrating to deal with

Buying Pros:

• You’re making an investment for the future
• You have better security in terms of not having to move at short notice
• It’s possible to decorate and renovate as and when you please to your taste

Buying Cons:

• Significant sums are required to put down a deposit and stamp duty
• You’re solely responsible for the maintenance of the property
• It’s costly to sell and can be a pain to let if you need to move abruptly

Our final word on the old debate

If you are the sort of person who needs to move around for their job, or if the flexibility of being able to drop everything if something exciting were to come along appeals to your nature, then renting is typically the best avenue to go down.

It’s possible for tenants to leave their homes within a few months or even weeks in some cases, and you’ll never need to worry about the place again, unlike homeowners who need to go through the processes of selling, or alternatively find a tenant to let their homes.

On the contrary, being a home owner can give you a wonderful (should there be a word here?), and greater peace of mind. There’s not a need for you to fret about your landlord unexpectedly deciding to sell up and ask you to move out, which can happen with short notice for some people. Just as long as you’re making the payments on your mortgage each month, that house is yours and that is your home. Additionally, when you own your property, your biggest payment per-month is paying off something that one day will be entirely yours and that can be passed down through the generations if you decide to keep it in the family, securing a home for your family for decades to come.

Rent my house, mid-Devon and sell my house, mid-Devon are two very popular requests online these days, and that is because of the appeal this area has. So whether you are looking to rent, or to buy, let Howes Estates help you every step of the way!

Image: Rob under Creative Commons