Why Buy Instead of Renting?

by Mark Johnston

The UK has one of the highest property owning rates in the world, no matter how many boom and busts there are, the British still like the idea of buying their own property.

When considering whether to buy or rent it is worth looking at the local area and weighing up how much you would pay to rent versus how much mortgage payments cost.

However property website Zoopla claims that it is cheaper to buy a home than to rent in 45 out of the 50 largest towns across Britain. The report states that on average the cost of renting a home is now 13% higher than the cost of interest on a mortgage for a comparable property.

Overall rents exceeded the cost of having a mortgage by more than 20% in 14 of the largest towns and cities in Britain, according to recent research.

With house prices down, low interest rates and sky high demand in the private sector, buying has never been a better option for those able to secure a mortgage, although the vital part of this statement to take in to consideration is ‘able to secure’ a mortgage.

While property prices have eased from their 2007 peak, many potential buyers have been thwarted by lenders dramatically hiking up their deposit requirements.

However house prices have remained stagnant in the past few months now is a good a time as any to buy property; the average house owner is less affected by fluctuations in house prices.

Owing a house does bring more responsibilities, such as maintaining it, which is the owner’s responsibility but not tenants.

So is buying worth the effort or is it better to rent?

Someone has to own every house in the land; therefore if you do not own the roof over your head you will have a landlord that you rent it from. This landlord clearly thought it was worthwhile to own the property; otherwise they would not do it.

A mortgage on average lasts around 25 to 30 years, but there will eventually be an end to the payments, which means being able to live rent free for the remainder of your years.

Rents also rise with inflation and often in the UK they rise faster than inflation. Whilst there is the prospect of the base rate increasing from 0.5% to 5%, many lenders did not pass on the full base rate cut to consumers so when it does rise it is unlikely that mortgage payments will go up by much.

When you own your own home, you own a real asset; ‘real’ as in it is actually there: bricks and mortar. Not just that but the property is likely at some point to go up in value as the years go on.

In truth, it can be a bit of a pain being a home owner. Nevertheless, you just can not beat owning your own home. It is yours for a start and there are huge benefits, many of which are actually financially good for you!

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