When you have enough money saved up to put a deposit down on a property, you might be tempted to just go for it and buy your first home. But hold on one minute, buying a property is a big decision and depending on your personal circumstances, it might be worth renting for a year or two before taking your first steps onto the property ladder.
If you’re now struggling to decide if you should rent or buy, fear not, we’re on hand to help you decide.
When to rent
Having the deposit is just the first step in getting a property that you can call home. Even when you do have the finances in place for a deposit, there are some situations where renting is the ideal solution.
One of the most common times to rent first before buying is if you and your partner have never lived together before. Owning a property is a big step and you won’t want to make life more complicated should the relationship end. If you two decide that you can’t live together and split up, it’ll be easier to sort out the parting of ways at the end of the tenancy than the hassle from having to try and sell the house, or potentially one partner buying out the other.
It’s also beneficial, as with two incomes, assuming there is a profit after all bills are paid, you can save up for solicitors’ fees and the Stamp Duty tax, if you’ll be required to pay it.
Another instance where it would be more sensible to rent than to buy is when you are relocating to a new area. By renting, you can get a better idea of where the places to avoid are and you can look at properties in more ideal locations.
You wouldn’t want to rush into buying a property in your relocated area, only to discover that it isn’t the nicest and you might find it harder to sell it on in the future. Renting allows you to learn about the area and gives you time to find the ideal home in the ideal location.
If you’re under pressure to move in a short space of time then renting is a more viable option. In the case of property sales, they can take twelve weeks to be completed, whereas assuming a property is vacant either immediately or in a few weeks’ time, then a rental agreement can be a good solution for you. When time isn’t on your side, consider renting.
When to buy
Of course, those are great reasons why you should start by renting, but there are also occasions when it would be best to take the leap and get yourself onto the property ladder.
One of the most important aspects when deciding to buy or rent is to analyse your finances. A good idea is to look for a property that you would like to buy and one that you would like to rent. In the case of the rental property, work out how much money you’d be spending each month, including the rent payments and the council tax and estimates for gas, electricity and water and then see what you are likely to have left over at the end of the month. If you’re going to be making a loss, then it’s worth considering buying.
Realistically, the repayments on your mortgage should be less than the rent payments, meaning that it is more cost effective to buy if you have the funds in place to cover the deposit, solicitors’ fees and potentially even the Stamp Duty. If you're wondering if you'd qualify for the first-time buyer benefit of not paying Stamp Duty, check out our blog post "What is a first-time buyer?" to find out.
Also consider that not only are you paying less each month, but your money is going towards outright ownership of a property, rather than into a landlord’s pocket.
Another benefit of buying when you have saved enough for a deposit is that depending on the type of mortgage you choose; your monthly repayments won’t go up for a few years. Whereas a landlord is more likely to increase the monthly rent each year, even if it’s only a small increase.
One of the dangers of renting is that should your landlord decide to sell up, you face the arduous task of trying to find somewhere new to live. Whereas when you have bought your own home, the only time you might be forced to move out is if you fail to keep up with your monthly mortgage repayments. You can also live by your own rules and don’t have to ask for permission to redecorate and make substantial changes to the property.
The decision really comes down to your circumstances, if you are unsure if you have the finances to buy a property, then contact us, we can put you in contact with mortgage advisers, who will be able to assist you further. When you know whether you’d like to rent or to buy, do check out the properties that we have on offer.