Moving out or considering staying in a new place? Then you could be facing the dilemma of whether you should be purchasing your next home or renting an investment property. Below, we discuss several factors that can help you decide whether you should rent or buy your new home.
Where to Stay
The more prestigious your next home location is, the higher you can expect the cost to be. This applies to both the home purchasing cost and the monthly rental fees.
For some of the more prestigious places, most of us have no option but to rent, since the purchasing price is too high.
Carefully consider the location. Moving into a less sought after location could allow you to get on the property for the first time and move away from renting.
When you purchase a property, most will require a 20% down payment, while others require only 3.5% or even none at all.
If you can afford to pay 20% of a down payment, then purchasing a home could be beneficial since the amount of loan repayment each month will often be lower than rent repayments with the added bonus of having an asset to show for the money you have spent.
Length of stay
The duration of your stay matters too. If you are only planning to stay for a year or two, the cost of renting will be cheaper than purchasing a home.
In other cases where the line is not as clear, there are rent vs buy calculators that can help you to determine whether buying or renting is more viable for you. The longer you plan to stay in an area, the more seriously you should consider purchasing your own home.
If you are in Newcastle, then hire a Newcastle building inspector. If you are staying elsewhere, hire one located closer to your prospective home.
At times, the issues are not apparent until a professional carries out an inspection. If the building turns out to be in a good state, then you can purchase without worry. If there is buidling work to be carried out this could result in you having to rent a property as well as paying a mortgage on the home you bought. Proceed with caution and always within your budget.
Ideally, you should ensure that your monthly payments are less than 25% of your nett income. Check the mortgage rates and rental fees each month to find out which one is more affordable.
Spending less than 25% on your home each month will be kinder to your finances, and you can also budget to create savings for your retirement or for a down payment on a furture house purchase.
Number of people
A single person has a lot more flexibility than a family. It is easy for a single person to relocate as external factors are not as many in considering where they go and whether they rent or buy.
For a family, a town’s infrastructure may have a large bearing on whether or not they buy or rent. This is especially true when there are facilities nearby such as schools, public transport systems and the like. If you can afford it, buying would be the best option as houses in these areas are very sought after and have a good re-sell value. Rental prices are often high and hard to get due to high demand.
Maintenance and Repair
Renting means that you do not need to worry about home maintenance and repairs. The landlord is obligated to fix leaky pipes and electrical faults for you.
Should you own a home, however, the maintenance costs are on you. The same goes for your home insurance, property taxes and the like. If you are sure that you can afford these other payments, you can consider buying a home.
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