Buying versus renting

Buying your first home isn't just about owning your own property. There are myriad responsibilities, risks and costs involved in owning a home.

Here's how to decide whether you're ready to take the plunge, or if you'd be better off renting. 

Buying a home - advantages

• If you own a property, if house prices rise and you eventually pay off your mortgage, you'll have a valuable asset as well as a home.
• As long as you keep up with your mortgage, you know you can stay in your home: You're not subject to the whims of a landlord who could terminate your lease.
• You can put your own stamp on your home without having to clear everything with a landlord.
• You're not throwing your money away on rent.
• With interest rates low at the moment, mortgage repayments can be cheaper than rent.
• You don't have to nag a landlord to make repairs: You can do them yourself.

Buying a home - disadvantages

• The cost. When you buy you'll need a sizeable deposit; plus there will be legal fees, possibly stamp duty and mortgage arrangement fees. Once you've moved in, you'll have a mortgage to pay plus other costs such as insurance, council tax and utility bills. Miss payments on some of these and your home could be at risk.
• You'll also need to pay maintenance costs. And you'll need to furnish the place (when you rent, you often have a furnished property).
• You are less mobile than if you rent: If you need to move because of work, for example, you'll have to sell up and go through the expensive homebuying process again.
• House prices don't always go up. If you've got a big mortgage relative to your home's value and prices fall, you might end up in negative equity. Then you'll find it hard to remortgage onto a better rate - and moving might be hard too.

Renting a home - advantages

• You won't have the huge initial outlay of homebuying. While you will need to put down a month or more in rent as security, that's going to be less than the deposit you'll need to buy a home. And you won't have legal, valuation and mortgage administration fees. If the property is furnished, this lowers costs further.
• It is far easier to move. Many rent because it offers them the flexibility of relocating with relative ease.
• The landlord is responsible for maintenance of the property, so you don't have the worry or expense of looking after a home.

Renting a home - disadvantages

• You could find yourself without a home at short notice: Landlords do terminate contracts.
• Rent is lost money. If you pay a mortgage, the payments are going towards buying you an asset - your home - which hopefully will grow in value. You have no stake in a rental property.
• Some landlords may attempt to 'cut corners' when maintaining your house, lowering the quality of your accommodation.