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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.
Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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