Many people come to a certain conclusion at different stages in their lives, and that is when they start thinking about moving out to a house if they do not already have one. And this is where the main question arises: “Should I rent or own a home?”. Obviously, this is a perennial concern, especially for people living in countries with a high level of population migration, where there is an abundance of ready-made houses for rent as well as for sale. Also rising inflation doesn’t make things any easier… If you are also currently trying to make such a decision, or simply trying to orient yourself for the future, in this article we will help you find out, is it better to rent or buy a house.
Renting vs buying a house
Buying a house
Let's start with buying. When it comes to buying your own house, it usually and even always involves taking out a loan. Let's be even brutally honest - unless you're earning the proverbial 'millions', you can't manage to buy your own home without additional funds. However, it gives you the opportunity to fulfill your dreams, inner desires and needs for the future everyday life.
When buying a house, we focus on all the most important aspects - we choose the location closest to the ideal one for us, we carefully plan the square footage, the number of rooms, the neighborhood - trying to fit everything into our future plans and current needs, as well as our possibilities. Buying a house on your own also gives you a lot of options regarding the design of the house itself - by buying a shell or shell-and-build house, you have many more options to finish it the way you want. You can change the colors of the walls, change the number of windows, doors and much, much more, according to the taste. Buying a house is also a decision that evokes many emotions, from security and joy, even to a sense of maturity and fulfillment.
Renting a house
Moving on to renting, it cannot be said that this is a bad option, but it is in many ways quite limiting. By definition, renting is not permanent, rather it is temporary and fleeting, often tailored to the current situation.
For example, when choosing a house to rent, we will focus less on the neighborhood, because we do not assume to spend the rest of our lives there. So we will be matching it to our current job, perhaps the school the children go to or other key circumstances at the time. It also gives limitations in terms of the number of rooms, interior design and the ability to fully tailor the house to one's own tastes, which can significantly disturb many people. On the other hand, rented houses are usually fully furnished and do not require a financial contribution to organize, which can help, if your budget is limited in any way. Either way, it does not involve taking out loans, long-term financial commitments and other formalities that directly affect us in the case of an investment such as buying a house.
Renting vs owning - advantages and disadvantages
The descriptions in the preceding paragraph are only an abbreviated description of both situations. In this one, we will try to present the pros and cons of both options more clearly.
Advantages of renting
- A house for rent is easy to find. There is a mass of websites where we can find dozens of advertisements with such houses, with their detailed descriptions, photos and even opinions about the owners.
- Rental fees are fixed. Only the utilities, which we are responsible for consuming ourselves, are included, so budgeting is easy, and no sudden expenses are foreseen, as the landlord in most cases offers to repair any defects free of charge as long as they are not caused by the tenant
- Amazing flexibility. In the event of a sudden change of job or university and the need to move to another city or even country, it is easy to give notice and even the penalty for giving such notice will be less than the repayment of the loan taken out to buy your own property.
Disadvantages of renting
- You are not investing in yourself, but someone else. By paying monthly rent, you are only spending money. If the house was yours, every loan repayment and bill payment would be an investment in your future and your own wealth.
- If you become overly accustomed to comfort, you will be left proverbially "with nothing" in the future. The fact is that people like comfort. However, the moment you rent all your life and buy nothing of your own, in your old age you will have to worry about whether your pension will be enough not only for your medication and living expenses, but the costs associated with further renting
- Any improvements will pass to the landlord's account. If you improve anything, renovate, or in any way 'tweak' anything in the house that is not yours, as long as it is not furniture or electronics, everything gets upgraded at the end not for you, but for the landlord.
Advantages of owning
- Although this is a major step, the house you purchase will be your property forever. Once you've dealt with the repayment of the loan you've taken out, or any other financial redemption, you'll have your own place on earth forever.
- The value of a house increases over time. If you don't plan to spend your whole life in one place after all, you can expect your property to increase in value, which, when you sell it, can make it easier to make further plans for your life.
- You can do anything you want with your home. Once again, there are no restrictions! You can organize parties, renovate it as you wish, change literally everything in it as you please! Wise changes will also increase the value of your home.
Disadvantages of owning
- It can be difficult to plan for expenses. Not only can unforeseen breakdowns and accidents cost you money, but also loan installments or bill prices can rise unexpectedly, resulting in additional costs that you may not be able to cover, or you will find it quite difficult.
- You become theoretically and also physically attached to the property you purchase. If you buy a house, you will no longer be able to move as easily as if you were renting, because selling a house is very difficult and impossible "overnight."
- Danger of taking out a loan. If you do not pay the installments on the loan you have taken out, you will be faced with visits from a bailiff, who, in extreme cases, can even take away your home.
Which is better financially?
Both options raise financial issues. Buying a house usually obliges you to take out a large loan, which you pay back over a very long period of time - from a dozen, to even several decades! So this causes, in addition to the fulfillment of dreams and known joy, a sense of constancy and attachment, great responsibility and a mass of obligations.
Lending is also a financial commitment, but a bit more secure. The costs are much lower and much more constant, and therefore the decision is less risky and demanding.
Perspectives for the future in buying vs renting a home
This is also a matter that depends on you. It is impossible to give a definite answer, so for this purpose, ask yourself some questions.
- Do you plan to travel, to move in the future?
- Will you find a job in the place you want to settle in and manage to keep it?
- Do you plan to start a family?
- Where do you want to be, and what do you want to be doing in, say, 10 years?
If you can answer all of the above questions and have read the article carefully, you will certainly be closer to making the right decision. Remember, however, that it is not worth rushing or making a decision by force. Take your time and, of course, good luck!