Published on: 15 January 2015
Is it better to rent or buy? This is a question that we will all most likely face at some point in our lives. It is also a question that comes with no straight forward or easy answer largely because a lot comes into play and this is a decision that will have a major impact on our lives.
Usually, most people associate buying a house as a step towards financial freedom. However, this is not always the case with some people. Although owning a home gives some form of stability such as no more having to deal with a landlord, it might not be the right time as yet for some take a serious financial decision such as buying a house.
More often than not, the annual costs that come with owning a home can be greater than what you would have paid on rent. Some of these costs include taxes, maintenance, insurance, and interest. However, this does not mean that owning a home is not a great financial move, and in some cases, this could be the best financial decision.
General points to consider before deciding buying a property or renting one
For most, the decision to buy a home is one that requires a lot of consultation and financial re-evaluation. If you are thinking of making that big financial step, following are some questions that you should be able to answer to make things easier for you to decide:
For those who are in stable employment, the amount of income earned plays a major role in this decision. This is because you do not want to add extra strain on your current financial situation. If you are considering buying a home without steady income, you need to analyze your estimated annual income and the costs associated with owning a home to figure out if this is really a smart financial move. Further, the amount of time you plan on residing in the home plays a major role in the ÔÇÿrent vs buyÔÇÖ decision.
If you only intend to stay in the home for a few years, you may not realise returns from the investment. Usually, a home becomes profitable after approximately eight years. Therefore, it is important to understand that this is not an investment that results in swift returns. Another question that a potential home owner needs to think about is the source of income.
This an important point to address because you need to first identify if you have enough funds to smoothly manage to buy a new home. Further, you must think about whether the ends justify the means, especially when you are selling a property or making another investment to buy your home. Last but not least, explore all the other options to ensure that your decision is not one you will regret in the future and would in fact be one that you would be proud of. It is advisable to weigh the pros and cons of the ÔÇÿrent vs buyÔÇÖ decision in light of economic, financial, social, and all other relevant factors to arrive at a calculated and well thought out decision.
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