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To Buy or To Rent

On the back of pent-up demand from the Covid-lockdown and a stamp-duty cut, house prices are booming. But will it last? I entered the property market in my early 20’s, part of the Thatcher property boom and promptly faced negative equity when the housing market crashed (painful memories). Buying a home can be expensive and renting can be flexible. Do you tell your children to rent or buy a home?

bricks

Home sweet home

House prices are booming, with the Bank of England reporting mortgage approvals were the highest since 2007. This creates stronger demand for property and higher prices. The Nationwide building society reported that house prices rose at an annual rate of 5.8%, the highest house-price inflation since 2014.

The benefits of buying a home:

  • Monthly repayments go towards buying.
  • Keep the profit from selling, if house prices rise.
  • Set the living rules without needing a landlord's permission.
  • Make changes to the property that could increase the value.
  • Avoid the landlord ceasing the contract.

The benefits of renting a home:

  • It’s easier to move accommodation many times.
  • Finding and renting a home is usually quicker.
  • No risk of losing money if the property's price goes down.
  • Your landlord pays for repairs and renovations.
  • Often rent a bigger home in a nicer area (vs mortgaged home).

Which is cheaper?

It’s cheaper to rent in the short term because the rent is often lower than mortgage repayments and the deposit is smaller. Over time mortgage repayments become lower in relation to take home pay, so buying a home can cost less in the long term. The key question is can you afford the mortgage deposit and repayments while still leaving enough money for living expenses and everything else? 

ChildMax pays your take home salary while you’re on 12 months’ unpaid leave, caring for a sick child. It starts from £49.50 or for easy budgeting an initial payment of £8.25 followed by 11 monthly payments of £3.75.

Visit at www.insurewithmax.com or call the UK call centre 0333 323 0098 for more information.

Important: Securing a mortgage or other debts against you home, means that you home can be repossessed if you fail to keep up with the payments.

Sources:

https://www.money.co.uk/mortgages/should-you-rent-or-buy-a-home.htm

https://www.independent.co.uk/news/business/news/housing-market-first-time-buyers-record-property-ladder-a9266476.html

https://www.housebeautiful.com/uk/lifestyle/property/news/a1529/average-home-owning-brit-facts/

https://www.theguardian.com/money/2020/oct/30/uk-house-price-buyers-covid-stamp-duty-cut-property-market

 

 

Date: 30 November 2020 by max robinson