As a Mortgage Broker in Durham, we often have First Time Buyers considering their first move onto the property ladder as they ponder whether to buy a home or continue renting.
When deciding whether to rent or buy, the most common thing that you will hear is that renting is a waste of money. You have to ask yourself, is it a waste of money? The answer completely relies on your personal circumstances.
In fact, times have changed and it’s now a lot more common to find people who are renting. As an expert Mortgage Broker in Durham, we thought that with all of our mortgage experience we should talk about whether you should buy or rent a property.
The property market has been dipping up and down for quite some time now, you can never tell when it’s going to drop again. So if you decide to buy a property and the market plummets, your property value could too.
This has happened to many unfortunate homeowners over the years, although, history suggests that even if you buy at the very peak of the market as long as you can afford to keep the property eventually prices tend to go back up.
For example, during the period of the credit crunch sold values dipped. Before the coronavirus outbreak in 2020, the credit crunch was one of the lowest economic periods of recent times. Surprisingly, less than a decade later these sell values shot up to a new all-time high, meaning that if you bought a property between 2005-2010, it was more than likely that your property value had increased.
What we are trying to say is that if you invest in a property, in the future your sell price could increase which shows that it was worth buying over renting.
On the other hand, you could lose money if you are forced to sell your home at the wrong time, for example, this could be down to a relationship breakdown or a reduction in your income.
If you are concerned about the risks that come with buying a home, talking to a professional Mortgage Advisor in Durham could put you at ease. Before rushing into anything, it could benefit you to know where the market is currently sitting. We have been working within the mortgage industry for over 20 years now, we know exactly how the market is performing and what deals will be available based on what it’s like.
Buying a home is a huge financial commitment and you want to make sure that you get it right the first time. It also needs to be 100% right for you, the most important factor is that it matches your circumstances.
Applicants tend to think that mortgage payments are more expensive than renting, however, this is usually not the case. Also, depending on the mortgage that you take out, your payments may fluctuate; this is due to the interest rates changing. If you don’t want an inconsistent interest rate (can sometimes go down if you are lucky), you may want to look into fixed-rate mortgages. A fixed-rate mortgage could be the best option for you as your mortgage payments stay at the same rate through your whole mortgage term.
When renting, you’ll usually find that your monthly payments stay the same. Sometimes your lender may increase your rent for one reason or another but it’s unlikely that they’ll ever reduce it.
People like buying a home for a sense of security. No one can force you out of the property unless you fail to keep up with your mortgage payments. Whereas if you rent, if something goes wrong on the landlord’s end, they could ask you to move out.
Of course, you have some protection when you are renting and get asked to move out; you will always get a notice period. This is a disadvantage to renting, you are living in someone else’s property so if they want you to move out, there isn’t much that you can do. This is certainly not ideal, especially if you have family or work nearby or you have children in a local school.
Sometimes landlords give their tenants the first refusal to buy the property if they are selling it so they can save on estate agents fees.
Renting can be more flexible than owning. If at any time you want to move out of the property, you have the complete right to; you can give your landlord notice whenever you want. This may be because of a job offer in another area or that you simply want to move somewhere new, etc.
This is made more difficult as a homeowner as you have to decide whether you want to keep your home and rent it out as a Buy to Let or sell it. The process of selling a home and buying a new one is time-consuming and expensive, so if you are considering going down this route, it may be best to get Mortgage Advice in Durham. Speaking to a Mortgage Advisor in Durham could take all of the stress off your back and it could allow you to access competitive mortgage rates.
If you think that you may not be around in a particular area for very long you should consider whether the property is worth buying. Buying a property should definitely be seen as a long-term investment.
If you are renting, your landlord should be responsible for any major repairs. There will always be some letting agents and landlords better than others, however, as a tenant you should expect to do some minor maintenance of the property yourself.
If you are a homeowner then all of this is on your own shoulders, and so is insuring the property which will be a condition of any mortgage you take out.
Despite what some people might say, we know that owning a home is not for everyone. If you are a First Time Buyer applicant maybe you should consider renting first, especially if you are young or are moving in with a partner for the first time. If you move in with a partner, it could end up favouring you to rent just in case the worst happens and things don’t work out. Getting a name removed from a mortgage can be tricky and complicated whereas if you are renting, it can be a much easier process as you can move out whenever you want.
Before diving headfirst into buying a home, it could benefit you most to look at all of your options and see which route benefits you most. Buying a home is a huge financial commitment, you need to be certain that this is right for you and your circumstances. If you decide to rent though it may take you much longer to save up for a deposit.
As a Mortgage Broker in Durham, we see that most applicants end up deciding to buy over renting. People see getting a mortgage as an investment and they would much rather see their monthly payments going towards their own benefit rather than someone else’s. It’s sometimes just a case of getting your timing right and also being in the right financial position to be able to proceed.
To see what route could be best for you based on your personal circumstances, get in touch with your experienced Mortgage Advisor in Durham. Durhammoneyman will hold your hand through the whole renting/home buying process and we will provide our full help and support at all times. We have been doing this for 20 years now, we know exactly how to help you!