09/01/2018

Rent or Buy: The Advantages Of Stepping Onto The Property Ladder

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Especially if you have been a student and experienced living away from home, moving back in with your parents can seem extremely cramped and like you are taking a major step back in your own independence. If you decided not to go to university or college, you might have been able to save a substantial pot of money from being able to work full-time and be questioning whether you want to rent or take the plunge for a mortgage. Renting is a viable option to get some good life experience when it comes to paying bills on time, budgeting for food shopping and petrol, and seeing how good your cleaning skills really are. However, getting on to the property ladder sooner rather than later could save you money in the long run. Below are a few reasons why you may want to wait it out with your parents until you can afford to move out, or - if you are in the financial position to do so - apply for a mortgage.

Cheaper In The Long Run
A lot of people believe that renting is a lot cheaper than buying a starter property, however, weighing the cost of monthly rent vs monthly mortgage repayments - the latter commonly works out cheaper. In fact, all you have to do is look at the price of a studio for rent, and you would find that it is likely on par with the mortgage payments for a two-bedroom apartment. You will also eventually pay off a mortgage and own your property outright; a rented property will always belong to someone else. A mortgage down payment may seem like a monumental amount to you right now, compared with the average monthly rent of an apartment or flat. However, you could end up saving yourself thousands by committing to a mortgage. You will also need to take into account when renting a property that you will need references, a guarantor, money to cover the cost of administration fees, one to two months rent upfront, and your security deposit which is usually the equivalent of a couple of months rent also. You may also have the best credit rating you will potentially have in your life if you have been working since leaving education. A good credit rating ensures you are a low-risk investment for a bank to take on, and make it easier for you to quality for a mortgage. If you chose to rent a furnished place, when you do eventually get a mortgage you will have the added cost of buying all of the furniture.

You Can Create Your Very Own Space
Unless you have a very laid back and relaxed landlord, it is unlikely you will be able to make any significant changes to the house or apartment you move into. If moving out has been something you’ve been craving for a long time, you may find that moving into bare, plain white walls and cream carpets a little unsatisfying. If you fill your spare time pinning images of your interior design dreams to your Pinterest walls, you may before long find yourself wanting a space that is entirely your own to do whatever you want with. Jumping on the property ladder will ensure you are able to create your own haven, without having to worry about leaving pin marks in the wall.

Prepares You For Your Future Plans
Even though getting married or starting a family may seem so far into your future it's not even worth thinking about, one day you may find yourself in a committed relationship and/or expecting your first child. Families generally require a bigger home than the typical first-time buyer starter property. Getting on the ladder when you need a larger house could be significantly more difficult due to the expense and the risk of the investment from the bank. Not only will already having a mortgage make it a lot easier for you to borrow more, but you can also put the money from your first mortgage towards your next, maintaining your monthly repayments at a manageable level despite the added cost of the larger property. If you find yourself in a financial position where you are able to buy another house without selling your first property, you can rent it out for a monthly fee that will most likely cover your new mortgage payments. Even if you don’t have the wish to have a family or get married, you may just find you outgrow your apartment quicker than you expected, so it’s always a good idea to consider the future.

It Is One Of The Biggest Investments You’ll Make In Your Life
If you own a house, no matter what issues arise in your life you will always have a roof over your head. This can be an invaluable asset when times get tough. There are three main areas you can invest in during your life, and those are pension, property, and stock exchange. Investing in your pension will obviously help you a lot in later life, so it is important to start up a private pension plan to go alongside your state pension as soon as possible. However, owning your own property completely will take a lot of the strain off of your expenses when you do come to retire, as your monthly outgoings will be considerably less. As you get older, you can even downsize your property and use the money left over after selling up and moving to buy a holiday home or campervan, allowing you to retire in ultimate comfort and luxury.

This blog may have helped to inform your decision to jump on the property ladder as early as possible, but it is always useful and well-advised to weigh up all the options available to you before making a decision. Renting in no way means you won’t be able to get onto the property ladder in later life, and for many people renting and then buying it is the only suitable option due to their financial situation. However, if you have the option and the funds to choose whether to buy or rent, buying may be the most beneficial option for your future due to the reasons detailed above.
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