Your decision to rent or own a home depends on your personal preferences, financial situation or long term goal. Renting or owning a home comes with its upsides and downsides. Let’s look at the pros and cons of the two options. Hopefully, this will clear up any grey areas in your decision making process.
Pros of Renting a Home
Limited responsibilities: You are not saddled with the responsibility of maintaining the house or paying for major repairs. This can save you money and time.
Lower upfront payment: Renting a house does not require you to put down a huge amount of money—well, these days, that is debatable with the level of inflation in the economy but it is still a lot cheaper than making a down payment for buying a house. This is good if you don’t have so much savings.
Flexibility: If you are one who likes to experience what living in different places will feel like, then you are better off renting because it gives you the flexibility to move when you need a change of location.
Cons
Lack of equity: Renting does not build equity since the house does not belong to you. This means you won’t benefit from potential property value appreciation. Whatever money you pay benefits the homeowner.
No control over rent: You are at the mercy of your landlord when it comes to the increment in your rent. They can decide to review your tenancy agreement and increase your rent when it’s time for renewal.
Restrictions on customisation: You can’t remodel or redesign to your taste because the house doesn’t belong to you. If the house is dated and isn’t too aesthetically pleasing, there is only so much you can do even if you have the means to change it because you do not own it.
No tax benefits: When you rent, you do not enjoy tax benefits such as deducting mortgage interest or property taxes unlike when you own.
If you need to save towards your rent, a Target Account can help you achieve this.
Pros of Owning a Home
Investment opportunity: Owning a home can be a good investment strategy as the value appreciates over time and help you build equity.
Control: You have the liberty to do whatever renovations or remodelling you deem fit. You want your kitchen and living room to look different from what they looked like last Christmas? You got it!
Tax benefits: Homeowners may be able to deduct mortgage interest and property taxes from their taxes, providing valuable tax benefits.
Stability and security: Owning a home takes away the anxiety of someday getting a quit notice because the property has been sold or put to another use.
Cons
Financial commitment: Owning a home comes with significant upfront costs, including a down payment, closing costs, and ongoing expenses like property taxes, insurance, and maintenance.
Less flexibility: Owning a home can limit your flexibility, as it is more challenging to relocate quickly. Often times you need to sell the house to be able to relocate.
Maintenance and repairs: As a homeowner, you are responsible for the maintenance and repair costs, which can be expensive and time-consuming.
Market fluctuations: Property values can fluctuate, and there is a risk of losing money if the value of your home decreases or if you are forced to sell during a downturn.
Do you dream of owning a home? Our Mortgage loan can make that a reality.
Ultimately, the decision to choose either of the options depends on your priorities. You might want to rent now based on your current financial situation but have the goal to buy when your finances can accommodate it.
