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Buying a house is probably one of the biggest financial decisions you'll ever make. However, the decision-making process alone is not easy since you know it would involve your money that you earned after a lot of effort. On the other hand, renting is a convenient option for some, it incurs a regular expense that weighs on the household's monthly finances. Another sad part is you keep paying for something that will never be yours.
Whether you decide to rent or buy a property, here are the advantages and disadvantages:
Buying a Home
Primarily, owning a home is one of the best investments you can make because it offers the long-term benefits of security, equity and potential growth in personal wealth. The value of your house and lot will always appreciate over time. So when you decide to sell it, you will surely earn a profit off the sale.
Secondly, being a Homeowner allows you creative control of your property. You can do anything with it. You can alter everything, including décor changes, landscaping and renovations, to suit your needs and your style. When you buy a house it becomes your legal property, which allows you greater freedom in its use without restrictions often enforced by a Landlord.
Thirdly, if you don't want it anymore, you can sell it or have it leased which enables a Homeowner to generate income from renting out the property. This income can be put towards the home loan.
Lastly, being a Homeowner who ensures repayments are made on time can improve your credit profile. Not only will you have a large investment to your name, but paying your monthly bond repayments on time increases your credit score.
Being a Homeowner comes with huge financial responsibility including bond repayments and regular house maintenance. There are additional costs to homeownership and these usually include rates, taxes, insurance, and maintenance for which the Homeowner is responsible unlike when you rent – your landlord pays for these things.
Aside from these, a Homeowner has less mobility when it comes to being able to move home than a Tenant who rents on a short-term basis. A Tenant can leave a property after fulfilling the notice period, which is usually one month. However, a Homeowner is likely to be dependent on selling their home before being able to buy a new one, and therefore it might take longer to be able to move homes once the decision has been made to do so. In addition, reselling is not easy especially when you're located in flood- and earthquake-prone areas.
Renting a Home
Firstly, renting a property allows more flexibility than owning a home. This is ideal for those who could be faced with sudden changes such as job relocation. Renting requires no long-term commitment from a Tenant, and is the best option if you don’t intend on staying in one place for a long time.
Secondly, tenants have no ownership and less responsibility. You can come and go as you please. Moving out is easier for a Tenant than a Homeowner as there is no stress of finding someone to take over the lease, or finding a Buyer to purchase the property as this is the responsibility of the Homeowner or Landlord.
Thirdly, tenants save money on maintenance costs because these are shouldered by the owner. The only insurance required by a Tenant will be to cover the contents of the home, while all maintenance work on the property is for the Homeowner’s account, as is homeowners insurance.
And lastly, as a Tenant, there is the possibility of living in an area in which you could not afford to buy.
Rent costs may be as high as your loan payments. You don't have a say in anything. When your landlord sells the property, you have no choice but to move out. Moreover, a Tenant is bound by the rules of the lease agreement, which can impact the freedom to use or renovate the property. You cannot make changes to a rented property without the consent of the Homeowner.Renting offers no wealth creation or return on investment since the property will never legally belong to the Tenant, and instead, the Tenant is paying towards the Homeowner’s home loan.
Look at all these advantages and disadvantages to help you decide on what really suits your needs, lifestyle and budget. Buying a home is a good investment, but if you can't afford one yet, renting is good for the time being.
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