Rent or buy a property

Rent or buy a property graphic

Rent or buy a property

Rent or buy a property – which is the best option for you?

“Should I rent, or should I buy?” is something a lot of people ask themselves. Buying a house or a flat is one of the biggest financial decisions you will make, so it is important to get it right. This guide will help you decide if you should investigate buying a house, or if you are better off renting.

Mortgage vs rent?

It is important to weigh up the pros and cons of buying a house as it is a huge decision affecting you for a long time.

Benefits of owning

Once you have paid off your mortgage, your home will be yours and you will not have to worry about paying for somewhere to live. If your home increases in value, you could use the equity (its market value less the mortgage debt) to help buy a bigger home or fund a comfortable retirement.

You can spend money improving your home and increasing its value without having to ask a landlord.

Sometimes it can be cheaper to buy than rent.

Potential downsides of owning

It is a big commitment – you need to be sure you can afford what you are taking on.

When interest rates rise, your repayments will go up. It is important you are prepared for a rise.

It might not always be easy to sell your home, depending on what is happening in the market.

You need to be sure you can afford maintenance costs like fixing a broken boiler or leaky roof.

If you stretch your budget when you buy you might not have money for meals out, holidays and entertainment.

If you are living with someone and split up, deciding what to do with the property can be complicated and expensive.

If the value of your home falls, you might be unable to sell if you owe more to your mortgage lender than your home is worth.

You have less flexibility than when renting. For example, selling up and moving is more expensive as you have estate agency and legal fees to pay.

If you are buying a flat, you might incur additional service charges which is not usually payable if you are renting.

Can you afford to buy?

The first step towards buying a property is working out whether you can afford it.

If you buy a home, you will have to pay for:

  • deposit
  • survey costs
  • stamp duty
  • removal costs
  • legal costs such as solicitor’s fees
  • your monthly bills – such as gas, electricity, home phone, etc.

Find out how much you can afford to borrow for a mortgage before committing. Compare this with the upfront and ongoing costs of renting when deciding whether to rent or buy.

If you cannot afford to buy

If you cannot afford the costs right now, think about setting up a savings plan to help you reach your goal.

Government help to buy a home.

If you are on a low income, a first time buyer, a key worker, or only have small savings for a deposit, there are housing schemes available to help you buy your own home.

We have more guides available for first time buyers, home buyers, remortgages and buy to let.

We also recommend The Money Advice Service if you want more detailed information.