Changing residence comes with lots of responsibilities, workload, and stress, including the dilemma of whether you should rent or buy.
For the average population, buying a property or house is one of the most expensive purchases they will ever make in life. And if it’s first-time ownership for you, deciding between renting and buying a house can be complex and confusing.
There are many reasons why people might choose to rent a home rather than buy a home.
Many owners have expressed their views about the advantages of renting a home or reasons why renting is better than buying.
In this article, I’ll discuss the points from those views that should help you decide to rent rather than buy.
The list will be enough for you to learn renting vs. buying a house and the pros and cons of the same.
Table of Contents
#1 Renter’s insurance is cheaper than homeowners insurance
Renters insurance is meant for covering your personal property in case it is damaged or stolen. It includes liability coverage and loss of use coverage. Similarly, a homeowner’s insurance policy covers the same, but it also provides home structure protection as they own it. The home structure is more prone to danger than any other personal belongings inside the home, protected, and often are expensive to rebuild than the personal properties would be to replace.
#2 Renters can avoid some major expenses
It is known that owning a place you live has responsibilities and is more expensive than renting one. Spending money on a new roof, gutters, or other repairs and replacements can be costly depending on different repairing services. From a simple crack in the roof to a loose windowpane, all are an owner’s responsibilities. However, when it comes to renting, you are not responsible for the maintenance of the house.
There’s a massive gap between renter’s insurance and homeowners insurance. While renters’ insurance is 180 USD per year, the homeowner’s insurance is whooping 1200 USD per year.
#3 Renting makes moving easier
Not everyone’s job or work allows them to have a stable home, and not everyone likes to stay at the same place all the time. This is what renting is for.
Renting provides flexibility. Either you want to scale up your lifestyle, or sometimes downsize, or get a new job offer, you don’t have to wait around to sell your house. And don’t have to spend time with paperwork.
Even when you decide to change your neighborhood, your living conditions should not stop you from doing so. All you have to worry about is packing and unpacking.
One of the other reasons renting is a better option than buying is because living in an expensive city like London or New York can be possible. While renters can pay for their accommodations monthly without any difficulty, buying a home in big cities is a whole different thing.
#4 Selling a house is time-consuming and hard
In most areas or places, selling a home is difficult depending on the net migration, job situation, and average salaries of people. While it is nice to own a house to enjoy the sense of freedom and ownership, you must think ahead of it. Especially research the area you will be buying your home. Will it be hard to sell it off later? Will you get your expense back even if you could sell it?
In the case of renting, all these questions don’t matter because you can frequently move out without any responsibilities or burden.
#5 No down payment
Another reason why renters have a better deal than homeowners is that they don’t have to worry about the upfront cost.
In general, the renters have to pay a security fee which they will get back during moving out, considering there’s no damage to the rental property.
However, purchasing a home requires a considerable amount of down payment, generally around 20% of the property value. This is significantly higher than the rental security deposit on any day.
If buying a house costs you £250000 and you deposit £20000 with your bank with an interest rate of 2.29%, you’ll require a full monthly payment of £1008 + £439 interest rate. The total interest will be £72,298.94 if you’re paying it in a span of 25 years. The total cost will be £322,298.94 which is huge.
If you want to learn more about mortgage payment calculation, you can easily calculate mortgage payment in this online mortgage calculator to find out yourself.
#6 Renting doesn’t tie you to the place
If you want to live in a place for five years or more, buying a home seems logical. Finance experts mention that 5 years is enough for property prices to rise so that you can sell it and cover the initial buying cost.
If you are not sure about staying in the same place for 5 years, or staying in the city only for a couple of months, renting a home is the wisest decision to make. Renting a home doesn’t tie you to a home with responsibilities of maintenance and upkeep.
#7 Access to various facilities
Many middle-scale to upscale apartment complexes have amenities like pools and fitness centers, which a renter can access without additional charges. These luxuries, otherwise, would cost a huge expense to build for homeowners or to own because they require maintenance, upkeep, installation, etc.
Renting a home over buying is more than just individual choices. Especially if you are married and have children with you, renting based on moving advantage might not be the best choice.
Owning a home comes with its own merits, especially in the long run where you can sell it to cover your buying expense or if you like a neighborhood that can be good for your job and children’s schooling and adulting. Renting isn’t a waste of money after all.
Before you make a decision, you must learn why renting is better than buying and vice versa.