Choosing to rent or to buy is a tricky decision to make - we've weighed the pros and cons of each to try and make the decision a bit easier.
The decision to rent or to buy a home is one that many clients struggle with when it comes to choosing where to live. Both options have their benefits and downfalls, and unfortunately there is no clear-cut answer as to which one is objectively better. If a client is on the fence about whether to rent or buy a home, it may be helpful to list out the pros and cons of each for them:
Pros of renting a home:
• Renting is not as permanent as buying – it is much easier to move somewhere else at your leisure once your contract ends.
• Your landlord deals with damages – if the roof leaks or the sink breaks, you are not responsible for fixing it. The landlord takes care of that for you.
• No mortgage – as long as you pay rent on time, there is nothing for you to worry about.
• No down payment – while you may have to give a security deposit, you don’t have to pay a hefty down payment that you would if you were buying a home. You also usually get the security deposit back in full once your contract ends (provided that no damage was brought onto the home at your fault.)
Cons of renting a home:
• You don’t have freedom to make changes – if you wish to alter the home in any way, you must first get a permission from your landlord, who may or may not grant it.
• Nonrenewable contracts – you may not be able to live there for as long as you might want to after your contract ends.
• Strict pet policies – some places do not allow you to have pets if you’re a renter. The places that do also usually require you to pay a pet fee.
• Inability to build equity – since the home is not your own property, no equity will be built from renting no matter how long you rent for.
Pros of buying a home:
• A sense of pride – it feels good to own a home!
• It’s more long term – buying a home ties you to one place that you know you’ll be at for a while. You don’t have to worry about contracts ending or falling through.
• Home value increases – if you buy a home, its value increases the longer you live there. Then, if you choose to eventually sell it, you could make much more than you paid for it.
• Tax deductions – when paying mortgage for a home, the interest and property taxes included can be written off as tax deductions.
Cons of buying a home:
• It’s more difficult to move – selling a home is a painstaking, lengthy process that you’ll have to go through if you decide to move in the future.
• Pricier payments – mortgage payments are generally much more expensive than rent payments. In addition, buying a home also requires down payments and closing costs.
• You are solely responsible for any maintenance that has to be done – unlike renting, you do not have a landlord that you can call if anything breaks or gets damaged.
• Commitment to a place – if you’re buying a home, you’re most likely going to be there for a long period of time. Therefore, if the area turns out to be not as pleasant as it seemed earlier, you’re stuck.