Renting VS Buying: What's best for you?
Renting vs buying in the UK is a hugely debated topic amongst people looking to move into their own home. When it comes to deciding whether you should rent or get a mortgage, it’s important that you weigh up the pros and cons of both so that you’re better prepared to make a financial decision that’s right for you.
If you’re wondering whether renting is better than buying, or vice versa, you’ll be pleased to know that we’ve put together an extensive guide to help you reach your decision.
Should I buy or rent a house?
The decision to buy or rent a house is one that can only be made by you and whomever you’re making the decision with. It’s an entirely personal choice that can only be decided by weighing up the pros and cons of each option and seeing which one makes the most financial sense for you.
Below, you can find some of the advantages and disadvantages of buying and renting a house.
Advantages of buying a house
- The monthly repayments go towards you eventually owning the home, not into a landlord’s pocket.
- Once your mortgage is paid off, the home will belong to you.
- You can decorate and organise your home without asking your landlord’s permission first.
- You can make a profit if you eventually sell your home for more than you bought it for.
- You can’t be forced to move out by a landlord.
Disadvantages of buying a house
- It’s a very big financial commitment so you need to ensure that you can keep up with the monthly repayments and potential increase in interest each year.
- You’re responsible for paying for and arranging repairs if anything breaks in your home such as the boiler or roof for example, which can be quite costly.
- If you fall behind on your mortgage repayments, you could face getting into debt and potentially even have your home repossessed.
- You will likely need to have a large upfront amount of money to cover your deposit and other fees associated with buying a house.
- If you share a mortgage with another person and you split up, it can be complicated and expensive (many couple sign a 'declaration of trust' to protect themselves against this).
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Advantages of renting
- Finding a home to rent and getting all the paperwork sorted and completed is usually quicker than applying for a mortgage and purchasing a house.
- You won’t be responsible for repairs and renovation costs.
- It’s often more affordable to rent a home in the short term and it can be easier to raise finance to pay for your rent each month.
Disadvantages of renting
- You will never own the house if you continue to pay rent on a property.
- Monthly rent payments are often much higher than monthly mortgage repayments.
- Renting for long periods of time could result in you not being able to save for a deposit which means it could take you years to be able to afford to buy a house.
- If your landlord decides to sell the property, you may be evicted and have to find somewhere else to live.
- The landlord could decide to increase rent prices which means you might not be able to afford the new rent payments each month.
- The landlord can sometimes set strict rules such as no pets allowed in the property or no decoration allowed.
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What is the average rent monthly payment?
According to Homelet in May 2021, the average monthly payment for rent is £997 in the UK, or £854 when London is excluded from the statistics.
What is the average mortgage monthly payment?
According to a study carried out by Santander, the average mortgage monthly payment is £723.
Is it cheaper to rent or cheaper to buy?
In the short-term, it’s usually considered cheaper to rent as the rent that you pay each month is often cheaper than monthly mortgage repayments and the deposit that you have to put down on a rental property is also usually much more affordable.
However, depending on the type of property that you choose and the area that you live in, mortgage repayments can sometimes be cheaper than rent repayments.
How much mortgage can I borrow?
You can use a mortgage calculator to determine how much mortgage you can borrow by putting in your ideal monthly payments, the interest rate and the loan term of your mortgage.
Read more: What affects the cost of your mortgage?
Do I need a good credit score to rent?
Each landlord has a different idea of what a “good” credit score looks like, so it’s hard to qualify exactly what counts as a good credit score when it comes to renting. There’s no exact credit score that you need to rent a property, and your landlord will look at other factors to see whether you’d be the right person to rent their property.
Do I need a good credit score to be eligible for a mortgage?
Similarly to the credit score needed to rent, there isn’t one universal credit score needed to get a mortgage; it depends on the mortgage lender’s terms and conditions, plus numerous other factors as well, such as your credit history and mortgage affordability.
What other costs are involved when getting a mortgage?
When it comes to thinking about whether it’s worth buying a house, you’ll need to consider the associated costs that are involved in owning a house.
Some of the other costs involved when getting a mortgage include:
- Stamp duty
- House deposit
- Survey costs
- Removal costs
- Mortgage broker/financial advisor fees
Help to buy schemes
Help to buy schemes are government schemes that can help first-time buyers to purchase their first home in the UK.
What to do if you decide to buy a house
- Save up for a deposit or find a guarantor.
- Compare mortgages amongst different providers.
- Consider researching how to get a mortgage with no deposit.
- Think about whether you want to buy a house on your own or get a joint mortgage.
- See how much money you could borrow on your current salary and whether you could afford the monthly payments and interest.