Is it better to rent or buy a home?

The question has been asked countless times around the world for years: “Is it better to rent or buy a home?”. There is a short answer to this, but the short answer doesn’t take everything into consideration…

The biggest thing that isn’t taken into consideration here is where you are at in your life at that stage. The needs of a graduate moving into their first place and that of parents with 2 kids differ vastly.

Here is the short answer however: Buy if you can. If you pay you have an investment that keeps growing in value and you are not paying someone else’s mortgage for them.

Simple answer hey?

Over the years the difference between paying rent monthly and paying a monthly installment on a mortgage is almost non-existent. In some instances the rent is more than the mortgage payment and vice versa.

Why don’t people just buy homes then?

There are two answers to this question. The first is that there are many people who can’t get a loan as a result of their low credit scores or bad credit score in general. This is the first logical stumbling block for most people and there sadly aren’t many options available for people to get around this.

The second answer is however often down to uncertainty. People find it difficult to commit to the long term implications of buying a home, despite the obvious benefits of buying vs. renting. Most people don’t deal with these types of problems on a daily basis and the unknown scares them. If they rent they are only responsible for the rent from one month to the next or in some cases for a few months.

How do I then know which one to choose?

This is where you talk to an expert. In this case a financial planner.

Most people won’t look at their car when there is a funny noise coming from the engine and know what to do about it. They take it to a mechanic. The mechanic looks at the problem and suggests ways to fix the problem.

That is exactly what a financial planner is for. They help you make sensible decisions about all aspects of your finances as you progress through different stages in your life. As you life changes, so will your needs and getting a professional to help you is the best possible way to go.

Categorised in: Investments and Savings, Q & A

This post was written by thys