If you are considering buying a home, then there are a lot of things you need to think about first. The age-old question of whether you should buy or rent is still hard to answer. Of course, renting has its positive points. Renting means that you have the flexibility to move whenever you want and that you have the security of a landlord to help with repairs. Buying your home, though allows you to build-up financial security and work towards owning a property.
Much of continental Europe choose to rent, rather than to buy. In places such as Spain and France it is quite common for people to rent a property their whole life. The problem is that their children don’t inherit anything when they die. If you’re not sure whether to take the plunge and buy a home, then you have a tough decision before you. Here is how buying a house can save you money in the long-run.
The Initial Cost Of Buying A House
You will need to save about 15% of your house’s total cost before you buy a home. The percentage will make up your deposit, which all estate agents ask for as a standard procedure. If, for example, you are buying a home that costs £200,000, you will need to save up £30,000. That is a huge lump sum, which will be difficult to save up. It is understandable, then why so many people choose to rent rather than buy. If you can manage to save a large amount of money though, you will save yourself money in the long run. That money will never go to waste. By putting cash into your home, you are investing in yourself as you will own the property. Never think that buying a house is a waste of money. Everything you pay into the house is yours, so you never lose out.
The Average Cost Of A Mortgage
The average cost of a mortgage, in monthly payments, is less than the average rent cost. People often assume that mortgage repayments are expensive, but that is not the case. You stretch your mortgage over twenty, thirty or even forty years, so the repayments are minor. If you go to an estate agents in Beeston, for example, you can discuss your mortgage options. You might find that buying a home will mean you’re better off on a monthly basis.
Home Buying Means Building Equity
Each time you make a mortgage repayment you are building equity in your home. Equity means that you own something that is worth value. Ten years into paying your mortgage off you might own in the region of 30% equity of the home. You can release equity by extending your mortgage. That in itself means that owning a home gives you a level of financial security. If, for any reason, you should need a large sum of money, you can re-mortgage your property. Releasing equity will mean that it will take you longer to pay off your mortgage, but could mean you can pay off other debts. When people retire they often decide to release some of the equity in their home, so that they can take a lifetime trip. If you were to rent all your life you could not get a large lump sum, which would limit your retirement options.
Every year the price of rent goes up due to inflation. The brilliant thing about buying a home is that you can avoid inflation costs. Your monthly repayment plan will stay the same for a matter of years, so you will not have to pay more and more as inflation rises. By avoiding inflation, you can save yourself a lot of money and allow yourself to have a better standard of living.