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Are you wrestling with this question: is it better to buy or to rent?

Monday, February 13, 2017
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Seeff shares the pros and cons of both.

Pros of buying:

When you buy a home, you own an asset that will in all likelihood increase in value over time. It is also a place that you can always use as a backup to live in if you are using it as an investment and not living there already. Owning your very own property - especially as you are approaching retirement age - is invaluable it today’s economic climate!

When you own a property your monthly expenses are more stable (although probably more than when renting) especially if you have a fixed interest rate and you don’t have to be concerned about any rental escalations.

You can alter or renovate the property as and when you please and mostly without the consent of others. You also have more privacy than when renting, this is because you can choose al your own service providers including maintenance personnel, gardening services etc.

After 20 years of paying a bond you finally own the Property, but after 20 years of renting you still own nothing.

Once you have paid off a part of the bond you may use the Property for security or you may have the use of a Flexibond.

Cons of buying:

Buying a home is a big responsibility and it is in most cases a long term financial commitment.

People who rent can often afford to live in a place that they probably would not be able to afford if they had to service the bond. When you rent you may not own a property, but you can enjoy a more upmarket lifestyle in the shorter term.

You have less flexibility when you own a property as opposed to renting a property. As an owner you probably want to be close to your investment to keep an eye on it making it difficult to be a free spirit.

The market is always fluctuating and may not always be favourable for sellers which means that you could have to wait a considerable time before it would be wise to put your property on the market.

Pros of renting

You would probably be able to afford a nicer property when you are renting because costs go up considerably when you own a property.

Your landlord is responsible for levies, property taxes and any maintenance the property may need, while you are only responsible for the rent and electricity costs.

You are only tied to the property for as long as your lease binds you and you can then move on to the next thing or property without too much (if any) admin.

If you are disciplined enough renting enables you to save for a deposit to eventually buy your own home.

Cons of renting

You basically have to accept the property as it is handed to you or have to obtain the owner’s consent to make any alterations. In most cases you also won’t be reimbursed when making any alterations if the owner does give consent and you may not take it with you when you leave.

Although you may choose not to renew your lease when you want to move on it goes both ways unfortunately. The owner can also decide not to renew the lease or sell the property leaving you feeling disappointed.

Rental escalations are out of your control.