September 2019 - Beni Kudurt

The Benefits and Drawbacks of Renting vs. Buying a Home

Beni Kudurt Sep 30, 2019 0 Comments

Your unique situation and goals will determine whether you should rent or buy a home. The ideal option for you will depend on your current financial status, your long-term ambitions, and your preferred way of living. Both approaches have advantages and disadvantages.

We have broken down the benefits and drawbacks of renting and buying a home to help you decide which is best for you.

Renting a Home

Renting can be a better choice if you need flexibility and want to be able to move about easily. Among other benefits of renting a home are:

Renting typically requires less money upfront than buying a home, as renters typically only need to pay a security deposit and first month’s rent.
Less responsibility for maintaining or repairing the property.
There is no need to pay for property taxes or home insurance.
Renters who are unclear about their long-term goals can benefit from being able to commit to a property for a limited time by renting a home.
Depending on their demands and budget, renters can select from a variety of apartments and homes.
Renting can also help with renters save money for a future down payment when they are ready to buy a home.

However, renting also comes with several drawbacks such as:

The lack of equity as renters do not have any ownership or investment in the property they reside in.
Renters may see rent hikes over time, which can make planning a long-term budget a hassle.
The lack of control over any repairs or upgrades to the home without the landlord’s consent.
Usually, the money spent on rent does not qualify for any tax benefits.
Privacy may also be sacrificed due to landlords’ potential 24/7 access to the rental.
Renters are not able to benefit from the increase in property value, in contrast to home owners.

Buying a Home

Purchasing a home can be a better option if you want to increase your equity in a property and have more control over it. Other benefits include:

Paying mortgages gradually increase the property’s equity, which can grow over time to become a large financial asset.
Homeowners can make adjustments or enhancements as they see fit and have more control over the property.
A house’s worth may rise over time, which could result in a profit when the house is sold.
Tax deductions for property taxes and mortgage interest may be available to homeowners.
More control over privacy.
Owners are free to make changes to their homes to suit their preferences and tastes.

Similar to renting, there are also drawbacks to buying a home. Drawbacks include:

It normally costs a lot of money up front to buy a house, including the down payment and closing charges.
All upkeep and repairs, which can be expensive and time-consuming, are the responsibility of the homeowner.
It could be challenging to sell the home if the housing market is unfavourable or if the homeowner’s financial status changes.
Since they would need to sell their home, homeowners may find it more difficult to move to a different place.
There is also a risk of having negative equity—when they owe more on their mortgage than the home is worth—if the value of their home drops.
Recurring costs of Property taxes and home insurance that homeowners must pay.
Purchasing a home necessitates a substantial financial investment and long-term commitment.
In contrast to renters, who have a wide choice of possibilities, homeowners are only limited to purchasing homes that are currently on the market and within their price range.

Renting can be a better choice if you need flexibility and want to be able to move about easily. Purchasing a home can be a better option if you want to increase your equity in a property and have more control over it. Renting may allow you greater freedom if you are unclear of your long-term objectives.