Rent or to Buy? That is the Question!

How many of you are paying rent each month and wish you could buy your own property? If you are renting alone or even sharing with friends it can be expensive and frustrating. Chris Morgan debates the issues:

Renting

Sadly, it's not until something goes wrong around the house and you ask for something to be done about it that you find out what type of landlord you have. Until this point everything can be fine. It's also not uncommon for rents to increase upon renewal of a short tenancy placing you in a compromising position. Landlords know that the inconvenience of moving can sometimes be too much to bare, especially if you're a busy career minded bunny (as I'm sure you all are). Tenants sometimes feel stuck in a trap. If a property is not your own, you feel less inclined to feather your nest and make improvements which can be depressing if your environment is not as you would ideally like it. Any money you spend improving your surroundings would be lost to simply enhance the value of someone elses property.

Sharing

Sharing with friends or a flat mate can split these problems and take away some of the stress. Sharing can cut the costs; rent, electric and gas bills may not be such a burden. 

You should also consider the downs as well as the ups. Living with a friend can eat into your independence, cramp your style or even lead to a major falling out. I've even heard of affairs where the flat mate has run off with the boyfriend/girlfriend.

Buying Pitfalls

Some people are happier to have their own haven. Somewhere you can close the front door and get away from the world. No interruptions or invasions can be an attractive prospect.

The desire to own your own property can be overwhelming, but you should remember that owning your own home is not always an easy ride. It is the biggest decision you are likely to make and all the relevant points should be considered beforehand. 

Your mortgage adviser should address most of these responsibilities and discuss them thoroughly before you commit to a mortgage. After all, any borrowing that you take is going to be secured on your home. You know the one, Your home is at risk, blah, blah, blah…

Before buying a property you should see a mortgage adviser and consider how much you can afford to spend each month. Remember to take account of any insurance that you may need to have in place. Cover for the buildings, contents and your monthly payments in case of illness should be a bare minimum. Write your budget out so you know the standard of living you will have once you make the commitment. It is widely believed that owning property is cheaper. This is not always the case and the bills can mount up.

What happens if the boiler stops working? General maintenance and repairs are commonly overlooked by new home owners, as these have normally been covered by past landlords. Repair and labour costs can be expensive and provisions should be made in the form of an emergency fund of cash. Try and build up one of two months salary at least. 

Most people want to buy new furniture when they move into a new place. Or maybe forced to if their previous rented home was fully furnished. It can be tempting to buy on credit, but be careful not to over burden yourself and pay close attention to the annual percentage rate (APR). This rate is the true rate and takes into account the way the interest is charged and any other hidden costs.

Buyer Beware!

Not all sellers are as honest as us queens! Always take a second or even a third look at a property before you exchange contracts. Look behind furniture, pull back curtains and look at the view. Look for signs of subsidence (cracks in the walls). Look carefully at newly decorated rooms. This can hide a multitude of sins and why are they decorating if they're selling up? Although sometimes it's only because they've been watching the 'House Doctor'. If in doubt appoint a surveyor to conduct a Home Buyers Report or even a Full Structural Survey. These reports will exceed the observations made within a standard mortgage valuation. Observations will be made regarding the condition of the property. He will also check the price you're paying for the property. 

Go For It

After all of this, if you're still in favour of buying your own, then get yourself a mortgage agreed before you start viewing. Know how much you can afford to spend and the amount of deposit that's needed. Remember to consider any extra costs of buying, such as stamp duty, solicitors fees, search costs, valuation/survey fees and removals (See the Pink Mortgage Guide). These can be more than the deposit for a property and are often forgotten until the last minute.

Once you move in, you can set to work right away. Any changes you make to your own place are solely for your own benefit, enhancing your environment and future value. Any increase in the capital value of your main residence obviously belongs to you and, even better, is tax free. 

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