Should you rent or buy a home? It's a big decision that's different for everyone, as one lifestyle could be more suited to you than the other.
What are the differences between owning a home and renting?
Whether you’re paying a mortgage lender or a landlord, you’re mainly paying them so you can live in a house that you love.
But even though mortgage payments are often similar to the cost of rent, both options have their advantages and disadvantages.
Here are some of the main changes you can expect if you make the move from renter to homeowner.
You’ll have to make your own repairs and upgrades
You’ll need to pay for repairs and improvements out of your own pocket, but you have control over who does the repairs so you can make sure they’re carried through and to a standard that you’re happy with.
You can decorate your home however you like
You can paint your own walls, put up shelves and frames, even change the carpet or flooring. It's your choice to renovate as much or as little as you like, even take down walls if it’s safe to do so.
For me it's all about being able to decorate and create a home that I love. Plus I've had enough of paying off someone else's mortgage instead of my own!
Frankie
You can get a pet (if you like!)
Being an animal lover can be a deciding factor on whether you should rent or buy a home. But check the lease if you're buying a leasehold property as there might be pet restrictions.
I’ve always grown up with dogs and they've been a big source of happiness for me. Since moving out many years ago and living in rental properties, I haven’t been able to get my own dog due to restrictive landlords.
Now I've started putting some money aside for a mortgage deposit so I can have a home where I can have a dog – maybe even two!
Ines
Get up to £1,000 extra towards your first home deposit every year with a OneFamily Lifetime ISA
You can’t be told to move or have your rent raised
Stability is big advantage of choosing whether to rent or buy a home. As long as you’re keeping up with payments, you can’t be asked to leave your home. There is a risk of mortgage payments going up at the end of a fixed term or if you choose a variable/tracker mortgage though.
I've always valued security and freedom that comes with ownership above all else and never liked the idea of renting.
So when my then landlord decided to sell up and leave the country, it seemed like a good deal and I bought the very same place.
Milda
You can rent out your home
Whether you just have a spare room in your home or you’ve decided you don’t want to be there for a while, you can rent your home to someone else, as long as your mortgage lender agrees.
Bear in mind that if someone is in your home and paying you rent, your mortgage payments might change. This could also count as income so you might need to pay tax on it.
You may pay less on mortgage repayments than you do on rent
Monthly mortgage payments and rental costs are currently fairly similar, so if you can afford to rent it’s likely you’ll be able to afford a mortgage.
Even if you’re not saving much money, you’ll be reducing your mortgage each month.
My mortgage is significantly lower than what I was being charged in rent and I have the freedom do what I want to my own home.
Victoria
You can have someone move in with you
It’s worth considering that if the person who moves in with you decides to help you with your mortgage payments, they might have a claim to your property later on and they could even force you to sell it if they want their money back.
If you're thinking of having a partner move into a property you own, it's a good idea to seek advice from a solicitor or even get a cohabitation agreement drawn up to protect you in case things don't work out.
You also need to inform your mortgage lender as this is sub-letting.
You’ll be paying to own an asset that can increase in value over time
One of the biggest advantages of buying a home is that your monthly payments will go towards owning a valuable asset. The home you that you buy is also likely to increase in value over time, meaning it can sell for more money later on (although this isn't guaranteed!).
How can I save for a mortgage while renting?
Even if you can already afford monthly mortgage payments, your main challenge will be saving up for a mortgage deposit.
But there are some shortcuts to saving for a mortgage deposit even while paying rent!
A lifetime ISA can help you build your deposit faster as it comes with a government bonus.
You can put up to £4,000 each tax year into a lifetime ISA and the government will give you an extra 25% bonus on top - that's up to £1,000 a year!
However, if you take your money out for anything other than to buy your first home or before you turn 60, you’ll have to pay a 25% withdrawal charge.
Open a OneFamily Lifetime ISA
Our Lifetime ISA comes with a 25% government bonus, worth up to £1,000 a year!
Our Lifetime ISA invests in stocks and shares, so the value is likely to go up and down over time. This is normal for this type on investment, but it means there is a risk you could get back less than you put in if you withdraw at a time when the value is lower.
