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Bricks and Mortar

Deciding whether to take on a mortgage is all about personal choice. Renting may be the answer right now for you.

Should I buy a property or should I rent?  For many of us, this is a silly question. OF COURSE you should … and then some of us will say with conviction BUY and some of us will say RENT!

Why is this not a silly answer? 

​Because both answers are true. For some people buying is a much better choice, for others renting is clearly the best choice.

Mathematically the two choices are equal at the moment – only luck and your own choices on which property you buy or don’t buy will decide your returns. There is a lengthy explanation involving future interest rates, tax and anticipated returns but the answer is as described - the choices are equal.

Right now buying or renting comes down to your individual situation. I will list reasons which could tilt your choice either way:

If you are bad at saving but want to save, you are often better off buying. Many more people are able to pay back a mortgage earlier than are able to save. This is the single biggest financial reason to buy and why it is better for most people to buy a property.

If you are sick of landlords or dearly want your own home, then these are good reasons to buy.

If you don’t have money for a deposit and would have to borrow 100% with mortgage insurance and at a higher rate, then this is a good reason not to buy. The lower and the less certain your income, the better it is not to buy but to save for a deposit.
Buying and selling costs about 10% of the price. If you regularly move, or may move soon, buy where you won’t want to sell or at least consider twice before buying.

The more rural your dream property, the less financial reason there is to buy. It may take you years or a big loss before you are able to sell rural or even regional properties. A good rental return is often not enough to make up for these shortcomings. However, the lifestyle can be absolutely wonderful and more than make up for these disadvantages.

If buying is much more stressful than not buying or vice versa, take this into account. If you have the skills to add value to your property cheaply (I for example don’t have such skills), then that can tip the scales as well. It really depends on your situation as both buying and renting are great choices for the right person. 

Find out who you are and have fun!

Should I buy a property or should I rent?

Written by Christoph Schnelle and published in the February  / March 2016 issue of Style magazine

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