For anyone that is considering moving out of their parent's house, the thought of signing themselves up to a twenty-five year commitment of huge monthly payments may seem a little daunting, to say the least. While setting yourself up with a mortgage does have its benefits, there are a number of reasons why it is certainly not the only option available to you and why you should seriously consider renting property instead of buying it.
When the global economic downturn hit a few years ago and it seemed that businesses everywhere were going bankrupt and closing down, the effect it had on the general public was, in many cases, just as brutal. Many people lost their jobs and living expenses seemed to rise overnight. This meant that many people's levels of disposable income dropped significantly, causing trepidation in the housing market, and many people choosing to rent rather than buy property.
Some say that by renting a property, you are effectively throwing money away as you could be using that money to pay off a mortgage, but in fact with house prices so high it is difficult to predict exactly how much a house will be worth ten years into the future, let alone twenty-five years into the future when the mortgage will hopefully be paid off. What you lose in depreciation could be the difference between renting and paying off a mortgage, so it may be more beneficial to save the extra money you save by renting to then use as a large deposit on a house in the future.
The process of buying real estate is not only long-winded and full of bureaucracy, it is also expensive. The fees involved can easily reach five percent of the cost of the house, not to mention the deposit that is needed just to get the mortgage. On top of this, houses need maintaining, and that includes new houses. The amount you spend on maintaining your house can also run into thousands of dollars every year.
When renting property, the biggest headache that you will have from a situation that is out of your control will be the landlord. Any financial commitments that you have will be based on reasonable conditions and depending on the contract you signed, changing properties should be relatively simple and straightforward. Buying a house can be a continuous headache, with factors such as depreciation, interest rates, insurance, maintenance and other financial responsibilities to continuously be aware of.
