To Buy or To Rent: That is the Real (Estate) Question
Category Just Imagine Properties Team
Not since that most famous of Danish princes, Hamlet, asked "to be or not to be" has a question carried as much gravity as the one of whether one should buy or rent a property. Of course, whereas old Hammie in his soliloquy was rhetorically questioning the value of his existence, the tug-of-war between renting or buying has much more practical and concrete implications. Especially in these unusual and uncertain times, major financial decisions have much greater consequences over the long term.
In our previous blog post, we looked at 5 reasons to buy a house right now, and, in this article, we'll weigh up the advantages and disadvantages of renting and buying.
Let's start with the rent option, as that is commonly viewed as the easiest and most convenient - some might say non-committal - route. But there are a few important caveats to this.
Certainly, renting affords one a lot more flexibility to move should the need or desire arise to do so. It is generally merely a matter of giving notice for the period stipulated in the lease contract, whereas selling or buying a home is a somewhat more involved and lengthy process. We all know that life can change in an instant - you may, for example, be offered a job in a different city or province - and renting makes it considerably easier to uproot and relocate. Moreover, when you rent a property, concomitant costs such as maintenance and repairs are the responsibility of the owner or landlord, and not of the tenant, which does guarantee a certain degree of peace of mind. The upfront costs of rental are also relatively low - typically a deposit of one or two months' rent - and you do not have to pay any initiation fees, transfer duties or bond registration costs.
The above makes a pretty compelling case for renting one's property, but, as it turns out, there are a myriad of manifest advantages to purchasing a home in 2020.
For one thing, the current property market benefits the buyer, giving you the opportunity to buy a house below its market value. One of the most important benefits of owning property, however, is that it gives you leverage by boosting your credit score and enabling you to borrow more money should you ever need to. This makes property the most important asset in your financial portfolio. By investing in renovations, you are also increasing the value of your property so that, when the time comes to sell, you stand to make a healthy profit on your investment. Ergo, owning property is an effective means of wealth creation, and, with the recent interest rate cut, you have an opportunity to slash your home loan. It's also important to take into consideration that bond repayments fluctuate very little (or not at all if you opted for a fixed interest rate), whereas landlords have carte blanche to significantly increase the cost of rent.
Ultimately, the decision to buy or rent depends on your personal circumstances and financial profile. As the property experts, we have the knowledge and expertise to help you make an informed decision. Contact us today.
Author: Charl Mijnhardt
