A study by the Abbey National states that buying a house can save you thousands of pounds in the long term. This is because in recent months, the cost of renting has risen relative to buying. On average the benefit of buying rather than renting has increased from £5,000 to £10,000 over a 25 year period. The benefits of buying do vary considerably depending on the area. For example, the South East with high rents offers the best return for buying rather than renting. The Abbey say that buying in the South East can leave you £91,000 better off. [link]
Reasons to Buy a House
- Mortgage costs relatively lower than renting according to Abbey survey.
- Benefits of owning home rather than insecurity of renting
- The Abbey study looks at the benefits over a 25 year period. However, the real benefits of taking out a mortgage come when the mortgage is paid off - typically in 25-35 years. After this period buying a house enables you to live rent free. It is in your retirement that the real financial benefits of buying rather than renting will pay off.
Reasons Not To Buy A House
- It can be difficult to move around when you own a property. The market is notoriously slow.
- Falling house prices mean that it might be cheaper to buy in 2-3 years time.
- Local Property market. In some areas such as Wales and Northern Ireland, house prices have risen faster than renting meaning it can be cheaper to rent rather than buy.
3 comments ↓
[...] The other important issue is the alternative to buying which is renting. If you rented for the next 3 years, the cost of renting would probably be similar to the cost of paying a mortgage. The difference is that with paying a mortgage, you are working towards buying your house and being able to live ‘rent free’ in the future. In this regard the sooner you can buy and start paying off a mortgage the better. See: Abbey report which says buying is better than renting [...]
Think long term!
[...] Buying is preferable to renting. There are several advantages of buying a house rather than renting; the sooner you buy, the sooner you will have paid off your mortgage and you can live rent free. Abbey say buying is still cheaper than renting [...]
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