A house is more than just a roof of one’s head in many parts of the world. It give individual and their families a sense of stability as well as identity. As such, owning a house ranks as one of the most exiting experiences in life. However, housing is the leading personal expenditure followed by food, transportation and insurance. In most instances, it accounts for up to one-third of one’s monthly income (Joy, 2018). The kind and varieties of housing selected is informed by someone’s goals, values, wants and needs. Therefore, an individual must decide whether to purchase or rent a place to live while taking into account the available amount of money they are willing to spend on housing as well as its related expenses. Even so, there are merits and demerits of owning and renting a house that an individual must consider carefully before settling on either option.
On one side, owning a house is very important to many people today. Everyone relishes the promise of having a housing property to call theirs in almost every part of the world. Moreover, owning a home gives one a sense of security, permanence, and belonging in a community. Unlike renting, owning a house gives individuals the freedom to customize the house to meet their standards by either renovating or redecorating the entire premise without the fear of facing legal problems. House ownership also has the advantage of scheduled savings. That is, when an individual owns a home, his or her monthly mortgage repayments are a kind of a savings plan. After a while, the individual accumulates equity in the house which is not the case in renting as the person continually pays rent to the lessor and he or she does not stand to benefit if the value of the property increases. House ownership offers stable costing as well. Mortgages repayments remain relatively at the same level originally agreed and are only subject to variation in interest rates (Joy, 2018). This stability allows individuals some certainty when it comes to budgeting for their future. It also implies that the mortgage repayments will remain stable and not increase with inflation despite the cost of life increasing as years pass. Moreover, house ownership offers a build up on equity. Owning a house increases the net worth of the owner over time. Unlike in renting, they may use the home to secure another loan for other projects such as investments or home improvements. Once the full amount of the mortgage is paid, the individual will enjoy a rent-free life and stand to benefit from value appreciation of the home.
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However, owning a home has high costs. Unlike a renter, a home owner will spend more money in mortgage repayment particularly in the initial few years. In addition, recurrent expenses such as maintenance, council rates as well as insurance tend to be costly. Initial investments costs as may as well be particularly expensive as they comprise deposits, application and conveyancing fees, insurance, stamp duty as well as moving costs all of which stretches one’s financial commitments implying that he or she will have to cut down their food, entertainment and holiday expenditures. Owning a house also decreases one’s mobility (Joy, 2018). Unlike a renter, a home owner cannot move easily as they will have to sell the current house and buy a new one in the new location which makes moving very expensive. Selling the home is not a quick process either as the selling and the value of the house is subject to market condition such as the existing economic climate and demand. There is always the risk of repossession in the case that the owner is not able to pay the mortgage or default. In such a case, the house is resold, and owner is sued for the outstanding debt. In addition, the value of the house may also decrease particularly if the owner had bought it when the demand was high.
On the other side, renting is cheaper as well as more flexible and less complex than purchasing a home. The initial and recurrent costs of renting are cheaper. In most cases, the renter only pays two-week advance and a security deposit equal to one-month rent, which makes the deposit the only chance of financial loss. Given that rent is usually fixed for the lease period, one can easily predict their monthly living coasts. Renting also offers a high mobility as renters can change houses depending on their income and needs variation. Renting as well favors people who travel a lot and it is a good platform to learn the housing sector in different location before owning a home (Joy, 2018). Moreover, renters can invest their savings in other areas such as shares which diversifies their investments and minimize the risks.
Nevertheless, unlike a home owner, a renter does not gain equity on the property they are renting and do not stand to benefit from value appreciation of the property irrespective of how long they rent. Renters cannot renovate, redecorate or change anything in the house to fit their needs. Renting also has less security as the lease can be terminated, the rent increased as well as the renter can be evicted from the property (Joy, 2018). Moreover, the renter is required to follow the terms of the lease strictly and they stand to lose rental if the renter sells the property.
Conclusion
Owning and renting have their respective advantages and disadvantages. Before individuals settles down on either to rent or own a home, they must consider the merits and demerits of either option. Whatever option they choose, should fit their needs, wants, goals and values. It is also important to seek the advice of housing experts before settling on buying a house.
Reference
Joy, D. (2018). Pros & Cons of Home Ownership | Homebuyer Education. Retrieved November 10, 2018, from https://www.incharge.org/housing/homebuyer-education/homeownership-guide/advantages-and-disadvantages-of-owning-a-home/
