Should we rent or buy in Belfast?Posted on 01 February 2020
This is a frequent question for many estate agents in Belfast. Typically, it’s a question that doesn’t have an easy and obvious answer. There are many factors to take into account when deciding the next step but here at Pinpoint Property, we hope we can give you a starting point to help you get to the answer that suits you and your circumstances the best.
So, should you buy a home? Well let’s take a moment and review the following points.
The benefits of buying:
• Your monthly repayments go towards buying your home, not into a landlord's pocket
• You fully own your home at the end of the mortgage's term, and can then live rent free
• You could make a profit if house prices rise
• You can live by your own rules without needing a landlord's permission (e.g. having pets)
• You can make changes to the property such as redecorating or landscaping the garden
• Renovations and changes you make could increase your home's value
The drawbacks of buying:
• Upfront costs like mortgage fees and stamp duty can make it pricier than the upfront fees for renting
• If you get a joint mortgage and then separate, it can be complicated to sell the property
• Interest rate rises can increase your monthly payments (unless you get a fixed rate)
• You must pay for repairs, including if something urgent goes wrong like a leak
• Moving can take a long time because you have to sell your home first
• If your finances become tighter, moving to a cheaper property can take a long time
• There are financial consequences if you fall behind on repayments, like getting into debt
• If you fell too far behind you could face bankruptcy or your home being repossessed
Okay, lots of pro’s and con’s there and if you have decided to buy you can start your search by checking out our available sale properties here.
Still undecided? Lets take a look at the rental option.
The benefits of renting:
• It can be easier to move to a new house quickly when you need to
• Finding and renting a home is usually quicker than the process of buying
• No risk of losing money if the property's price goes down
• Your landlord has to pay for repairs and renovations
• It is often cheaper and rental payments rarely change, making it easier to budget
• You may be able to rent a bigger home in a nicer area than you could afford to buy
The drawbacks of renting:
• If you have to find a new property during your months notice period on your current rental you may have to pick the best of what’s available and it may not suit all your needs.
• All your rent payments go to your landlord, not towards owning a home
• If you never buy a house you must pay rent for your whole life, even after you retire
• Your landlord can set rules and restrict changes you can make to the property
• Your landlord could decide to increase your rent
• Improving the property could increase its price, but this only benefits the landlord
Any clearer? Well, whether you buy or rent should not be solely a financial decision. Obviously, your work commitments and savings play a big factor in any decision but there is more to think about.
Do you have enough for a deposit?
You need to save a deposit to get most mortgages, which is the amount you pay towards the purchase yourself. It is shown as a percentage of the property's value, and you usually need at least 5%. This would come to £10,000 on a home worth £200,000, and you would also need to save enough to cover the other costs of buying a home. You can get some mortgages that need no deposit, but you usually need a family member to agree to cover any payments you miss.
Renting requires a deposit too and you should budget enough to cover at least one months rent as a deposit and one months rent in advance plus moving costs.
Do you earn enough to afford a mortgage?
You can only buy a house if your income is enough to afford your repayments while still leaving enough money for living expenses and everything else you spend money on. We have specialist advisors at Pinpoint Property who can help you check this - they think of everything that you should take into account when making such a big decision. Offering free consultations, and evening and weekend appointments if you can’t get out of work during office hours our Specialist Advisors can offer you advice and recommendations to help guide your decision making. Click here to Get In Touch with them.
How long will you stay in your next home?
If you will only live in an area for a short period of time or you expect your circumstances to change, renting is usually cheaper and more flexible when you need to move house. This is because the initial costs of buying a home are much higher than the deposit you pay when you start renting a home. These include mortgage fees, stamp duty, valuation fees and your solicitor's charges. However, if you intend to live in an area or property for a long time, buying a house can work out cheaper.
Will you live alone or with someone else?
If you plan to live with a partner or someone else, you may be able to afford to borrow more if you buy a house. Here is how to get a joint mortgage and how they work. You could buy a house with friends instead of renting.
The first step is talk. Talk this through with parents, siblings and friends that have gone through a similar dilemma. Talk to us (and dare I say it, other estate agents). We have been there ourselves at some point and we help dozens of people every week with the same conundrum.
Pinpoint Property can put you in touch with independent financial experts to freely explain and talk you through the steps to take, irrespective which route you choose.