Can I buy a property?
Whilst 86% of UK residents want to own their home, data shows that actually only 65.5% of us actually do! Whilst there are pros & cons to both, make sure you check whether you can afford to buy first.
Pros: SAFETY AND SECURITY
The main advantage of being a property owner is that you’re much more secure. Whilst it’s not uncommon to stay in the same rented accommodation for many years – and many people actually chose to rent with long-term time commitments for this reason- it isn’t the same as owning your own property.
It’s a reality of life that things change, people, circumstances, finances, etc. Even if nothing changes in your personal situation, your landlord may be facing a change of circumstances – and however good your relationship is with them is – they might decide that they need the property or they want to sell it, meaning you’ll be asked to leave. The takeaway from this point is that owning a house is more secure than being a tenant.
PROS: Personal freedom
As well as being much more secure, you have much greater freedom and independence when you own your own house. There aren’t any tenancy agreement or contracts dictating what you can or can’t do, ways you’re allowed to decorate.
From a business point of view is that whatever changes you do make to the property are also an investment since they’ll increase the property’s value if/when you decide to sell.
PROS: Long term Investment
Keeping in mind annual increases in the property market in the UK, properties are seen as an investment. There have also been recent trends to purchase run-down properties as an investment. Whilst it can be a struggle to keep up with those mortgage payments being taken at first, every penny you put into paying off the capital you borrowed brings you one step closer to owning your property outright.
In the long-term, you could use the assets from the property to buy a bigger or additional one as your circumstances change or you could invest it, e.g to fund your retirement. the clear benefit is that every rent cheque goes into your landlord’s pocket rather than being used to build up a potential nest egg.
Cons: Costs of buying and maintenance
When looking at the initial upfront costs, obviously buying is much more expensive. Saving enough money for a sizable deposit could take years, and may mean you have to sacrifice a lot of little luxuries for an extended period of time – such as eating out. When you’re living in rented accommodation when issues arise with the property’s plumbing, heating, and such, all you have to do is contact the landlord for them t sort it out.
Unfortunately, when you’re a property owner, you have to organise & pay for all repairs and maintenance yourself. If you’re fortunate enough to be handy with a hammer -or have a friend or family member whos DIY enthusiasts-good at DIY or at least have a family member or friend who is, you can save on labour costs. But if you don’t, you should keep some money aside for any maintenance work which needs to be done to the house.
CONS: Long term commitment
If your financial circumstances change or interest rates increase, then your mortgage can become a larger worry. When in rented accommodation, it’s much easier to accommodate a change in your financial situation as you can simp,y give your landlord notice, walk away, and rent something smaller or temporarily move in with family/friends.
Falling behind on mortgage repayments, however, can have much more serious repercussions. Not only is it frustrating & disappointing to have to leave behind a place you’ve invested so much into, but there are also long-term consequences of how it’ll affect your credit rating and any plans you may have for the future too.
CONS: Fluctuating market
A risk you need to bear in mind is that the market’s always fluctuating, meaning property isn’t always a good investment. The property market can be so volatile and you don’t know what might trigger a drop in prices. Especially after the recent pandemic, we all know how quickly things can change.
If that does happen, you could find yourself losing money on your property. If you’ve bought the house as a long-term investment and plan on staying there, then it probably wouldn’t concern you so much.
How much are the extra expenses for buying a house?
In a report published by ONS in February 2017, they calculated that the purchase of an average £140,000 house would need £23,300 upfront for the deposit and all the hidden extras such as Stamp Duty, legal fees, etc.
How many years have seen a drop in house prices in the UK?
According to ONS statistics, house prices in the UK registered a drop 7 times between 1980-2013.
There are a number of factors you should keep in mind when deciding whether to take out a mortgage. Whether to buy a house depends on your personal circumstances, your personality, your profession, and what place of life you’re in.