As we reach our mid twenties, most UK residents start reassessing their living situation. Though sleeping in the same house as mom and dad means low rent, free dinners and having your clothes ironed, at some point we all have to grow up and fly the nest. In previous times, obtaining a mortgage from the bank and buying your own property would have been the best move, but thanks to the state of the housing market and the wider economy, this isn’t always the case nowadays.
I’ve spent the last couple of weeks performing some extensive research into the pros and cons of buying over renting, and I think you might be a little shocked to hear my conclusions. That doesn’t mean you should avoid mortgages at all costs, just that you should definitely be more careful and ensure you get the best advice possible before signing any contracts.
Take a moment to read through the following paragraphs, and I’ll do my best to show you exactly why owning your own home might be a bad idea given the current financial situations we face. Hopefully then you should be in the best position to avoid making bad decisions and to guarantee your money gets spent in the most sensible way possible.
It’s A Poor Investment
For the amount of debt you’re likely to place yourself in, the chances of you obtaining an amazing return are probably much lower than those you’d receive whilst gambling in a casino. I’m not suggesting you should waste your money this way, but the return you’re likely to see – even if you decide to stay in the property until the mortgage is fully paid – is very discouraging indeed. If you were to plow the same level of funding into a new business venture, the profits you make could be considerably higher.
The Interest Is Shocking
If you were to simply buy a £150,000 home outright without a mortgage, in 20 years time you might well see a fantastic return, but if this isn’t possible and you have to opt for a mortgage, you could end up paying around £250,000 to the bank, meaning your profit margins receive a considerable dent. It might be worth looking for legal advice about housing law before visiting your bank manager and asking about the rates they offer because alternatives may be available.
Tied Down For Decades
Though you could sell a mortgaged property at any time, it really doesn’t make sense to do so, not unless you’re willing to lose all the cash you’ve already given in payments. Most mortgages also last for between 20 and 30 years, meaning you’ll need to be confident about having a reliable source of income and have no desire to move out of the area.
Well, there you have it my friends. If you were to ask me, I’d say that renting is the most sensible option nowadays unless you’ve got the cash to buy a house outright. The banks are becoming a less and less viable option for people looking to obtain property, and if any return you might have received is going to be eaten up by interest payments, then what’s the point?
Good luck, whatever you decide to do!