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Shelter is a basic need of every human and the question we often ask ourselves is should I rent or buy a home? Whether to rent or buy has been a continuous debate and the points for arguing for or against keep expanding, making it harder for people to decide.
Let’s look at renting a home
Almost every person starts off as a renter living in an apartment or home owned by someone else and paying monthly rent to a landlord. For some, renting might just be a way to start out and then gradually grow into buying their own home while for others renting may be the most prudent financial decision in the long-run.
Benefits of renting a home include:
- In most cases you are only obliged to pay agreed rent and other utility costs which are stated in the rental agreement.
- More flexibility: As a renter, you don’t feel stuck with just one property for years, you can easily relocate.
- Renters are not responsible for major repairs.
But they don’t come with some downsides:
- As a renter you don’t get to retain any equity or part-ownership of the property of which you’ve been paying rent for.
Is buying better then?
It’s fair to say that everyone has dreamed of owning their own home at some point. But are they really worth it?
Some benefits of buying include:
- You have absolute control over your property.
- It is possible that the value of your home will increase over time.
Still not everything is great:
- Owning a home is a liability as long as you are still paying the mortgage.
- All the maintenance costs and repairs are on you, and you need to include this in your personal budget. There are also other costs you may have to be prepared for like insurance, property tax, and so on.
- The cost of owning a home can be very expensive depending on the city, like London, Berlin, Helsinki, Florida, and in other parts of the world.
So renting vs. buying, which is better?
The decision to rent or buy is a personal one which everyone has to make. Either way, you need to understand all the pros and cons of the two sides. For example, renting could be a better option if you are planning to stay for just a few years while buying could suit you more if you intend to stay for a longer period of time.
One of the ways we can invest towards buying while we are still renting is Bondora’s Go & Grow which yields up to 6.75%* annual net return.
In summary, you should weigh the financial implications and see how it fits into your financial goals before making your decision.
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*As with any investment, your capital is at risk and the investments are not guaranteed. The yield is up to 6.75%. Before deciding to invest, please review our risk statement or consult with a financial advisor if necessary.