Buying a House in the UK – Pros and Cons: Is it Always a Good Idea for First-Time Buyers to Purchase Property?
While buying a house is an ambition of many first-time buyers; it can be easier to rent a property. For instance, how does someone make mortgage payments following redundancy?
Many first-time buyers wish to get onto the property ladder, but there are a number of obstacles to achieving this. The biggest problem a first-time buyer experiences is raising a sufficient house deposit; Saving a 20% house deposit is difficult for anyone, but especially if already trying to pay the rent.
Advantages of Buying a House
Capital appreciation: On average, property prices have doubled every 9 years since 1955. Renting a property means that the only beneficiary of capital appreciation is the landlord;
Greater pride in the home: Buying a house gives the owner a sense of accomplishment and pride;
Greater control: First-time buyers have more control over what happens to their property. They also are better placed to control their monthly mortgage payments and decide whether they’d prefer a tracker mortgage or fixed-rate mortgage
Improved credit rating: Provided monthly mortgage payments are maintained, this has the effect of improving an individual’s credit rating. Those that never borrow are treated with extreme caution by lenders
Family pets: Many landlords have restrictive policies with regard to pets.
Disadvantages of Buying a House
House deposit: Falling house prices and negative equity have meant that first-time buyers are required to find a higher house deposit. The days of 100% mortgages are more or less over
Lending restrictions: Most lenders will only allow first-timer buyers to borrow 3.5 times their salary. This can prove to be a real obstacle when buying a house
Property repossession: It can be very difficult to keep up with monthly mortgage payments should a home-owner lose their job. State benefits and financial support are vastly better for those that rent a property, meaning that mortgage insurance is essential
Running repairs: While the landlord takes care of all the associated costs of maintaining a home; buying a house means that these expenses now have to be covered by the home-owner
Moving house: It is a lot easier to move when renting a house; It can be very difficult for first-timer buyers to move house, especially during a property recession.
Those that manage to save a sufficient house deposit can benefit from considerable long-term capital growth. This can lead to a greater sense of personal achievement, but all of this does come at a price, especially during periods of economic uncertainty.
Article sponsored by www.dulwichloftconversions.co.uk