So you’re thinking of moving house – and whether you’re just out of your childhood home or on your eleventh time, it’s one of those experiences that can be both exhilarating and terrifying at the same time. A big decision you’ll soon have to make is whether to rent or buy a property. One thing’s for sure, this is one topic where you have to have a tight handle on the finances.
Applying to rent? It’s important to bear in mind extra costs: a deposit, application fees, referencing fees etc. These will vary between properties, landlords and letting agents and the costs can add up, so be eagle-eyed before you sign.
One big question is: what is normal for a deposit? Currently there is no limit, but beware of landlords who ask for an amount that seems excessive or those who don’t ask for a deposit at all. Check here for some top advice: www.gov.uk/tenancy-deposit-protection/overview.
The best thing about renting? When your sink springs a leak, you know you won’t have to shell out for a plumber.
Be aware that some landlords can be picky though. Some won’t accept tenants on housing benefits; or with pets; or applications from students. Some won’t allow children. If in doubt, ask before you waste more time.
So, why not go all-out and get a place of your own? Check out www.moneysavingexpert.com/mortgages for some good advice and a mortgage calculator to help you visualise what it could be like.
When planning your monthly budget, remember to take into account utility bills, council tax, buildings and contents insurance, mortgage insurance protection (in case of redundancy) and other general living expenses, too.
There are several different options to help you buy a house, but you’ll need a hefty deposit. It’s usually 5% of the property price, but before you give up, visit www.helptobuy.gov.uk
Of course, the area you choose to live in will impact upon the price for a number of reasons. One piece of advice is to buy the worst possible property in the best possible area – after all, you can do up a house but you can’t change the area or the people around you.
The great thing about buying a place is that once you have paid off your mortgage, the property will be yours and yours alone.
In a nutshell, it seems that renting is a more cost efficient and less stressful option for a shorter term. If you’ll be living in the property for any longer than five years, the complexities and interest rates of a mortgage start to look more and more worth the hassle. However, a lot of it depends on individual circumstance, so be sure to set out your budget and do your research to avoid hitting a wall in the future.
Still not sure which option is best for you? Head to www.moneyadviceservice.org.uk/en/articles/should-you-rent-or-buy for more tips.
If you’re struggling to save due to unmanageable debt, Christians Against Poverty offers free advice regardless of age, gender, faith or background. You can call them on 0800 328 0006 or visit www.capuk.org for more information. Plus, head to www.capmoneycourse.org to find out about CAP’s free money management courses, which can equip you with the skills to budget and save for the future.
By Adriaan van Wyk