Since 2009, when rates went close to zero, there has been a home ownership boom in the UK and all major economies. However, things are changing, and the era of super-low interest rates may be gone for many years. This leads to the question, what is the best option now? To buy or rent a home?
With the Bank of England aggressively hiking interest rates, renting a home may be the best option in the short term. That’s because getting a mortgage at current rates could substantially affect your income. On the flip side, with rates rising aggressively, demand for homes will shrink, and this could see home prices drop. This may create opportunities to buy a home and also a time for first-time landlords to think about the steps worth taking. Whatever option you choose, here are some key factors you need to keep in mind over and above the rates.
Convenience
If you are the type that moves a lot, either for work or other reasons, then consider renting. That’s because, with a rental property, you can always change homes depending on where you want to live. The only challenge many people find with this option is that it can be tedious to move stuff around regularly. There is also the challenge of constantly installing and uninstalling fittings in the kitchen, bathroom, and other rooms. The good news is that there are professionals out there that can help you declutter and also deal with furniture and fittings. For instance, some companies offer same-day junk collection in London, making life a lot easier for renters who have to move from time to time.
Stability
Convenience and cost of home ownership may be a reason to consider renting over buying today. However, many reasons may convince you to buy despite the prevailing market. One of them is the stability that comes with owning your own home. It’s where you can build a family and customize it to the specifications you have always dreamed of in a good family home. Besides, some of the issues many homeowners find boring, such as gardening, can always be outsourced. There are companies that can handle garden maintenance all around for you without putting a dent in your finances. So, if you crave stability, it may be best to consider buying regardless of the prevailing market conditions.
Income stability
In times of low-interest rates, it is easy for anyone to own a home. However, as rates rise, as is the case going into the foreseeable future, it is best to consider your income. If your income is shaky, this would be a good time to stay off the home-buying market and consider renting. That’s because if the interest on your variable home mortgage rises, it can easily put you at risk of foreclosure. On the other hand, if you have built yourself and have assets that have a predictable income, then buying a home may be a good idea regardless of the prevailing rates environment. That’s because rates will eventually stabilize, and your home will increase in value over time. A home is one of the best assets you can own.
Conclusion
A multitude of factors determines whether to buy or rent a home. The most important among them is the interest rates. In an environment of high-interest rates, which is what is expected for the next couple of years, many people would be better off renting. However, buying a home may be a good option if you have a stable income and love the convenience of owning a home. Regardless of short-term price fluctuations, owning a home is always one of the best investments that one can make long-term.
