Mortgage vs Renting: What Are The Benefits?
Owning your house is often a goal for many people living within the UK, with the old adage that “renting is simply paying someone else’s mortgage”, but what are the full range of benefits of becoming a homeowner vs. renting? We examine how becoming a homeowner can give you more flexibility and security compared to renting.
Many people we speak to are unsure of whether they want to take the plunge into the mortgage market, however there are many benefits of owning your house rather than renting.
As the economy and housing market continues to recover, there’s been an increase in first time buyers entering the housing market. However, some are still unsure about the benefits of becoming homeowners.
Benefits of Homeownership
There are a variety of benefits to becoming a homeowner. It’s often a proud moment taking that first step, or next move, on the property ladder, but there are additional financial and personal benefits too.
Investment: Typically, when someone rents a property they’re paying a landlord, who in turn will pay the mortgage lender or retain the rental income to fund their lifestyle. The tenant will never get the money back. When you pay your own mortgage you are investing in the property and purchasing the property, over a period of time. If the price of the house increases you will get a return on your investment and could be financially better off than when you first obtained the mortgage, especially if the property price increases.
Security: A landlord may decide to sell their property if they no longer wish the property or begin to struggle financially. This will affect the tenant as they will have to find another property to live in, possibly at short notice. A homeowner repaying a mortgage is solely responsible for making payments and this brings an element of security and assurance that your home is safe as long as payments are maintained.
Personal Finance: If you have financial difficulties then the mortgage lender will often work with you to resolve your financial problems with payment holidays. They could also help with interest only repayments for a period. If you’re renting then the monthly fees must be paid, otherwise the landlord could pursue you for the debt.
Personalised: It’s difficult to personalise a rental property and not be charged by the landlord. Often, in a rental property, you are not allowed to paint, decorate or change any of the features of the property. It can sometimes be difficult to get the property maintained if there is an issue. Whereas, in your own home you can make changes and fix problems as you wish.
Can I Get a Mortgage
The main question for people looking to move from the rental market to homeownership is, “can I get a mortgage”? Many people believe they won’t be accepted for a mortgage because they have been refused before, their credit file isn’t good enough or there are outstanding debts.
The benefit of speaking to a financial adviser is we access each application and help narrow down the search for the most appropriate mortgage lender. The expertise and knowledge helps protect your credit file and save you time and effort.
There are 2 main ways to apply for a mortgage. One is going direct to the Lender and the other is using a specialist mortgage adviser. The disadvantage of the former is the risk of being declined which then shows up on your credit record making it very difficult to get a mortgage elsewhere. The specialist mortgage adviser will use their knowledge to place you with a lender who will accept your application. That is why over 70% of mortgages in 2016 were arranged by mortgage advisers.
If you’re looking to take the first steps, or next step, on the property ladder then speak to Pivotal Financial today about finding the mortgage that’s right for you.