Is Owning a Home and Having a Mortgage Best for my Future?

Buying a house and potentially taking on a mortgage can be a big decision. It is worth thinking hard about it. Many of us decide a mortgage is not for us or decide to rent a home without really thinking all of the advantages and disadvantages through. It is worth giving both sides of the argument a lot of thought before making your decision.

Advantages of home ownership

Many people like the idea of owning the home that they live in because they see it as a financial investment. This can be a bit of a mistaken idea but it is worth thinking it through. A true investment is where you get an income or high return on money that you invest. This would happen if you bought a second home and rented it out, for example. Buying your own home is not so much of an investment as you need to live in it and you do not pay yourself rent. You will save yourself the cost of rent if you compare it to renting form someone else though. The investment side is a bit hazy though as if you want to get back the money you paid into the house you have to sell it and that will leave you with nowhere to live. However, it could potentially be seen as an investment for your descendants as they may benefit form inheriting the house once you pass away. However, you may need to release the equity form the house to fund your retirement or to pay for care.

There are other advantages though which are not strictly financial. If you rent a home, particularly a private rental then you will have security with regards to being able to stay there as long as you wish. Your landlord has every right to serve you notice if they want to sell the house or whatever. This can leave you with a constant concern that you may need to be prepared to move at any time. You will also have less control over what you do with the house if you rent – you will not be able to do major renovations and may not even be able to decide when to paint it. Being able to expand your home if you want to stay but to have a bigger home or make improvements is something you will get when you are a home owner. You will also get a lot more freedom on how you decorate it and even down to what you can plant in the garden.

Once you own your home you can also rent parts of it out (although you will need to consult with your lender if you have a mortgage and insurance company). You could run a bed and breakfast, rent out a spare room, or rent space like attic space or garage or even a driveway. This could provide some income for you and help you to make use of spaces that otherwise might be empty.

Disadvantages of home ownership

With a home comes responsibility. If anything goes wrong with the house it is up to you to pay for it. Insurance may cover some costs but you will be responsible for boiler services, insurance costs, updates, renovation and decorating. This can actually be quite expensive. Depending on how reasonable your rent was, it can be more expensive to own a home. However, the major influence on the cost will be the mortgage initially, but once this is paid off, the home costs will be a lot cheaper.

The mortgage is probably one of the most important parts of the decision. This is because you will be taking it on for up to thirty years and so you will be committing to a lot of payments. You will need to be sure that you will be able to cover those payments every month and this is a tricky thing to commit to. It is very hard to predict the future but you will know what your employment prospects are like and that should help. There is always an uncertainty when it come to interest rates though and this is also something well worth thinking about. If the interest rates go down then that would make loan repayments easier but if they go up then it could make them very much more difficult. It is therefore worth being prepared for this which could happen at any time throughout the mortgage repayment period. Taking on a mortgage is a big responsibility – ii is therefore really important to make sure that you are ready and prepared for that and that you have a plan in place in case money gets tight or if interest rates go up so that you can still manage and will not risk your home being repossessed by your lender.

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