Buying a house is not for everyone, but neither is renting. Deciding between these two options requires careful deliberation. Both have their advantages and their equally reasonable disadvantages.
For many years, buying has always been the best option because it brings with it the stability of owning the roof over your head. In the same breath, young people are choosing to rent because of the freedom and flexibility it allows them to have. Let’s take a moment to see how these two options compare to each other.
A big advantage is stability. Owning a home brings a sense of maturity, solidity and long-term security and potentially, growth in personal revenue because the money you pay every month towards your bond leads you closer to legally owning your home in future.
Another advantage is that you have creative control. When you own your house, you could revamp, renovate and redecorate as and when you see fit. When you need a bigger kitchen, it is much easier to knock down that wall because it belongs to you.
Rigidity is a substantial disadvantage to many people. Once you have bought your house, it becomes relatively challenging to pack up and move on a whim because there are many steps to the process, and the costs involved can be quite high.
Another disadvantage is that of the high purchase costs involved in buying property. Purchasing a home comes with various types of costs, such as upfront costs, closing costs, recurring costs and even irregular one-time costs. Also, because you will now be a bonafide homeowner, you will need both household insurance as well as buildings insurance. All this individual costs can amount to a hefty sum when totalled together which is why so many people shy away from buying.
In today’s economy, affordability is pivotal when making any kind of financial decision so renting almost always works out to be the cheaper option financially. You are not faced with hefty upfront costs, maintenance costs or the responsibility of getting buildings insurance because your landlord will be responsible for all those costs.
The flexibility that comes with renting is a big advantage. Renting a home means you have the freedom to relocate on a more frequent basis, depending on the contractual agreement between you and the owner of the property. This is essential when you have a job that requires you to relocate often or you travel a lot.
Even when you are renting, you still need to protect your assets. The responsibility of taking out a home insurance policy lies with your landlord. All you will need to think about is which items you will need to specify in your home contents insurance policy.
Another disadvantage to renting is that there is hardly any return on investment. When you are renting, you are essentially paying towards the landlord’s home loan or bond, which means you are not creating any wealth for yourself since the property will never legally belong to you.
These are only some of the advantages and disadvantages of buying and renting a home in South Africa. At Auto and General, we cannot tell you what option is best for you, but we do know what kind of home insurance will suit you best based on where you currently are in your life. Speak to one of our consultants today and get excellent advice on home insurance.
The information provided in this article is for informational purposes only and do not constitute professional advice.