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Rent or Buy?

If you’re struggling to decide whether you should rent or buy a property, here’s our advice.

Buying a property is likely to be one of the biggest financial decisions that you’ll ever make. The prospect of owning your own home is exciting, but it’s also a huge commitment.


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When Do You Know When It's the Right Time to Buy?

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‘Lifetime renters’ are likely to hand over around £296,000 to private landlords during their lives.

When Do You Know When It’s The Right Time To Buy?

Unfortunately there is no straight forward answer. Buying is often seen as the best option for your long-term financial health. Recent figures from Santander Bank reveal that ‘lifetime renters’ are likely to hand over around £296,000 to private landlords during their lives. This is a substantial amount of money that could alternatively be used for mortgage repayments on a property, creating a valuable financial asset.

However, depending on current market conditions and personal circumstances, you may not be financially better off buying, rather than renting. Buying can be financially damaging if you do not fully consider all the costs involved and if your personal circumstances quickly change. If you need to move for work or personal reasons, selling and moving is far more expensive and complicated if you own (rather than rent) your property.

So when deciding whether to buy or rent, it is important to consider:

1. Current Market Conditions

2. Personal Circumstances 

1. Current Market Conditions

Interest Rates are Important

According to Zoopla’s latest research, in financial terms, buying wins out over renting today.

However, Zoopla claims that if interest rates were to increase by 1% and the cost of renting remained the same, renting would become cost effective in 80% of the locations recently studied. So it is really important to consider how rising interest rates would affect your monthly payments. Fixed rate mortgage deals can help protect you from rising interest rates, but may not suit everyone’s needs.


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2. Personal Circumstances

When is it a Good Time to Rent?

-When it is your first time living away from your family home.
-When you are new to the area. If you have just moved to the area, it is often useful to initially rent a property so that you get a feel for the location. It can help you decide where exactly you would like to live and what type of accommodation would suit your needs. If you are moving to the area for a new job, renting is the safest option in case you decide that the job is not for you.
-When you think you’re residence in an area may only be temporary. Renting offers flexibility and enables you to relocate at minimal cost.
-When you want to live with friends or a new partner. Owning a property with someone else is a huge commitment. Renting offers greater freedom and means that you are not tied into a long term contract.
-While you make long term plans. If you are currently in a position where you are making long term plans, renting provides you with the opportunity to take your time planning your future.


When is it a Good Time to Buy?

-When you are looking to build your future in the area. If your stay in the area might be more permanent it could be worthwhile comparing the costs of buying your own home to renting.


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The Benefits of Renting…

-Flexibility. Most rental contracts are initially for 6 months, providing you with flexibility if your personal circumstances change and the option to live in a new location before you commit to buying in the area.

-Free from long term financial responsibility. As a renter you obviously have to pay rent, but you are not tied into monthly mortgage repayments over a long period of time.

-Low risk/No maintenance costs. If you own your property, you have to be prepared for maintenance costs, including unexpected ones such as replacing a boiler or fixing a leaky roof.


The Benefits of Owning Your Home…

-Investing in your future and creating a valuable asset. Your monthly repayments are not going to a landlord and creating ‘dead money’ for you. When you have paid off your mortgage, your home will be yours and it could be worth far more than you paid for it. If your home does increase in value over time, you can use the equity to buy a bigger home or to a fund a more comfortable retirement if you downsize.

-Assurance for you retirement. Debt charities have recently warned that those with poor pensions may not have the income they need to pay their rents in retirement. If you have paid your mortgage you will effectively be living ‘rent free’.

-Freedom to make alterations and improvements to you property… and make it a real home. The money you spend improving your home will increase your property’s value. In a rented property, you have to ask the landlord’s permission to make any changes, and all improvements will be to the financial gain of the landlord’s, rather than your own.

-Community. When you buy a property, you become part of the local community: making life-long friends and providing the opportunity to have an active role in community events.



Can You Afford to Buy?

Can You Afford to Buy?

If you decide that you want to buy a property, the next step is figuring out if you can afford to buy. In addition to mortgage repayments you should also consider:

-Legal costs e.g., solicitor’s fees
-Survey cost
-Stamp Duty
-Removal costs
-Expected monthly bills e.g., gas, electricity, internet access

If buying is not an affordable option for you right now, think about setting up a savings plan to achieve your goal in the future.

Financial Advice 

We have an independent financial adviser you can talk to in confidence.

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Affordable Options

Shared Ownership and Help to Buy schemes can make buying more affordable.








Still not sure whether to rent or buy?

Specialising in buying and letting, we can help you figure out what’s best for you. Call, e-mail or visit us to today to start planning your future.


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