To rent or buy a home, that is the question

The big decision of whether to rent or buy a home comes with plenty of considerations, both emotional and financial. However, two things are certain: this step is personal and far from being clear-cut. Here at Engel & Volkers, we have plenty of expertise in this area, so we've put together a list of the key factors you need to consider when making this crucial decision.

Hamburg - To rent or buy a home? What things you should allow to affect your decision.

The financial aspects

A major benefit to buying is that you make an investment, whereas rental money is strictly a one-way transaction. However, the fact of the matter is that it takes time to build equity. The first few years at least will be spent paying off the interest. There are also initial costs to consider when deciding whether to rent or buy a home. While renting has relatively small upfront costs, buying has plenty of substantial ones, from lawyers fees to stamp duty (in many countries), down payments and insurance. All things considered, the first several years of buying often end up costing about the same as renting.

The question of time

The aforementioned initial costs of buying a house can seem daunting to first-time buyers, yet they are often justified due to the long-term nature of the decision. When taking stock of your current situation and choice to rent or buy a home, draw up a plan for the direction of your life over the next five, ten and 30 years. If you want to purchase and are likely to stay in the property for 20 or 30 years, then these initial costs pale significantly over time. However, if you’re considering relocating or upsizing in the near future, these expenses – plus the additional costs of selling – become a bigger consideration and can eat into any profit you may have acquired. In that case, renting is certainly the better solution.

The lifestyle considerations

Some people realise when making the choice to rent or buy a house that they aren't cut out for the permanence of buying. They prefer the flexibility of lifestyle that renting affords them – plus, by living a more on-the-go lifestyle in an apartment, you can invest in property elsewhere. Another challenge with renting that many people cite as a reason to buy is that you can’t always find your 'dream' rental. Even if you like your rented property, you may be limited in the amount of changes you can make, whether interior design or major renovations. This can be frustrating when trying to curate a space you truly love.

When you own a home the only limit to the changes you can make are your finances and the building regulations. When deciding whether to rent or buy a house, you should also consider the availability of appropriately sized properties to rent, especially if you’re looking for a family-sized home. However, this depends a lot on the country where you’re searching. In plenty of places it’s normal to rent a large family property and live there long-term.

At Engel & Völkers, whether you’ve settled on a decision or you’re not quite there, our experts are on hand to advise you on the finer details of renting vs buying a home.

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