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Is it better to buy a property in the UK or rent?

Before the current problems with the UK property market began, the rent versus buy question wasn’t really broughtbuy a property in the UK or rent up. Simply because the mindset was, ‘if you can afford it and you’re going to stay long enough to recoup the transaction costs you buy’.

As a society, the belief was that house buying was simply what normal people do. Home ownership has traditionally been what everyone dreams to do once they have a stable job and family. Anyone not wanting this was assumed to be either transient or not able to measure up financially.

Financially, house buying was never better because over time the value of your home would escalate.

The housing crisis changed all of that.

How should you choose?

If ‘’not buying a house’’ for fear of falling prices makes sense then it also makes sense never to buy something such as stocks, since they also have the ability to decline. That’s not good logic for either stocks or houses. What falling prices of any kind teach us isn’t that it’s nonsense to buy – it’s that it’s nonsense to speculate. You will never be able to speculate what happens in the UK property market, and those saying they know are just guessing.

Here are a few rules to consider if buying in the UK:

1. Buy only if you’re confident you’ll be staying for at least five years:

That’s because buying property in London has very high transaction costs, the longer you own it, the more likely you are to make money from it.

2. Hope for appreciation, but don’t count on it:

You’ll gain equity in your house by paying off the mortgage, especially if you have sourced the best mortgage deals. You’ll gain additional equity via appreciation over time. But the beauty of a house is that it’s an asset that you live in. Making a home into something that reflects you isn’t something you can take to the bank, but it is rewarding.

3. Be your own boss:

The average house in 1950 was less than a few square feet. Today it’s more than twice that. Whatever you decide to buy, you’re going to have to furnish, heat, cool, and maintain. With renting the landlord has to deal with this, this may seem like an advantage but you are likely to hear many stories of tenants whose living qualities haven’t been met, whereas, with the help of buying agents, you can successfully monitor the maintenance because you live there.

4. Wait until you’re ready:

If you have bad credit and as a result are forced to take on a high-interest mortgage it will cost you considerably over the life of your loan. Also, the more money you put down the less you borrow and the less risk you take. Instead be patient and wait for a while, so you can take advantage of the best deals.

Consider the factors above. If you don’t feel that you’re ready to own there’s certainly no shame in renting. But if you do feel like you’re ready, it would be a fantastic idea to go for it.

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Questions you should ask before buying a home?

Buying a House
Questions you should ask before buying a home?

Buying a house, especially for the first time, can be an extremely exciting prospect. You could possibly be making the transition from renting or have saved up a considerable amount of money to put towards a deposit. Regardless of your reasons to buy your home, there are key decisions you need to make before you even start looking.

The following has been devised to give you an idea of what you need to think about before making any decisions on purchasing a home:

1) Can I afford to buy a home?

An obvious and important question. You of course need a considerable amount of money to buy your dream home. It’s likely that if you are reading this article, you have an indication that you can. Or you possibly have a budget in mind. Most mortgage lenders calculate the amount they are prepared to lend on your total household income. They will look at your financial commitments such as credit card payments and utility bills, focusing on how much you have left over to pay the mortgage back.

Purchasing a home is likely to be one of your biggest financial commitments, so you need to know you have formulated a realistic budget. Don’t stretch your finances so much that you can’t afford to do anything but pay your bills. Attempt to make cutbacks where you can and don’t forget to consider the set up costs.

2) Who do I contact?

Locate a property solicitor to help you carry out the legal processes of the house buying process. They will draw up contracts and papers that will protect you if your situation changes. For example, if you are purchasing a house with a friend, a property solicitor will construct an agreement contract in case either one of you decides to leave in the future.

3) What is the right mortgage for me?

A mortgage is essentially a loan. You need to pay back the amount borrowed to you in addition to the interest charges. Your mortgage lender will discuss with you what options you have, depending on your budget. There are a few incentives offered by several mortgage lenders so it is a good idea to understand the basics. These include: early repayment charges, opportunities to pay more towards your mortgage to reduce your balance and cash back options. It can take a few weeks to arrange a mortgage so don’t delay, but do choose carefully for the right one that suits you. If you are using the assistance of a specialist buying agent they should insure that they are fully aware of your requirements to insure your mortgage is arranged promptly.

4) Where do I want to live?

The area you choose to live is almost as important as the budget itself. As mentioned earlier, purchasing a house is a large financial commitment and so you want assure you can see yourself living there for a while. Although you might not realistically be able to buy your dream home straight away you could think about essential features such as: transport links, proximity to schools, off street parking, central heating and so on.

About the Author:

Finding the right type of property in your chosen area can be an extremely time consuming and fruitless process when doing it on your own. I’m John Savvy and I run Propsavvy.com to assist the first time buyers and investors alike to buy property in their chosen area with amazing efficiency whilst saving tens of thousands of pounds in the process.