The decision to remain a tenant or make a shift into the world of homeownership is a challenging one. Some of the latest statistics, based on information from the National Housing Federation, as reported by the BBC, shows that tenants in the UK often direct a higher percentage of their income towards rent than the average of all other European countries, at a rate of 39.1 and 28 percent respectively.
The high cost of renting is highlighted by an increase in competition amongst lenders looking for qualified mortgage candidates. The British Bankers’ Association found that, as of 2015, acceptance rates for loan applicants was rising. The increased competition in the mortgage market has also lead to more favourable rates for buyers. This is making it more tempting to make the transition from tenant to homeowner.
Making the decision to purchase a home should never be taken lightly. Regardless of the rates being offered by lenders, homeownership requires careful consideration. If you want to make sure you are well-equipped to become a homeowner, consider the following points.
Additional Costs of Homeownership
While the costs associated with a mortgage are well known, there is more to homeownership than simply repaying your lender. As a homeowner, you will be responsible for any repairs that may be required. This includes the replacement of any failing appliances. Regular maintenance activities will also fall on your shoulders, leading to costs that you did not initially anticipate.
If you do want to become a homeowner, make sure that you will have suitable funds remaining after the purchase to handle these expenses. While the exact amount needed will depend on the property, having a few thousand pounds in the bank is likely a necessity. Otherwise, you will face with costly choices. For example, you be wind up taking out an emergency loan to handle a needed repair. You could also be stuck dealing with the broken item until you can raise the funds necessary for the repair.
Just as you will need to direct additional funds to the maintenance of your home, you will also need to sacrifice some of your time to manage any upkeep. This can include meeting repair services at your property when professional assistance is required. You will also be taking your personal time to complete maintenance tasks on your own.
While postponing some services until they are convenient to complete is an option, others may not be so flexible. For example, a plumbing issue will likely need immediate resolution. This can mean taking time off work to find a repair service, obtain an estimate, and oversee the work.
In some cases, you may be able to work with companies you trust to enter your property unsupervised. However, this is generally not recommended with companies with which you are not incredibly familiar. If you are a new homeowner, it may take time to build the sort of relationship that would be required to feel confident leaving them in your home alone.
The Level of Commitment
People who remain tenants can often more easily make major changes in their lives. It may be easier to accept a job in a new city for tenants as moving does not require the management of a home in your previous city. Those who rent have the flexibility needed to move more easily, but it also comes with the some risk. Since you are not the owner of the property in which you live, you may have to deal with unexpected challenges. Tenants may find themselves without a home should the owners decide to sell the property. Additionally, the owner may discontinue the tenant/landlord relationship, a risk that is not felt by homeowners.
What is Right for You
Whether you choose to buy or rent, the decision is always yours. Consider your personal financial situation, as well as other life changes that may be on the horizon. If you feel the time is right, and you can afford it, then now may be a great time to buy.