The real estate sector has come up with an array of housing styles and apartments are one of the major housing styles opted by more number of people. People find it convenient to live in an apartment because they aren’t happy with the cost-effective home choice. On the other hand, although renting a home is not a long-term investment one can stay under a temporary roof while they can get a new home constructed. Considering the living styles offered by both an apartment and a home, here are some facts which should be considered:
Advantages of buying a home
- Owning a home comes with long term benefit like security, equity and potential growth in personal wealth
- When you buy a house it becomes your legal property, which allows you greater freedom in its use without restrictions often enforced by a Landlord.
- You have the option of buying to rent which enables a Homeowner to generate income from renting out the property. This income can be put towards the home loan.
- Being a Homeowner who ensures repayments are made on time can improve your credit profile. Not only will you have a large investment to your name, but paying your monthly bond repayments on time increases your credit score.
- There is an opportunity to save money in the long term as there are possible tax deductions related to income-generating properties.
Disadvantages of buying a home
- Being a Homeowner comes with huge financial responsibility including bond repayments and regular house maintenance.
- A Homeowner runs the risk of not making any profit through resale. This is often caused by economic factors such as a recession or high interest rates, or simply through a particular location becoming less desirable.
- A Tenant can leave a property after fulfilling the notice period, which is usually one month. However, a Homeowner is likely to be dependent on selling their home before being able to buy a new one, and therefore it might take longer to be able to move homes once the decision has been made to do so.
Advantages of renting a home
- Renting a property allows more flexibility than owning a homeit doesn't requires no long-term commitment from a Tenant.
- As a Tenant, there is the possibility of living in an area in which you could not afford to buy.
- The only insurance required by a Tenant will be to cover the contents of the home, while all maintenance work on the property is for the Homeowner’s account, as is homeowners insurance.
- After paying rent, a Tenant may have additional money which they can use to invest elsewhere, whether it is saving towards buying a house or investing in the stock market, and need not worry about putting additional funds into a home loan.
Disadvantages of renting a home
- You need to follow rules of the lease agreement, which can impact the freedom to use or renovate the property.
- You cannot make changes to a rented property without the consent of the Homeowner.
- Renting offers no wealth creation or return on investment
- When renting a property, you will have no control over annual rental fluctuations which are directly affected by inflation.
- There is no guarantee that a lease will be renewed when it expires.