Buying a House - Pros and Cons
Is it Always a Good Idea for First-Time Buyers to Purchase Property?
Jan 16, 2009
Whilst buying a house is an ambition of many first-time buyers, it can be easier to rent a property. How does someone make mortgage payments following redundancy?
Many first-time buyers wish to get onto the property ladder, but there are a number of obstacles to achieving this. The biggest problem a first-time buyer experiences is raising a sufficient house deposit. Saving a 20% house deposit is difficult for anyone, but especially if already trying to pay the rent.
Advantages of Buying a House
- Capital appreciation. On average, property prices have doubled every 9 years since 1955. Renting a property means that the only beneficiary of capital appreciation is the landlord;
- Greater pride in the home. Buying a house gives the owner a sense of accomplishment and pride;
- Greater control. First-time buyers have more control over what happens to their property. They also are better placed to control their monthly mortgage payments and decide whether they'd prefer a tracker mortgage or fixed-rate mortgage;
- Improved credit rating. Provided monthly mortgage payments are maintained, this has the effect of improving an individual's credit rating. Those that never borrow are treated with extreme caution by lenders;
- Family pets. Many landlords have restrictive policies with regard to pets.
Disadvantages of Buying a House
- House deposit. Falling house prices and negative equity have meant that first-time buyers are required to find a higher house deposit. The days of 100% mortgages are over for now;
- Lending restrictions. Most lenders will only allow first-timer buyers to borrow 3.5 times their salary. This can prove to be a real obstacle when buying a house;
- Falling house prices and negative equity. According to a house price survey by Nationwide, the average cost of a house has come down by £29,000 to £153,048 over the past year. House prices have fallen by 15.9% during 2008 and are set to continue falling during 2009;
- Property repossession. It can be very difficult to keep up with monthly mortgage payments should a home-owner lose their job. State benefits and financial support are vastly better for those that rent a property, meaning that mortgage insurance is essential;
- Running repairs. Whilst the landlord takes care of all the associated costs of maintaining a home, buying a house means that these expenses now have to be covered by the home-owner;
- Moving house. It is a lot easier to move when renting a house. It can be very difficult for first-timer buyers to move house, especially during a property recession.
Those that manage to save a sufficient house deposit can benefit from considerable long-term capital growth. This can lead to a greater sense of personal achievement, but all of this does come at a price, especially during periods of economic uncertainty.
The copyright of the article Buying a House - Pros and Cons in First Time Home Buyers is owned by Asa Ghaffar. Permission to republish Buying a House - Pros and Cons in print or online must be granted by the author in writing.
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