Own Or Rent - Which To Choose?

It happens to all of us eventually - we go to pay the rent and realise how much money we hand over at rent time. Then we start to wonder if maybe we'd be better off putting that money towards buying a house. It's never an easy decision, mainly because it's such a big decision - one that will have an effect on you and your lifestyle for many years ahead. So let's take a look at both options, and check out the pros and cons of owning and renting.

Firstly, let's look at the option and buying your own home. Most people aspire to owning their own home; it's a dream for most of us. If we're planning to start a family, the urge to have our own home frequently becomes a lot stronger. We want to put down roots, have a feeling of financial and emotional security, as well as linking into a community for our kids to grow up in. All of these are strong motivations to buy your own home, but there are disadvantages too.

Advantages:

- You can do what you want
- It gives you a sense of security
- Long term it's a much better investment than renting
- You have a lot of freedom
- You may qualify for a number of tax incentives
- Often it costs the same or only a little more to buy compared to renting
- You feel like you're putting your money to good use
- It's a chance to decorate the house exactly the way you want to
- You can build equity, and maybe borrow against that down the track
- It helps you to establish a good credit rating for the future

Disadvantages:

- If someone has an accident on your property, it's your problem
- Also, if a neighbour's property is damaged, for example by a tree branch falling off your tree, it's your problem
- If it breaks - you fix it!
- You will probably start out with a very big loan, and the lender will want to get paid, no matter what happens to you financially
- You're tied to one location - it's hard to move quickly if your job demands it
- Insurance - you really have to have it
- Interest rates may move, if you have a variable loan rate
- You're probably going to have to pay property taxes
- Depending on the loan, you may need to have a lump sum saved up to get a loan

Most people start life on their own by renting, and some people like it so much they never stop. Let's take a look at the pros and cons of renting a home.

Advantages:

- You're free to move as soon as your lease ends
- If you're having financial problems, you can move somewhere cheaper
- Maintenance mostly isn't your problem
- Sometimes your utility bills may be included in the rent, which makes budgeting easier
- If you rent in a complex, you might have access to a laundry, pool and other facilities
- It's often substantially cheaper to rent in a desirable area than it is to buy a home there

Disadvantages:

- You don't have the opportunity to stamp your personality on the place by making changes
- Rents generally go up over time
- There are no available tax deductions
- You may feel well and truly settled, only to find yourself having to move on because the house is sold
- You risk being evicted
- You may not be allowed to have pets
- There may be limits on the number of occupants
- Your rent money isn't growing as an asset in any way

From these lists it's easy to see that there are numerous advantages and disadvantages to both owning your own home and renting. In the end, your decision has to take into account your own personal circumstances. Where are you at financially and emotionally, and what sort of lifestyle do you want? Not only that, you have to think about where you want to be in those areas further down the track, and decide which option is most likely to get you there. There's no doubt owning a home is a huge investment and also a huge responsibility, and you need to be prepared for that, if you make that choice. Perhaps the freedom of being able to move regularly is more your style.

The important thing is to take your time - think hard about all the different elements involved in the decision, before making up your mind. Knowing you've taken the time to really consider all your options will help you to feel more comfortable about your decision, whichever decision you make.