To rent or to own? Your guide to making the call

There’s an old notion that renting is “throwing away money.” But is it really? Sure, owning your townhome is an awesome goal, but jumping into a home loan isn’t for everyone. It’s a big decision, and one that requires some serious thought.

Here are some considerations to help you decide if buying a home or continuing to rent is your best move:

1. Your wallet’s wellness

Taking out a home loan is a big financial leap. Buying property usually involves making a 20% downpayment, so if you’ve got the cash — and have been pre-approved for a mortgage — it might be time to consider it.

But don’t forget about any other debts you’re carrying: Are you still paying off any other significant loans, such as an auto or a personal loan? Not all debt is bad, but it’s important that you know how these will factor in.

Lastly, how’s your income looking? You’ll have to make regular payments on a home loan for years, so having a steady financial source is key.

2. The timing of your life

House hunting and home loan applications? Those take time. Do you have the energy for those? If not, remember that your situation can always change, and in the meantime, renting might still be best if the timing isn’t right.

Think about your job, too. Are you likely to be relocated by your work in the future, or might you want to take further studies abroad? If you’re not yet sure about putting down roots and need some flexibility for the next few years, continuing to rent might be best for you.

3. Little (but big) expenses

Apart from the actual loan, there are other things to consider. Will you need to put money aside for association dues, broker fees, and insurance? And let’s not forget property taxes once the place is yours. 

Plus, those little repairs add up. When you rent, the landlord often takes on the cost of repair for a busted faucet or aircon maintenance, but as a homeowner, those costs fall on you.

4. Location, location, location

As we all know, property prices vary by location. Do you want to stay in the same area, and if so, will the monthly amortization of your loan be around the same as your rent? If not, will the additional amount be worth it?

If you’re looking to buy property outside the city, or in a different part of the main metro area, consider the commute. And don’t forget the nearby establishments: check if they will cover your needs, and if the area is still being developed, investigate if the master plan will suit your lifestyle.

5. The crystal ball of the future

One of the biggest things to consider when buying a home is your future. Are you planning to start a family? Will the space be big enough? In other words, the property needs to be futureproofed. But, keep in mind that starting a family doesn’t always require buying a home, and renting can actually be better suited for starter families. Take stock of your future plans — it might make more sense to continue renting for the next five years while everything is still in flux.

Remember, having a home under your name isn’t the end-all-be-all of financial independence. Taking out a home loan is a huge commitment, and even if you’re financially ready, you need to be mentally and emotionally prepared, too.

But don’t stress — you’re not alone. BPI is here to help you make the right decision. For more tips to help you decide, click here and here. 

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