A mortgage is a huge financial commitment, and a big chunk of your monthly repayments are to cover the interest on the loan, which is why it takes so long to pay the whole thing off. The average mortgage term is 25 years, but the number of first-time buyers taking out a 31-35 year mortgage has doubled over the last 10 years.
Renting is a much more flexible arrangement. Should your personal circumstances change, it’s easy to move to a different place, perhaps one that is closer to work, or cheaper to rent. And while you may not be able to afford to buy a house in a desirable area, renting there may well be within budget.
On the other hand, renting is often decried as ‘dead money’ when compared to the returns available on a property investment with the help of a mortgage. House prices have risen significantly over the last years, and while the cost of mortgages has gone down, average rents have gone up. Depending on the area you want to move to, monthly mortgage payments could work out cheaper than the cost of renting in that area.
For anyone contemplating a property purchase, crunching the numbers is key. Work out how much you can afford to borrow and how much you need to save, and make your decision from there.