Buying a property is possibly the toughest financial decision you will have to make. To help work out if it is better for you to rent or buy, the Money Advice Service has compiled an action plan.
Pros and cons
The Money Advice Service believes: “Writing everything down in one place will help focus the mind when deciding whether to buy or rent, and will be a useful reference point when looking at your finances, especially if money is tight.”1
You can read their list of pros and cons of home ownership here, and also read their guide to legal and financial responsibilities when renting. After reading these, it is a good idea to start your own list.
It is advised that you compare the possible long-term cost of buying or renting a property. You should work out how much rent you can afford, by determining your outgoings and any upfront costs. The Money Advice Service has put together a guide on how much you can put towards rent.
Affording to buy
Sometimes people underestimate the costs of buying their own home, and focus solely on mortgage repayments. If you cannot afford extra costs, then you should put off buying. Read this guide to see how much you can afford to borrow. Additionally, there is a guide on estimating your overall buying and moving costs.
If you do need to save more money, you can follow the Money Advice Service’s tips on setting a savings goal.
Affordable housing schemes
Some schemes can make buying more affordable. You may be able to part-buy and part-rent to begin with. With others, you may be able to receive interest-free loans that help with deposits. See this guide for affordable housing scheme advice.
You can also follow the Money Advice Service’s action plan to help you get a mortgage with a small deposit.