One day, you’ll own your home
The obvious pros of buying versus renting is that once your mortgage has been paid in full, you’ll have a home that you own. This means you won’t have to consider the cost of renting into your retirement plan. If you plan to sell your home after retirement, there’s the potential that the property has increased in value, and you’ll have more cash to put towards your nest egg.
You can change the home to suit your needs
Even before you pay off your mortgage, the house is still yours to change as you see fit. This means painting, fencing, landscaping and large-scale renovations are up to you. This gives you a certain amount of flexibility too, if you buy a home in an area you love, but it’s too small, or in need of work, then you can always address these issues down the track.
Whereas when renting, if the home doesn’t fit your needs in the future, you’ll be looking to relocate to another rental property.
There’s a certain amount of security that comes from owning your home versus renting it. For instance, no one is going to tell you need to vacate because they’ve decided to sell the property or move back in themselves. There’s no risk a rental agreement won’t be renewed for any reason, or that certain conditions will change that may impact your lifestyle.
This security can make it easier to plan for your future and consider things like pets and children without the risk that your living situation may dramatically change through no fault of your own.
It depends on your location, but across the globe one thing about home ownership is generally the same, and that’s the requirement of a big lump sum up-front as a down payment or deposit. This means you’ll need a hefty amount of cash just to enter the property market.
There are other initial costs too depending on your country, like taxes, stamp duty, solicitor bills and title fees.
The cost of upkeep
Unlike renting, the costs associated with the upkeep of your home falls to you. Depending on the age and state of your home, location and whether you have a free-standing home or apartment/unit will all determine how much you may be spending in maintenance costs over the course of owning your home. It’s best to factor this into your budget before committing to a mortgage.
Your return on investment is not guaranteed
Of course it depends on your area and how this area fairs in the long-run, which can be pretty hard to predict without a crystal ball, but the costs of owning your home versus how much of a return you’ll receive if you decide to one day sell might mean you could make a loss at the end of the day.
Other things to factor in here are how long you plan to be in the home, how much work is needed on the property (could you see yourself taking out additional loans to cover things like renovations?), has the area experienced recent growth? What other long-term factors could impact the neighborhood positively or negatively?