Why Renting Isn’t Wasting Money
Contrary to popular belief, renting a home isn’t a waste of money. In fact, renting works out cheaper than buying a property outright. What’s more, renting a house can help you to save substantially.
There are unavoidable costs associated with owning a home such as property tax and renovation expenses. By renting a house instead, you’re relieved from incurring these obligatory expenses.
Here are just a few reasons why renting is a better option compared to buying a house.
Your Home isn’t an Investment
You need to be extremely lucky to earn millions from your real estate investments. There are so many factors you have to consider before investing in a lucrative investment property. For a start, the home should be conveniently located, not very far away from the city centre.
Then again, you’ll need to carry out periodic renovations and upgrades to ensure the market value of your property is intact.Letting agents in Newcastle maintain that the annual percentage return on property is 0.575%. They’ve arrived at this figure after adjusting for depreciation, property tax, mortgage interest and income tax rates.
No wonder, you should not consider your primary property as an investment. You could earn a better ROI by investing in equities even after accounting for inflation and taxes.
You Cannot Avoid Taxes
There are two things you cannot avoid in life; death and taxes. So, if you own a home, you’ll have to pay property tax. Sure, the market value of your abode will appreciate if you stay in a neighbourhood that’s conveniently located. But bear in mind that the property tax will also go up.
And if your earnings or salary does not keep pace with rising costs, you’ll struggle to live in your neighbourhood. Alternatively, as a tenant, you only need to pay the rent, and can relocate when the lease expires.
Maintaining a Home Could Be Expensive
The monthly instalments you pay goes towards repaying the home mortgage thereby adding to its equity. But you have to carry out costly renovations from time to time to keep the resale value of your home intact. But when you rent, the onus of maintaining the premises is on the landlord.
Why Renting is More Practical than Buying a Home
There are some benefits of renting that you shouldn’t ignore. First, you can move home if you don’t like the location or when you get a new job. Most lease agreements are valid for no more than 12 months.
However, you cannot move out of your house or sell it as soon as you’d want to. Instead, you can save substantially by renting a home. For instance, you could rent a home for £1,100 for which you may have to fork out £1,500 as EMI. So, you’d be saving £4,800 a year that you could use to pay off a loan or to invest.
Contact Our Letting Agents in Newcastle
Bowson are your trusted property agents in Newcastle. We work with you to help you find the rental home of your dreams. Contact us today for a free inspection.
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