Are you considering the cost of Rent vs Buy? Are you wanting to work out which you can afford? If so...
Stop!
Think!
There are other, more important factors to take into account when considering whether to rent or buy. You can find out more by completing:
The Loans Guidebook
Rent vs Buy Questionnaire.
"Why?" (you may ask)
A Qualitative Decision
The Rent vs Buy decision is far more than a simple financial one. Most rent vs buy calculators help you make a quantitative decision; ie: they work out whether it will cost you less to rent or to buy.
However, such calculators are only a minor part of the decision, because:
- there are often many hidden costs - such as repairs and maintenance, the cost of moving, etc. - that are not included in many "rent vs buy" equations.
- the rent vs buy decision is often not a quantitative one, but a qualitative one.
According to the 2001 Fannie May National Housing Survey (in the US) roughly 2 out of every 5 people who rent do so as a matter of choice. Such choices can be influenced by factors as diverse as:- Whether you need a better credit rating for future borrowing
- How much stress you are prepared to deal with if and when you move
- Whether your sense of independence or freedom is important to you
- Whether you'd rather spend or save
- Your pension strategy
- And other factors
- renting and buying are not the only options; there are other variations that may suit you better
Considering the options
There are two ways you can consider the qualitative factors in your rent vs buy decision.
One is to list the most important aspects of your lifestyle, both now and in the future, and in different categories of importance. For example:
- career ambitions
- family plans
- social life
- travel
- holidays
- etc.
Then, for each aspect of your lifestyle, assess whether tenancy and purchase will support it or inhibit it. Pay particular attention to the more important aspects of your lifestyle
However, a better way is to complete
The Loans Guidebook Mortgage Calculator.
This is an online questionnaire (free and anonymous) that looks at your lifestyle and suggests which of eight property strategies may be best for you.