Should you rent or buy?

Is it sensible to ‘buy’ a house if actually you are just renting it from the bank or building society?

If your mortgage on a 4 bed house in the Kentish suburbs is £1500 a month, and £1200 of that is the interest,… and you could rent a 4 bed house for £1000 a month, then even ensuring that you save £300 a month (as you were paying off the mortgage) then you would still be a couple of hundred pounds a month better off? Right?

Well… nothing is ever simple and this rather crude example assumes that houses are not increasing in value (Ed- which they are not currently, in June 2012). But it’s enough to make you think, and it’s time to get out Excel or the calculator or a pen and paper depending on your preference.

As mentioned in a previous post, the New York Times rent or buy calculator is another way to get some perspective on the issue

Usual caveats apply: this is general statistical modelling and not specific to your financial situation. Don’t make decisions based on this, but talk to a financial advisor before making any financial decisions.

The point is to consider whether renting is actually a better option? It costs around £10-20k out of your equity for the average house move (sell and buy). Good luck.

photo credit: tifotter

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James Cole

James Cole is the Group Editor for Sailfin Magazines and oversees our titles and content creation. He's literally the person who dots our 'i's and crosses our 't's across our Home and Garden Magazine section, our Family and Parenting Magazine, our Life & Wellbeing Magazine, Our Travel and Tourism Magazine, and our Business and Work sections.