Should I Buy or Rent?

Did you know that you can buy a home earning as little as $12 per hour? We can all buy a house, but it depends on our life stage and how we can finance our monthly repayments. In some cases, it may also be better to rent an affordable apartment before we move forward with a property purchase.

In this guide, we take a closer look at popular home budgeting steps that you can take to find out just how much you need to rent or own your next home.

Let’s Start By Considering Rental Costs

Before you can apply for a home to buy or an apartment to rent, you need to compare what you will be paying each month.

The average monthly rent in a city apartment is around $1200.

If you looked at buying a house of 200K at an interest rate of 5% over at least 30 years, you would pay around $1074 per month. For a house of around $250K and an interest rate of 4% over 30 years, you’re looking at $1200 mortgage repayments every month.

The cost for renting an apartment in the city and paying a home loan of between $200K and $250K are not that different. Remember, that the costs for renting will include the security deposit of one- or two months upfront rent and the possibility of administrative fees (depending on where you rent). Apartments won’t include maintenance though, so you save on those weekly or monthly costs.

Buying a house means paying the mortgage and covering the overall maintenance of the property. If your plumbing causes a flood, or your power supply needs repair, you will have to cover the expenses.

Consider Your Credit

Credit plays a major role in affordability and qualifying for an apartment to rent or a home loan. Your credit rating or FICO score is needed to receive rental and mortgage approval. A negative credit rating makes it harder to be approved for an apartment to rent while applicants for a mortgage may be subject to higher interest rates. This means that you pay more for your home compared to someone who has a positive credit rating.

To help you save money when you have bad credit, you can rent a second chance apartment. Second chance apartments are available for renters with a negative credit rating, and it is more affordable than your average apartment. It is a great way to save on the monthly costs while you work on improving your credit. This way, you can find a place to rent and work on your debts, so you don’t have to pay sky-high interest.

So, Is It Buying or Renting?

Buying a house is always a great idea provided it is a valuable investment and more importantly, you can afford it. On the other hand, if you are saving to purchase a nice house in a good neighborhood, then affordable rentals will help you dedicate more to saving and a deposit. Whether you want to buy or rent, it is entirely up to your personal finances, your goals, and affordability.

If you can’t manage on your own, you can speak to a financial advisor who will maintain confidentiality and help you with a reasonable budget. Remember, your bank balance shouldn’t be on zero at the end of the month to cover a house purchase. You should always have enough left for saving.