Should you buy a home?

Can you afford it?

Buying a house is a long term investment and can work out cheaper than renting. But you can only afford it if:

  • You can get a mortgage for enough to buy a house. Here is how to find out how much you could borrow.

  • You can afford the monthly mortgage payments. Use this calculator on our mortgage comparison to see how much each deal could cost you per month.

  • You have a deposit or guarantor. A deposit can come from your savings or a gift from a relative. A guarantor has to agree to cover any mortgage payments you miss.

Here is how to check if you can afford to get a mortgage

The benefits of buying

  • Your monthly repayments go towards buying your home, not into a landlord's pocket

  • You fully own your home at the end of the mortgage's term, and can then live rent free

  • You could make a profit if house prices rise

  • You can live by your own rules without needing a landlord's permission (e.g. having pets)

  • You can make changes to the property such as redecorating or landscaping the garden

  • Renovations and changes you make could increase your home's value

  • No landlord who could make you move house because they want to sell

  • Buying can sometimes be cheaper than renting

The drawbacks of buying

  • Upfront costs like mortgage fees and stamp duty can make it pricier than renting

  • If you get a joint mortgage and separate, it can be complicated to sell the property

  • Interest rate rises can increase your monthly payments (unless you get a fixed rate)

  • You have to pay for repairs, including if something urgent goes wrong like a leak

  • Moving can take a long time because you have to sell your home first

  • If your finances become tighter, moving to a cheaper property can take a long time

  • There are financial consequences if you fall behind on repayments, like getting into debt

  • If you fell too far behind you could face bankruptcy or your home being repossessed

Should you rent a home?

The benefits of renting

  • It can be easier to move house quickly when you need to

  • Finding and renting a home is usually quicker than the process of buying

  • No risk of losing money if the property's price goes down

  • Your landlord has to pay for repairs and renovations

  • It is often cheaper and rental payments rarely change, making it easier to budget

  • You may be able to rent a bigger home in a nicer area than you could afford to buy

The drawbacks of renting

  • All of your rent payments go to your landlord, not towards owning a home

  • If you never buy a house you have to pay rent for your whole life, even after you retire

  • If your landlord decides to sell or get new tenants, you have to move out

  • Your landlord can set rules and restrict changes you can make to the property

  • You have to pay a deposit, and the landlord may keep some or all of it

  • Your landlord could decide to increase your rent

  • Improving the property could increase its price, but this only benefits the landlord

Which is cheaper?

It is usually cheaper to rent in the short term because:

  • The rent you pay could be lower than mortgage repayments would cost

  • The deposit you pay is usually much less than the initial costs of buying a home

However, mortgage repayments can sometimes come to less than paying rent, depending on the property you choose. Buying a home could cost less in the long term.

You can use this calculator to work out how many years it will take until buying works out cheaper than renting.

How to decide

If you should rent or buy your home depends on your financial and personal circumstances. Ask yourself these questions to help make up your mind:

Do you have enough for a deposit?

You need to save a deposit to get most mortgages, which is the amount you pay towards the purchase yourself.

It is shown as a percentage of the property's value, and you usually need at least 5%. This would come to £10,000 on a home worth £200,000, and you would also need to save enough to cover the other costs of buying a home.

You can get some mortgages that need no deposit, but you usually need a family member to agree to cover any payments you miss.

If you still cannot afford a deposit, here is how to save up for one.

Do you earn enough to afford a mortgage?

You can only buy a house if your income is enough to:

  • Afford your repayments while still leaving enough money for living expenses and everything else you spend money on

  • Make lenders agree you will be able to afford the mortgage

Here is how to make sure you will be able to afford a mortgage's repayments

How long will you stay in your next home?

If you will only live in an area for a short period of time or you expect your circumstances to change, renting is usually cheaper and more flexible when you need to move house.

This is because the initial costs of buying a home are much higher than the deposit you pay when you start renting a home. These include mortgage fees, stamp duty, valuation fees and your solicitor's charges.

However, if you intend to live in an area or property for a long time, buying a house can work out cheaper.

Will you live alone or with someone else?

If you will live with a partner or someone else, you may be able to afford to borrow more if you buy a house. Here is how to get a joint mortgage and how they work.

You could buy a house with friends instead of renting. Here are the benefits and risks of buying a home with friends.

What to do if you decide to buy

  1. Save up a deposit or find a guarantor

  2. Check how much you could borrow and how much mortgages cost per month

  3. Learn how mortgages work

  4. Find out how to get your first mortgage