Is it better to buy or rent a home? This is a question that has been up for debate for decades and will continue to be as the real estate market evolves. Buying a house is usually considered an investment while renting is often seen as a waste of money. This makes buying a house seem like the better option, but in reality, it all comes down to what suits the individual. The cost is not the only factor to consider. Age, lifestyle, desired location, readiness to settle, work situation, and the economy are also important elements that should be carefully considered before making a decision. In this read, we’ll delve into the pros and cons of each and help you determine how each affects your situation.
The Benefits of Purchasing a Home in Dublin
For many, purchasing the first house is usually a symbol that they have made it. But why is homeownership in Dublin so appealing?
1. Building Equity
Home equity is the difference between your home’s market value and your mortgage’s outstanding balance. In other words, it’s the portion of your home’s value that you own outright. When you first purchase a property, your equity equals the down payment percentage compared to the loan value. Whenever you make a mortgage payment, your equity increases. As you do this, the property’s value is likely to increase, meaning you get more money if you sell or rent it out.
Purchasing a home has long been considered a solid long-term investment as real estate prices have historically gone up over time. The housing market certainly has bullish and bearing periods, affected by varying factors, but it rises by an average of 4% annually. If this trend continues, you will likely see a substantial profit on the property if you decide to sell.
3. Tax Benefits
In regards to taxes, purchasing a house is more beneficial than renting. That’s because you can claim a tax deduction for private mortgage insurance, which reduces the amount of income to be taxed.
The Benefits of Renting a Home in Dublin
The home equity and investment aspect of homeownership is undoubtedly appealing, but there are certain cases where renting makes more sense. Here’s a closer look at some of the benefits of renting a home:
1. Lower Requirements
When purchasing a house, you will need to meet some specific requirements. First, you should be able to afford a deposit. According to Conerney, in Dublin, the average deposit is 10% of the purchase price, but some lenders may ask for a minimum deposit of 20%. You also need to have a good credit score to show lenders that you’re a responsible borrower and can repay the mortgage. In addition, you must be able to meet the Central Bank of Ireland’s mortgage lending rules. The Central Bank of Ireland has rules in place that limit the amount of money that lenders can give to borrowers. These rules are designed to protect borrowers from taking on too much debt.
2. Minimal Surprise Expenses
When you rent, most home system and appliance issues are the responsibility of the landlord. If your dishwasher suddenly breaks, you won’t have to depend on your emergency fund to have it repaired. If you rent while saving for a down payment, you will be better positioned to purchase a home down the line.
3. Flexibility in Living
If you are still young and early in your career, chances are you are unsure where you want to settle down permanently. The last thing you want is to buy property in a location that does not match your lifestyle, needs, or work situation such as working from home as a web designer in Dublin. This makes renting a more sensible option. As a renter, you can decide to terminate your lease as per the agreement and move as often as you want.
Questions to Ask When Choosing Between Renting and Buying
The decision to buy or rent your next place is one that will have a major impact on your life, so it’s important to consider the following questions carefully:
Are you ready to stay in the current place for years?
Yes, you can sell your property and relocate after getting a mortgage, but it takes time to find the right buyer. If freedom and flexibility are more important, then it’s better to rent.
Are you eligible for a loan?
You need to prove that you are financially capable and responsible before you’re given a mortgage. So, look at your credit score to determine if you’re likely to qualify for one.
What are the housing costs in the desired location?
If it is too expensive to rent where you intend to live, buying a home may be a better decision.
What is your budget?
Before you begin house hunting, ensure that you have a clear budget and how much you can realistically afford.
As you can see, the right answer boils down to the answer to the above-discussed elements. Each has its own advantages and disadvantages, and it is important to consider your situation before picking one.