Owning your own home is a goal for many people, but with an estimated one in three people aged 50 and over now renting their homes, it’s clear that there are pros and cons for both sides.
The rise in renting for the over 50s may be down to an increase in divorce for this age range, otherwise known as ‘silver splitters’, with many people not being able to afford to buy their own home after their separation.
Whatever the reason, if you are currently weighing up whether to rent or buy, here are some things to consider.
Should you rent or buy a property?
Deciding whether to rent or buy your next home is a very personal decision and what is right for another person may not be right for you. Both options have a number of benefits and disadvantages. Here are some questions that you should ask yourself to help you work out which route is best for you:
What does your financial future look like if you buy rather than rent?
Your living situation obviously makes a big difference to your finances, not just now but in the future, so it’s important to consider how you might pay for your home over the coming years and after you retire. Renting is now cheaper than owning a first home in nearly all UK regions, according to Halifax, with a series of increases in the Bank of England base rate having added to millions of homeowners mortgage costs. Getting a mortgage when you’re over 50 isn’t always easy either. You can find out more about the options that might be available to you in our article Mortgages for over 50s: what you need to know.
If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Cheaper still is living mortgage-free, so if you are in a position to buy and potentially pay off your mortgage before you retire, perhaps by overpaying your mortgage each month, then buying could reduce your living costs later on. Learn more about the effects overpaying can have on your mortgage in our article Should I overpay my mortgage?
If you aren’t able to pay off your mortgage before you stop work, it’s worth thinking about how you will cover your monthly repayments once you retire. Do you have a pension pot that will cover these costs or do you think you will need to keep working? If you have a workplace pension, it is worth paying into it to try and boost the amount of money you will have at retirement?
What are your priorities over the next few years?
A mortgage is a big financial commitment, so you need to be sure that it’s the right thing for you. It’s worth asking yourself what you want your life to look like over the coming years. Is making somewhere your permanent home a priority or would you like more flexibility? Do you want to use your savings now to put down a deposit so you can buy a home, or keep a nest egg for the future?
Renting could provide you with more flexibility as you won’t have many of the costs associated with buying, such as Stamp Duty or mortgage arrangement fees, and you’ll also be able to rent short-term if you want to, making it easier for you to move on if you’re not happy in your home. Buying a property and getting a mortgage can give you more certainty as you’ll usually know exactly what your costs are for a set period of time (depending on the type of mortgage you choose), which can make it easier to budget.
Can you afford the costs of buying a home?
While many people can afford the monthly mortgage payments, and in many cases these will be cheaper than the rent they pay, there are several other costs to consider when buying a house. These include:
A deposit – when you apply for a mortgage, lenders will require you to put down a deposit of anything between 5% and 20% of the property value. Currently, because of the government backed Mortgage Guarantee Scheme, there are several lenders offering mortgages with only 5% deposits. You can read more about this scheme in our article How does the Mortgage Guarantee Scheme work?
Home survey costs – Before buying a home it’s a good idea to have a survey done so you are aware of anything that needs repairing or might affect the value of the property. Depending on the kind of survey you opt for and the size and age of the property you’re buying, this could cost anywhere from £150 – £1,500 or more. Find out more about surveys in our guide Which property survey should I get?
Stamp Duty – This is a tax you pay when purchasing a residential property in England or Northern Ireland over the threshold price (if you live in Scotland you might need to pay Land and Buildings Transaction Tax or Land Transaction Tax if you live in Wales). Stamp duty has different brackets depending on the value of the property, you can find out more information in our article Stamp duty explained.
Legal costs – when you buy a property, there are a number of legal processes to go through, which will usually be carried out by a conveyancing solicitor. Solicitors can charge anything between £850 – £1,500 or more to help with your property purchase, depending on the complexity of your situation.
These costs can quickly mount up, so it’s important to consider them all before making your offer to make sure you can afford them.
What are the pros and cons of renting and buying?
If you’re still not sure whether to rent or buy a home, we’ve put together this table which outlines some of the general pros and cons of each option:
| Benefits of owning | Benefits of renting |
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| Possible negatives of owning | Possible negatives of renting |
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Finally…
There’s no ‘one size fits all’ answer to the question of whether renting or buying is best, as the answer will depend entirely on your individual circumstances. Some people have a great experience as tenants, whereas others don’t and wish they were in a position to buy. Equally, many homeowners might feel their mortgage is a major financial burden, or that they’re trapped in a property they’ve bought – or they may be lucky enough to own their dream home.
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