Should I - Rent Or Buy

Buying a home or getting a mortgage is a rewarding experience. You will get a great deal of personal satisfaction from owning your own home. Owning your own home allows you to build up your personal net worth. Not only that but continued growth in housing prices makes owning your own home a very attractive investment.

Sometimes though, renting a property may be a better option for you. Here is an example for you:Iif you're planning to move in a couple of years, you will not be able to recover the closing costs you pay when you buy a home. And finding a home to buy generally takes a lot more time than finding a rented property.
The following calculator will help you calculate the trade-off between buying and renting a property:
If you have a mortgage then your equity over time is building and you get some great tax breaks, if you have under 1 million £ or € mortgage then it is tax deductible.

Your mortgage tax saving will be at their greatest in the early years of your mortgage, here is an example:
A 30 year 7.3% fixed rate mortgage loan of 1000000 you will pay around €6.968 in interest over the first year. If your tax code puts you in the 25% bracket then you would save €1.742 in tax payments. The amount you save on your mortgage over the years changes.

If you are a homeowner you can tap in to the equity in your home with a home equity mortgage, loan or interest expense that you pay on up to €100,000 in home equity debt is also tax-deductible.

But renting a property does have some pros. The deposit on renting a property will be a lot less than if you were applying for a mortgage. Your monthly outgoing amount for renting will be much lower than a mortgage (depending on the size that you rent and location). With a mortgage you end up paying off a loan with interest and paying for homeowner's insurance and property taxes. You might also be required to buy private mortgage insurance. Finally, homeowners face maintenance and home improvement costs that renters avoid.

Renting a property has a much lower financial burden but you are not gaining any future equity or building up your financial profile. People who have a mortgage arer buying into their future.

All of the above information is educational, any information required about mortgages or mortgaging should be obtained fresh from mortgage plus.

In the next section we will look at how to determine how big a mortgage you can afford if you choose to buy a home.

Next Topic: Home affordability