Your first year as a newlywed couple can be a parade of beautiful firsts. One of the most beautiful of those can help cement the relationship just as well as getting married can: it’s deciding on the place that you will call home.
It’s a place that you can either buy or rent. Which way you head can depend on what your needs and expectations are as a couple. Each choice comes with its own pros and cons; there is no one answer that is right or wrong for everyone.
First off, you shouldn’t see ownership as a test of the strength of your marriage
It’s important to think about your choice in an objective way, rather than in an emotional way. Putting a couple of hundred thousand pounds into a house to call your own isn’t necessarily an investment in your marriage. It is only a financial investment. If you choose to not buy and to instead put the money in something else, say the stock market or a business that you run, you can be proud of those joint investments as beautiful signs of your commitment to each other, too.
It’s committing to the best outcome for your family that matters.
There are a number of areas of basic importance that you should explore before you make a choice. What works for you entirely depends on your individual needs as a couple and family.
How important is flexibility to you?
If you’re only in your 20s and are just starting out in life, it may seem as if you’ll be happy with your current career path forever. Unless you’ve done a lot of thinking about your future and the course that your careers will take, though, it’s a good idea to keep your options open. Buying a home together is a good option if you are sure that you will stay where you are at least ten years. You need at least five years simply to make back what you spend on closing costs. If you believe that you might want to look for a new job in a new city, follow a spouse with a new job, or anything else, buying will tie you down. When it comes to flexibility, renting obviously wins.
How much money do you have each month to spare?
While different banks tend to use different formulas to determine the ability of an applicant to handle a mortgage, the strictest ones look at the entire financial picture. They want to make sure, typically, that everything that you owe, including student loans, car loans, credit card bills and other drains on your money, never amount to more than 40% or so of your gross income. If you find it hard to qualify by such standards, you would need to rent until you’ve managed to rein in your debt.
As noted by UK real estate specialists like JayneandMoss.co.uk, Britain now enjoys historically low mortgage interest rates at the moment. It’s turning out to be easy for couples to manage their mortgage payments. You need to think about more than just the mortgage, though — your calculations should include property tax, insurance, upkeep, repairs and utilities, as well. Renting turns out to be cheaper than ownership sometimes; in other cases, renting is more expensive. You need to make sure that you pick the right option for the resources that you have access to.
How hard is it for you to make the down payment?
While the government does provide down payment assistance to families buying their first homes, you do need to qualify. If you are ineligible, you need to find out how long it can take to put a few thousand pounds together. If your current situation doesn’t allow it, you may need to put off your plan, and rent instead.
How greatly do you need the incidental benefits?
When you pay your mortgage, you get to claim the interest that you’ve paid on it as a deduction on your taxes. It can be a significant sum of money. Rent, though, is not an allowable deduction. There’s also the matter of your credit file. Paying your mortgage in time each month for years can mean that you have something extra to give the credit scoring organizations. With rent, such scoring is not available.
If you are nearly certain about the decision to buy, you should take advantage of a rent-to-buy plan. When you sign up for such a contract, anything that you pay towards rent each month is automatically counted against the cost of the home, should you choose to buy one day. To anyone in a serious puzzle about whether to buy or rent, the buy-to-rent idea can be a happy middle ground that calls for no immediate action, one way or the other.
Rose Evans works in financial planning and is often online in order to provide some insights and ideas on subjects like affordability and funding. She is a regular writer for several property-related websites.