Buying your own home is considered to be a rite of passage in most parts of the world. From the moment we’re born, it feels like our parents have a plan for us. We’re supposed to go to school, graduate, get a great job, meet somebody, settle down, buy a home, make your home moving checklist and start a family. It’s a cookie-cutter life plan, and yet it’s the one most of us find ourselves following as the years go by.
As is always the case with a ‘one size fits all’ approach, sometimes it’s the case that one size does not, in fact, fit all. There are some people who prefer not to go with the flow and don’t feel comfortable doing something just because everybody else is doing it. Increasingly, young people are backing away from the idea of getting married because they consider it to be archaic and irrelevant. As recently as thirty years ago, if you told your peers that you never wanted to get married, they would consider your outlook to be strange. Nowadays, such a viewpoint isn’t considered to be unusual. Say you never want to buy a house, though, and you’ll likely get the same odd looks that those marriage-resisters encountered all those years ago – but should you?
If you’re a regular reader of this (or any other) personal finance website, you’ve probably read dozens of articles about the advantages of buying your own home, and dozens more on the best ways to go about doing so. For the sake of balance and contrast, today we’re going to do something a little different. We’re going to look at the arguments against buying a home instead – and there are some very good ones!
You’re Stuck With The Cost
You’ll almost certainly have come across the opinion that renting is dead money. Nothing could be further from the truth. While it’s true that renting usually (but doesn’t always) cost more each calendar month than paying off a mortgage, and you don’t get an asset at the end of it, you do get something else that a mortgage can’t give you – freedom. When you buy a home with a mortgage, you’re entering into a contract that will rule your life for the next twenty years or more. If something goes wrong financially during those years, you’re still expected to pay the mortgage, and you still owe the remaining balance no matter what happens. If you’re renting a property and something goes wrong, you can give notice and walk away from the obligation within a small matter of months with nothing further to pay. Walk away from a mortgage, and you’ll still be expected to pay off everything else you owe under the terms of the contract – and that’s on top of the cost of paying for your new accommodation after you’ve moved out. This happens when personal relationships and marriages break down far more often than people like to talk about.
You Could Lose Everything
None of us know what the future holds. You could have the most stable job and family life imaginable right now, but six months from now, your personal financial picture could have changed completely and without warning. Life is like one never-ending game of paypal slots. You put money in by feeding and clothing yourself, and you hope to get more money out of it in return by working. When you’re playing online slots and things aren’t going your way, you just shut the game down and walk away. Real life isn’t as easy to shut down as an online slots website. You’re stuck at the machine, and you have to carry on playing even when you have nothing left. If there’s a large amount owing on your mortgage and you have no means to pay it, you’ll be expected to liquify every asset you have in order to satisfy the debt. That means your savings, your car, and every item of value you have are at risk until the whole balance of the mortgage is paid off. Not only is that a bad game of online slots, but it’s also a bad investment. In fact, you could even argue that it’s a trap.
You’re On Your Own
You can consider this next point another benefit of renting – one which more than justifies the enhanced cost. If you’re renting a property and something breaks down, it’s the landlord’s responsibility to repair it. If the oven breaks, you get a new one. If there’s a problem with the electrical wiring at the property, the landlord has to pay someone to come and do the repair work. Should a window break, the landlord steps in again. You’re never left with the cost. When you own a property, all of the cost and responsibility for maintaining it falls on your shoulders. Everything in your home will break down eventually, and it will need replacing. White goods aren’t cheap, and neither are repairs for common issues like damp. You might pay a thousand dollars or so more in rent than your friends are paying for their mortgages, but when they have to pay a thousand dollars or more on maintenance and repairs, the difference soon balances itself out.
It Limits Your Life Options
The previous issues we’ve looked at are negative ones, so here’s a positive one. Let’s say you get offered your dream job a year from now, but your dream job involved moving. That might mean moving to a different town or city. It might even mean moving to a different country. That’s easy to do if you’re renting, but harder to do if you own a house. As we covered above, you still owe the balance of your mortgage, whether you need the house and want to live in it or not. You might be able to sell it, but selling a house takes time. Even if it does sell, because of turbulent market conditions, it could easily be worth less than it was when you paid for it. You could consider renting it out, but your mortgage lender may refuse you permission to do that. Simply put, you might have to pass up on an opportunity to make a major life change because you can’t get away from the house you tied yourself to when you felt like you needed to get on the property ladder.
There are, of course, several good reasons to get a mortgage. You’ll find plenty of them elsewhere on this website. Some people like the idea of having an asset they can pass down to their children. Others like the peace of mind that comes with knowing you can’t be caught out by a surprise eviction when your landlord decides they no longer want to own your property. We’re not saying that getting a mortgage is a bad idea in every circumstance, but we do feel that it’s worth pointing out that buying a home isn’t always the great idea it appears to be at first.
Categories: Real Estate