Q. I have been renting for a couple of years and I love the place I am living in, which I have just been invited to extend for a further 12 months. I am actually in a position to buy now with a decent deposit in the bank and a salary that would accommodate a sizable mortgage but I am unsure whether I want the whole commitment of buying. I really like the flexibility of renting but am constantly reminded that rent money is dead money. Do you think I should take the leap of faith and buy or continue to enjoy the flexibility I love so much with renting?
A. I understand where you are at with respect to the flexibility of renting but the underlying fact here is that financially, renting is not the best option and would usually only make sense for someone that couldn’t afford to buy. So in your position I would absolutely get yourself in front of a financial advisor and get that mortgage arranged pronto. Mortgage rates are still ridiculously low and there are some really great fixed rate deals around at the moment. Owning your own home will mean that not only are you repaying the mortgage off month by month but capital growth will also be accumulating to, so as long as you invest wisely and buy in a growing area you are set to make a healthy profit by just owning rather than renting without doing very much at all. And flexibility is still sustainable even for someone that owns. There are lots of options open to you, of course you can always sell, that way you pocket the profit and move on but the more sensible option if it is affordable is to the rent the property. That way you continue to benefit from further capital growth within your investment and collect rental income which could mean you completely cover your mortgage and other expenses on the property which will free you to either rent something again or buy a second property. With everything considered using the excuse of liking the flexibility of renting is really not a good enough reason not to buy. So if you’re smart and are keen to make some money then you know what you need to do!