What is better: Mortgage or Rent?

Posted: 2 months ago

Many individuals who do not own homes continuously face the dilemma of deciding whether to rent houses or take out mortgages to purchase residential properties. Each of these options has numerous benefits and drawbacks. Renting a house leaves one with the freedom to move out whenever they like. Because rentals may be cheap, tenants incur less short-term expenditure. However, it subjects the tenant to the mercy of their landlords and landladies who may change the terms of engagement at any point. Conversely, the capital of a mortgage may be expensive, but gives the comfort of security and ultimate property ownership. Despite being considered expensive, mortgages offer better options compared to rent because they offer affordable ways of owning homes and cost effective ways of borrowing.

The most common reason people choose rent over mortgage is financial. Many who cannot afford down payments for homes consider renting a better option. The inability to raise such capital may be caused by poor credit rating or excessive debts. Hence, individuals may stay in rentals as they continue building their credit. Another reason to rent is fostered by the implicit costs and extra expenses required for maintenance and renovation of homes. Additionally, those who rent have no binding attachment and can move out to cheaper or preferred locations at will. Notwithstanding, various disadvantages still make this option undesirable. If the home owner decides to sell the house, one is subjected to a new lord who may even issue an inconveniencing eviction notice. While the privacy of tenants may always be compromised by neighbors or owners, their rules of engagement can be changed at any time. A typical example is the sudden increment of rent.

On the other hand, mortgages may appear expensive but still offer a better and more comfortable option. When processing a mortgage, one requires a large sum of money or creditworthiness for the initial capital. While mortgages come with exorbitant interests, buyers still have to meet additional fees for set-ups, insurance, and legal proceedings. In the long run, buyers in this category still end up paying more than they borrowed by far. This is the reason some schools of thought dismiss mortgaging and prefer renting instead.

Several scientific evaluations conducted comparing the overall cost of mortgaging with that of renting reveal that renters pay much more than mortgagors in the long run. Over a period of five to ten years, most tenants in rental houses pay the approximate cumulative price they would have paid for the property if they used a mortgage. This leaves mortgaging a better option as many other benefits ensue. As one pays for the mortgage, they move closer to owning the house. No landlord can harass them. At the same time, they acquire express freedom to modify the property as they wish. Such may include planting gardens, grass, and making desired interior and exterior designs. It is also possible for mortgagors to rent out their houses and use the income to repay the mortgage.

Although many advantages accompany renting a home, they cannot outdo the benefits associated with mortgages. Renting is cheaper in the short run. However, its cumulative costs match the costs of a mortgage while the tenants remain owning no home. Renters may be free to move out at any time, but this also applies to those with mortgagors. Challenges faced by renters include reduced freedom and privacy, subjection to sudden changes of contracts, and the reduced possibility of owning a home. While mortgages appear expensive, they help overcome all these challenges and avail the freedom to customize environments as one desires.