09 Mar 2017
Choosing a main course in a restaurant can be a stressful business. Do you want the chicken dish you know is a safe bet, or the more expensive and tasty-looking steak?
You just can’t avoid FOMO (Fear Of Missing Out). There’s always the feeling that you’ll end up with a side dish of regret if you make the wrong decision.
The choice between buying a house or staying put and renting can be similar: do you go with what you know or is it time to take the step up to a house of your own?
Even some of your friends are taking the leap from renting to buying (talk about pressure), but you’re just not sure whether you’re ready for the grown-up responsibility of home ownership.
Solution? Weigh up the pros and cons of buying your own place, and think about which one is the better option for you.
To help you out, we’ve outlined 5 areas you should really consider as a potential buyer in Ireland.
1. It could actually be cheaper
You might think that you can’t afford monthly mortgage payments, but here’s the thing – you could already be paying more in rent every month. The latest Daft Report found that your mortgage payments could be as little as 56% of your monthly rent in certain parts of Dublin.
The shortage of housing stock means that everyone is fighting for a limited amount of rental properties. This is great for landlords, who can ask for more rent – but not so good for tenants.
And the result being, the average cost of renting a home in Ireland has risen by over 9% since last year.
You might argue that this is just a temporary arrangement but Irish rents have been rising every quarter since 2012. It may be a good time to do the maths and discover if a mortgage would be a cheaper option.
2. Making a house your home
The big advantage of owning your own home is that you can change what you want when you want. You don’t need to call your landlord if you want to put a picture hook on the wall. If you want to cover all your walls in Harry Potter wallpaper, that’s your prerogative.
You can renovate and redecorate in your style, pushing structural boundaries to create your own space. And whilst renters might be able to swap the curtains or add some furniture, they’re limited in terms of what they can change – most landlords aren’t going to extend the kitchen so their tenant has more cooking space.
Everyone has an image of what their dream home looks like. Owning your own place means you can start working towards that goal. It might not happen overnight, but you can chip away at it until you have it just the way you want it.
3. Renters have limited stability
Irish people have always been slightly obsessed with owning their own homes. Four out of five Irish households owned their own home back in 1991 (page 6). One side effect of this is that long term renters don’t get the same protections as many of our European cousins.
The recent two year freeze on rental reviews was a good start but tenants can still be hit with major rent increases after 24 months. This can price many tenants out of their house and force them to look for new digs in an inflated rental market. They can also end up on borrowed time if the landlord decides to sell the house.
Compare this with someone who has a fixed rate mortgage. They know what they’re paying every month and they’ve the security of owning their own home. There’s also something comforting about knowing that you’ll still be sleeping in the same bedroom five years down the line.
4. You become part of a community
Owning a home means you’re as invested in the community as you are in the bricks and mortar of your house. It gives you a greater sense of belonging and security - you know you’re going to live here for the foreseeable future so you can start putting down roots.
You might join the local GAA club (up the parish!) or get involved with the local parent-teacher association. It doesn’t take long to feel like you’re really part of the community.
Before long you’ll be nipping next door to Mary and Paul’s to borrow a cup of sugar or waving to people as they walk down your street. It’s a long way from living in rented accommodation and not knowing your neighbours’ names.
5. Your house is an investment
Most renters have at some time been told, “You’re only paying the landlord’s mortgage”. Buying your own place isn’t for everyone, but the advantage is that it turns the roof over your head into an investment. And it stops all those “dead money” comments from your home-owning friends and relatives. (Not that you’re paying attention to those of course).
House prices have stabilised again after the crash and national asking prices are up 28% from their lowest point; so the money you pay into a house can build equity to earn you money over time.
Having your own home also opens up other options. You can sell your house or rent out a room. The money you invest in a property can pay off over time and your home is yours when it’s all paid off.
All things considered, maybe it is time to take a chance on the steak!
Are you thinking of buying your own home?
The first step to buying your own home is finding out what you can afford. Are you ready to go or do you need to skip a couple of fancy meals to get yourself back on track?
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