Research online and you’ll find numerous articles suggesting that you should buy property as quickly as possible. The term thrown around here when referring to rented property is ‘dead money.’ While this sounds scary it simply means that you aren’t getting any long-term benefit when you’re renting, compared to when you buy a home. What people often forget is that unless you are buying a property outright – unlikely – you’ll be paying a mortgage.
Essentially, until you pay off most or all the mortgage the property still does not belong to you. That should be enough to make you pause and wonder whether buying is always the right decision. But here are a few other times when buying is not going to be better.
Your Job Is Not Stable
One of the issues with buying property is that you will be tied into a long-term contract. This can last for years and you could still be paying off a mortgage that you arranged in your twenties in your forties! As such, you need to make sure that you will have the money to pay for it. It’s easier to say this if you have a long-term employment contract where you feel relatively secure.
However, a lot of people these days are instead working as freelancers or on a short-term employment contract. As such, their income is not stable and could fluctuate at any point through the year. It may, therefore, not be wise to invest in property in this situation. You could lose the home and even end up in serious levels of debt if you start to struggle to pay off the mortgage.
You Don’t Have Money for the Deposit
Experts recommend that you aim to save about twenty percent of the asking price before you purchase a property. Depending on the size of the home you want to buy this could be well over ten thousand. Recent reports have revealed that most millennials don’t even have one thousand in savings. The lower the deposit, the less likely it is that you will be able to get a quality mortgage deal that won’t take your finances through the wringer.
In contrast, when you look at apartment rentals on Apartment Guide and similar companies, you’ll find that the costs are far more manageable. Indeed, it could easily fit into a monthly budget and leave you money to spare that could be put towards saving for a home you can purchase later on.
You Haven’t Settled
Finally, it’s not going to be wise to buy a property if you haven’t settled on where you want to live. Remember, a job opportunity could appear anywhere across the country or even in an international location. If that happens, you need to be able to move quickly and you can, with one-month rental contracts available.
When you own a house, however, you need to think about sales and free up the capital you need to relocate. You could rent out a property you own but this can be complicated and time-consuming.
We hope you find this advice helpful and see now why buying is not always the right move for your money.