Buying a house is one of the biggest commitments you can make as a human being. If you are not sure that you want to buy a house, then renting is a great alternative. Renting an expensive or nicer place can sometimes be better than saving up to buy a house, depending on the situation.
If you are a high income earner, then it is probably better for you to rent a nice place while still saving to buy too. This way, if your job is very demanding, draining or difficult, you still get to enjoy your rented place and to spend on experiences and doing things that will make your life worthwhile, while working towards a better future.
If you are a low income earner, then it may be wiser for you to save up and stay in a lot lower-rent type of place to one day be able to buy. But, if you think your income is too low to ever afford buying then why not rent a decent place to live in at least rather not make your life more miserable, sad and bleak.
Either way, in this article we discuss few reasons that may make the unusual idea of going for a nicer more expensive place to rent a bit more understandable than going for a bad rental and saving most of your money towards buying later.
Should you rent a nicer flat or opt for saving and buying instead?
The obvious answer for this question is that saving to buy a place that belongs to you is almost always better than renting.
However, if you feel that a mortgage can be an annoyance or something that makes you question the future and rob you of security then renting may be preferable. Also if you make a good enough salary to rent a nice or decent apartment and have a good lifestyle, but not that good of salary either to afford a nice house then you may prefer to rent.
Renting can allow people to have access to more options and have a beautiful lifestyle; especially if they are not sure what will happen in the future. For example, the buyer can be forced to sell their house at a loss or find themselves unable to keep up with mortgage payments because of unforeseen reasons or expenses.
From a financial point-of-view:
Renting an expensive place might be better than saving to buy in some cases, but this is mostly true in the short term. The thing with renting is that most people won’t have any equity in the property they are living in, so when they want to move on, they will have to find a deposit for another rental.
And, what’s sad is that they would’ve spent so many years and have memories in a property that’s not theirs. All of which will be lost in a heartbeat, if the landlord decided to send you a notice to move out or if you decided to move or go for a more affordable option. In other words, you will have spent a lot of money throughout the years and still have nothing to show for it.
In other words, from a purely financial point-of-view renting when you have the option to buy and pay for your mortgage instead looks so ridiculous.
There’s no questions about what to do when you consider the amount of money you’ll throw in rent over the years and that would’ve meant nothing to you as opposed to putting the same amount in a place that can become fully and exclusively yours and for your next generation of kids and grandchildren to benefit from.
From a lifestyle point-of-view:
You may be thinking of an instant reward for your good income and preferring to go for an expensive place to rent to instantly enjoy a great lifestyle, rather than get stuck in a mortgage for a place that is not half as good. That’s also an idea that people have when they’re wondering whether or not they should save, put a deposit, buy a place and start paying mortgage instalments rather than rent fees.
If you’re one that is thinking about enjoying to the maximum and if you value having a good lifestyle today and now because tomorrow is not guaranteed and you’d like to enjoy right now and worry about later in the future, then go ahead.
However, it is worth considering that buying a place to live in for yourself at least can give you a better quality of life in the long run when a day comes where you only worry about paying bills and not the rent. When you become a home-owner it may be important to consider that at that point you may actually have an amazing lifestyle far from anyone or anything that would’ve cause you financial worry.
From a practical point-of-view:
No one will debate the merits of owning versus renting. But what if you could rent a cheaper place lower your standards and lifestyle for a couple of years and still save enough to buy your dream place outright or put a good deposit for it? Is this a good option?
Yes, it is what most people in their right mind do. Some people do not mind lowering their living situation just as long as they’re saving towards a better future and doing it to be able to get themselves out of there once and for all. If you think you can afford to rent somewhere not as nice as you can do and a bit smaller, in order to gain more time to save and buy your place after that then it may be a great option.
If you are not planning to stay in an expensive place for a long time, it may be better to invest money elsewhere. Paying for a very high rent when you only need a bit of time to save is not smart. So rather than paying a high rent that does not go towards buying that property but will just be lost forever, better to put your money in another type of investment instead or save more to afford a nicer place to buy in the future.
Saving to buy is usually a better idea than renting. However, there are some cases where people are better off renting.
If you have the money to rent a place, but not enough for a down payment; it might be better to rent and live comfortable especially if you know for a fact that you won’t be buying any time soon. If your intention is not to ever buy then you can pick a nicer place to rent just as long as you’re not paying for more than what you can afford either.
If you live in an area where property value will increase quickly, then consider that when saving to buy. In this case, it might even be more beneficial to rent because by the time you save up enough for a down-payment and closing costs, property values will likely have increased significantly again anyway and renting would make more sense.
Lastly, if your job is unstable or offers limited opportunities for development, it may be better to rent as buying may make little sense if your job changes.