Why it's ok not to buy a house

The Cons   

I'm British and therefore I must buy a house....

....you don't have to. Here's why:

 

Purchases

When you buy a house you buy beds, sofas, fridge freezers, cupboards, chairs, tables, TV, etc etc etc. When you rent, ask your landlord to buy all this. When you have a space, tendency is, you'll fill it. Filling it costs money. Then you insure all purchases; this costs even more money.

 

Risks of borrowing money

You borrow money to buy a house (unless you have all the cash). When you repay the money you repay capital (paying off the house), and interest (paying money to a bank for the privilege of borrowing the money). In 1990 interest rates were 15%; they are not that at the moment. In the future they could be; this is money paid to a bank, not your house. 

 

If you default on your mortgage (i.e can't pay it back), the lender of your mortgage can come for your house, and you. They can take everything you own.

 

House stuff breaks

Back to point 1; owning a house means you are responsible for buying the goods for the house. Things break, and when they do, it’s you who has to find and pay for the plumber, electrician, maintenance man. When you rent, it’s the landlord.

 

Commitment

Houses tie you down and commit you to an area, or even country; it’s expensive to move (think stamp duty, legal fees) and if there is a downturn in the market you might lose money. People tend to buy houses for schools or local amenities and if they deteriorate it’s hard to pull yourself out of that situation.

 

Housing bubble
 

London may be perceived as a housing bubble; if you are looking for a short term investment, buying at the peak of the market may not be a wise idea. You can suffer financial loss. If you are in an area for the long run, due to house prices tending to follow the trends of economic growth, they usually go up over a long period of time.

 

The crux of this is; it's ok not to buy a house

Photo from the beautiful unsplash.com

Wee Scot Finance