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The housing market: should you rent or buy a house?

October 26, 2022

Whether you're looking to rent or purchase one of them depends on your specific wants and needs, whether you need a place short or long-term, and your financial health. 

While purchasing a home comes with the security of homeownership, it also comes with property maintenance and unforeseen expenses, should something break. 

If you're interested in making a real estate investment during this housing market, then you should know about the pros and cons of renting vs buying a home. This article walks you through each, so be sure to keep reading. 

Pros of renting a home

If you're looking for a home, renting is a great option. While you usually have to pay your first and last month's rent upfront (security deposit), it's significantly less expensive than purchasing a home.

Renting is also ideal if you're unsure of where you want to settle down.

Perhaps you plan on relocating for work. Or maybe you're single and want a place just for you. This makes renting ideal while you figure out where you want to live permanently. 

Renting is also a great option if you travel for work and aren't home often. Since there's little to no property maintenance (depending on the type of dwelling you rent), you can leave for days or weeks at a time. Homeownership requires home maintenance, which may be less than ideal for certain individuals.

Another huge benefit of renting a home is that when something breaks, you can call your landlord to fix it. If you own a home and your boiler breaks, you may be spending in the thousands. However, with a rental, your landlord incurs the cost. 

Additionally, some rentals include heat and hot water in the lease, which can save you money. 

Cons of renting a home

While renting a home has tons of pros, there are also cons to consider. 

Even though you save money on maintenance, you're paying for a rental that you'll never own. That money goes to your landlord and you won't see any equity as a result. 

Landlords are also strict with their rentals. If you have a pet, your landlord may not allow it. A lot of landlords aren't comfortable with you customizing your rental and will prohibit paint, for example. 

If you rent an apartment, for example, you run the risk of having a revolving door with neighbors. This makes it difficult to build relationships and feel like part of a community. 

Pros of buying a house

If you're looking to purchase a home, you'll find that there are many benefits of real estate investments. 

For starters, purchasing a home comes with financial stability. Unlike rent, which may go up every year (depending on the terms and length of your lease), your mortgage remains the same if you choose a mortgage with a fixed interest rate. 

Depending on how much money you put down on your new home, you may even spend less than you did on your monthly rent. And as you pay off your mortgage, you'll build equity in your home, especially as real estate prices rise. 

Tax benefits are another pro for homeownership. If you're a first-time homebuyer, make improvements to your home, and have insurance claims, you may get a tax break next time you file. 

Aside from the financial pros of owning a home, there's a sense of permanence and stability. You own your home, so you won't have to worry about where you'll move next or whether they'll accept pets.

Being a homeowner allows you to dictate what color you paint your walls, for example, while many landlords don't even want you putting nail holes in the walls. 

Cons of buying a house

While buying a house offers great benefits, there are certain drawbacks. For example, if something breaks (and it always does), you don't have a landlord to fall back on. The expense is all on you. 

You also have property to maintain if you purchase a single-family house. If you invest in a condo, you may not have property to take care of. Property maintenance can be costly and time-consuming, from snow and leaf removal to gutter maintenance, landscaping, and lawn care, to name a few. 

Another con of homeownership is if you find a new job and have to move. It's not as simple as canceling a lease (provided you have a break-lease clause). You have to list your home, show your home, and then juggle buying and selling simultaneously when you move again. 

Securing a mortgage with bunq

If you're looking to purchase a home, you can do so with bunq. bunq offers a selection of mortgage options, each specific to your needs.

Annuity mortgages allow you to pay a fixed amount each month. This payment consists of interest and redemption.

When you first start repaying your mortgage, your interest will initially be higher than the redemption. However, this reverses towards the end of your mortgage.

You also benefit from high tax benefits at the beginning of your mortgage term. This means the housing costs increase gradually throughout the duration of your term. 

Linear mortgages allow you to repay the same amount of money monthly for the length of your mortgage term. However, you can expect to see a decrease in tax benefits. But, on the flip side, you'll pay less interest as your principal loan amount decreases. 

Interest-only mortgages are another option. You can expect to pay interest throughout the term. It may be tax-deductible.

While your monthly payments will be decently low, repayment is required when your term matures, so you have to prepare yourself ahead of time. 

Today's Housing Market

If you're looking to buy or rent in today's housing market, it's best to consider your finances and make the decision that works best for you. If you need to rent as a short-term solution before buying a home, you could do so while saving for a down payment. 

bunq can help you with all your mortgage needs. We'll help you find an advisor so you can make homeownership a reality. 

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