Recently, Britains second biggest lender Nationwide announced that it is to increase mortgage rates for new customers. With speculation now growing about when - and by how much - the base rate will be raised to counter inflationary pressures, many are wondering when, not if, mortgage lenders across the board will increase their rates, both for new and existing customers.
One of the key things to consider after the initial outlay for deposits, stamp duty and other legal fees have been taken into account is how rising interest rates would affect the buyers monthly payments.
This is one of the reasons why the pros and cons of renting and buying are being increasingly debated by singletons, couples and families up and down the country.
If you own your home and have a repayment mortgage, rather than interest only mortgage, you are investing in your future and potentially creating a valuable asset (assuming house prices do not fall). Dont think of buying as a short-term strategy.
If you own your home it is yours to do with as you want (within the planning regulations). You can renovate/update or simply move in. On the other hand you'll also be responsible for any problems with the property.
3. Discipline and experience
If you're a first time buyer, owning your first home can be a great way to kick-start financial planning for your future. Managing a household budget is a life skill.
You have the opportunity to become part of an existing community that makes up the local school, church or shops and create lifelong friends and support.
Renting allows you to be more flexible about where you live and in most cases you can decide to move on after the usual initial six month rental period is over. This can allow for more mobility, particularly in a difficult jobs market.
2. Free from financial responsibility
As a renter you are not going to fall foul of any housing market related conditions. You will of course have to pay rent but you're not tied into monthly repayments on a loan and so cannot fall into negative equity.
3. No maintenance costs
It is the responsibility of your landlord not you to maintain the property, pay for decoration and its upkeep.
These are just a few pros and cons of both buying and renting to weigh up before you decide on whether to or to take the plunge with home ownership or rent . The most important advice is to do your research before making such a potentially life-changing decision.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients.
For further information: www.latimerhinks.co.ukor call 01325 341 500.
Please note: This article is intended as guidance only. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.