Should I Buy My Home Series – Part 1- Debunking Myths

Should I Buy My Home Series – Part 1- Debunking Myths

This is part of a series highlighting what factors to consider if you choose to rent or buy your home. It doesn’t apply to investing in real estate, which is an entirely different creature I’ll cover someplace further down the line.

It’s one of my clearest childhood memories. My mother (who had fought hard against poverty her entire adult life) sat us down and instilled her mantra: ‘Get an education, get a good job, be financially independent of others, and buy a house’. My sister and I, having heard this lecture innumerable times before, would roll our eyes and troll out the required: ‘Yes, Mum’.

My experience is by no means unique. In many countries, the idea of buying your home is tantamount to being viewed as a success in life. Your own home may come with the simple satisfaction of having your own roof over your head, or a dream of an ideal family, living in a spacious fantasy with high tech appliances and a garden filled with your favourite flowers. In fact in many places the idea of buying your own home is known as ‘the [insert name of country here] dream’. And it’s all bull$%#*.

Wait, what?

That’s a big call.

Let’s backtrack a second. Home buying financial advice, whether professional or society created, generally comes in two flavours:

1. Vanilla flavour, where the assumption is that home ownership is a goal that everyone aspires to; and

2. Choco-mint-raspberry flavour, where (Shock! Horror!) the vanilla assumption is challenged, rent encouraged and statement made that renting means you may be financially better off.

This advice too, is bull$%#*.

Huh? What are you saying? Buy or rent or what? If all of this is bull$%#*, what am I supposed to do?

Well, the ultimate answer is that the right advice is the advice that’s right for you. Oops, so that sentence was a bit confusing. The point is that buying a home or choosing to rent is an emotional, personal and financial decision. There are actually a number of factors that affect your choice to buy or rent your home. In no particular order, they include happiness, location, cash flow, housing purchase price, rental costs, lifestyle, taxes and the ability to sleep at night.

As you can see, the decision is a complicated one. It highly depends on what you want.

To start with, let’s break down some of the most common myths around this topic.

Rent money is not dead money

Rent is a bill for shelter. Like any other bills for such things as electricity, gas and the internet, it doesn’t matter if you pay for it for a few years or for the rest of your life. A house is a major purchase and may it make more sense to rent, especially in expensive cities. This is even more the case if you are fortunate enough to have a long lease (i.e. you cannot be kicked out on a landlord’s whim with 30 days’ notice).

Buying a home is not a sign of success, nor is it necessarily a good investment

You might have a small mortgage you can easily afford to pay off quickly, making the home your own. However, you may also buy a mortgage monster that sucks up your savings right into retirement. Your house might appreciate in value, or it might not (yes, house prices do go down). If it does appreciate, if could reflect your smarts in buying it, or it could be due to market forces beyond your control.

So now that’s out of the way, what factors should we considering when deciding whether to buy or rent our homes? Keep an eye out for Part 2 of this series in the coming weeks.  In the meantime, think for yourself!

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