Moving to a new country can be an exciting yet daunting experience, especially when it comes to finding a place to call home. Renting is often the first step, providing a sense of flexibility and ease.
However, as you settle in and grow roots, the idea of buying a home may start to appeal to you. Yet, navigating the process of buying property in a foreign country can feel overwhelming. Here are some tips to help guide you through this important decision-making journey!
Buy or rent?
Deciding whether to rent or buy a home is a deeply personal choice, one that requires careful consideration of your unique circumstances. It's vital not to overlook any aspect of this decision-making process. Take the time to reflect on what truly matters to you, both now and in the future.
These are the most important advantages and disadvantages of renting vs buying:
Pros of renting a home
Renting has several advantages and disadvantages, namely:
- More flexibility
Renting offers the freedom to adapt to changing circumstances, like if the owner (landlord) suddenly decides to sell the property or you want to relocate to a new area. The rental contract states the notice period, with one month being the most common.
- Fewer additional costs
Besides the rent that you pay, you have fewer additional costs if you rent rather than buy a home. With a rental property, the owner is responsible for maintenance, insurance and taxes - making it easier to predict how much your overall costs each month will be.
- No financial risk from market fluctuations
As a renter, you run no financial risk if the property you live in loses value. On the other hand, you do miss out on the opportunity to build up capital over the long-term. Therefore, it's essential to prioritise saving or investing to secure your financial future.
- Possibility of housing benefits
Depending on your income and savings and the rental price, you may qualify for housing benefits (such as the huurtoeslag) from the Dutch tax authorities. This can help to ease the financial burden of renting.
Cons of renting a home
While renting a home is a suitable option for many people, it also comes with some disadvantages:
- Rent increases
The rent of your home can increase every year as a result of inflation. The landlord can also simply start charging more for rent if they want to, which helps to build their wealth and equity.
- Less customisability of your home
If you want to change something in your home and do renovations to make it completely to your personal taste, you may well find that your rental contract restricts your freedom in this respect. In any case, it's not a good idea to invest money in major changes to a property that you don't own.
Pros of buying a home
Buying a property comes with a few advantages over renting:
- Building up capital
When you invest in property, you're gradually building a valuable asset that eventually will be entirely yours. Imagine the sense of security and accomplishment that comes with having your own property and never having to worry about a landlord.
- No worries about annual rent increases
With a mortgage, you gain stability in your monthly expenses throughout the loan term. Unlike renting, where annual increases are common due to inflation, your mortgage payments remain steady. Plus, there are opportunities to reduce your income tax burden by deducting mortgage interest.
- Personalising your space
You have the freedom to customise your living space the way you want. Enhancing your property can also increase its value. Moreover, there are situations where these improvements could lead to lower monthly repayments on your mortgage.
Cons of buying a home
Although there are many benefits to owning a home, there a few downsides:
- Handling maintenance costs
Owning a property means taking responsibility for its upkeep. From small fixes like a broken tap to major repairs like roofing, you'll need to make sure that you have some cash tucked away for these expenses.
- Dealing with the risk of negative equity
While home-ownership offers stability, there's a potential risk if property values decline. If you need to move and your home value has dropped, you could find yourself with a residual debt due to the negative equity.
Still unsure about what's best for you?
Understanding the costs involved is key. When considering buying a property, you should calculate the maximum amount you can borrow and how it would affect your monthly budget. Additionally, you should be prepared for a number of one-off costs, for which you need to use your own money for.
Ultimately, the decision between renting and buying depends on your unique circumstances, goals and priorities. Take your time to weigh the pros and cons and trust your instincts to make the choice that feels right for you.
Do you need advice and assistance from a mortgage expert?
ING Bank has a team of expat mortgage advisors who are ready to guide you through your options based on your unique circumstances. By considering factors like your current rent, they can tailor a mortgage solution that meets your needs.