For a number of people renting not only makes sense, but it offers them financial freedom. However for some renting isn’t ideal hence buying is the best choice. We’d all like to own a home, the sense of security and comfort that comes with owning a home offers piece of mind. Renting involves dealing with the constant rising of prices something that takes place every year. What consumers are unaware off is that you can save that money and work towards owning a home, always be on the lookout for property on sale. Nigeria has a very viable property market and finding the ideal property in Lagos is an example of one of the best asset investments. Renting or buying is a decision that’s based on a number of reasons.
1. Can you qualify for a mortgage at the best rate available?
2. Which tax bracket do you fall in? Do you highlight your deduction
3. How long will you reside in your home?
When consumers consider buying a home, they usually look for a lower mortgage rate. Before making this decision certain calculations need to be made, these include the following:
Consumers should look at all the rentals and homes for sale. On the for-sale homes look at the asking price and estimate what it would rent for. On the rental side look at the rent price and estimate what it would sell for. This allows you to work out the estimated rent and asking price for both properties.
The following step is the estimated total costs of renting and buying for property in a residential area over a seven-year period. Factors of homeownership (e.g. maintenance, taxes, closing costs, insurance etc.) need to be considered including property taxes, tax benefits of deducting mortgage interest and profits from selling the home after seven years including price appreciation. Factors on the rental side include security deposit and renters insurance. Consumers can then calculate the net-present-value of all those costs in order to get the costs of tying your money up with a down payment. This will give you the total costs of purchasing versus renting.
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