Is buying right for you? Set your goals

Buying a home or an investment property is one of the biggest decisions most people make. After this lesson, you will be able to decide whether buying is right for you now, or whether waiting or renting is wiser.

You will also be able to write a short list of what you need from a property. This list will guide every step that follows in this course.

Buying and renting compared

When you buy, you own the property and can change it as you wish. Over time, you may build equity. Equity is the part of the property's value that you own outright, after any loan is taken away.

When you rent, you pay a landlord to live in a property they own. Renting is usually more flexible. You can move at lower cost, and the owner normally pays for major repairs.

Neither choice is always better. Buying often suits people who plan to stay in one place for several years. Renting often suits people who may move soon, or who are still saving.

Questions to ask yourself

Before you look at any property, answer a few honest questions. Your answers will show whether you are ready.

• How long do you plan to live in the area?
• Is your income steady, and is it likely to stay steady?
• Do you have savings for a deposit and extra costs, with money left for emergencies?
• Are you ready to pay for repairs and upkeep yourself?
• Is a move for work or family likely soon?

If most answers point to stability, buying may suit you. If several answers are uncertain, it may be wiser to keep renting and save for longer.

Living in it or letting it out

Decide why you are buying. Some people buy a home to live in. Others buy to let, which means buying a property to rent out to tenants for income.

The two goals lead to different choices. A home should suit your daily life. A rental property should attract tenants and earn enough to cover its costs. Lenders and tax rules may also treat the two very differently, so speak to a lender and a tax adviser early.

If you plan to let the property, learn about a landlord's duties before you buy. A good starting point is our guide to property management.

Writing your needs and wants list

Now write a simple list with two columns. In the first, put your needs. These are things you cannot live without. In the second, put your wants. These are nice to have but not essential.

Needs might include the number of bedrooms, the distance to work or school, and access to transport. Wants might include a garden, a view or a newer kitchen.

Be strict with the needs column. A short list of true needs makes your search faster. It also helps you compare properties fairly when you start viewing them.

Thinking about the area

The area matters as much as the building. You can change a kitchen, but you cannot change the street. Think about safety, noise, shops, health services, schools and transport.

Visit the area at different times of day and on different days of the week. Talk to people who live there if you can. Ask about flooding, planned building work nearby, and how the area has changed in recent years.

Common mistakes

• Buying because others are buying. Avoid this by answering the readiness questions honestly before you start.
• Mixing up needs and wants. Avoid this by keeping your needs list short and agreeing it with everyone who will live there.
• Ignoring the area. Avoid this by visiting at different times and asking local people questions.

Key points

• Buying suits people who plan to stay for several years and have steady income and savings.
• Decide early whether you are buying a home to live in or a property to let.
• A clear list of needs and wants will guide every later step of your search.