Which is Better? Mortgage or Renting (Essay Sample)

Name of School: () Department: () Title: What is better: mortgage or rent? Author Name: () One of the most important decisions people have to make that impacts on their lifestyle and financial flexibility is on whether to take out a mortgage or rent a home. Often young couples and people starting out in life have to deal with this important decision but they are not well-informed to make the right decision. Whilst the ultimate choice will be based on personal choices and taste, there are bottom-line arguments that one should consider. It is thus the aim of this essay to make plausible and informative arguments on whether to take out a mortgage or rent. According to Mnasri (2015), a mortgage is a loan one takes or is given by a building society or bank to finance the purchase of a house, over an agreed period of time. The mortgage amount is often spread over 10-25 years. On the other hand, rent is periodic payment made by a tenant to a landlord for use of the landlord’s house (Mnasri, 2015). In simple terms, one pays to live in another person’s house and does not own the house. In many cases, cost is the main factor that one considers when deciding to either take out a mortgage or to rent a house. At face value, renting might appear cheaper because there are no down payments as in a mortgage. However, this is only true if one intends to stay at the property for a very short period of time. From a long-term perspective, renting tends to be expensive than taking out a mortgage. Lords (2010), posits that in mortgage, the down payment and the interest rates are spread over the payment period, and the mortgage-interest tax deduction reduces the overall cost of a house when taken out in mortgage agreement. One of our aspirations as humans is to be able to generate wealth and value, that secures our retirement and we have something to pass on to our children and grandchildren. Renting does not allow us to create such wealth and value as the money is given to an external person or entity. However, with a mortgage one invests in his/her own wealth portfolio and future as at the end one owns the property. It is thus highly commendable to take out a mortgage. Creating a happy and peaceful home requires that one has control over the property they reside on. There will be times when one want to make renovations to suit personal taste, children’s welfare or changing health conditions. Unlimited control over the property buildings and gardens can only be realised when one has ownership status which a mortgage provides. In most if not all, rented cases the tenant has no full control over the property. In order to implement some renovations and modification one has to go through a long and cumbersome process, which often does not lead to satisfactory results. For someone with entrepreneurial flair and intentions, which we all should have in order to grow an economy, it is way much better to take out a mortgage. A well-serviced mortgage allows one to improve their credit ratings, which puts them in a better position to borrow in order to finance a new business venture (Office for National Statistics, 2013). In the event that the mortgage is paid up, the property can be used as collateral in borrowing to finance new business ventures in the future. This possibility and potential cannot be realised from just renting. Furthermore, taking out a mortgage allows one to have and enjoy personal freedom at their place of residence (Crowley and Li, 2016). This is unlik...