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Should You Buy a House Outright or With a Mortgage?

The Vertical Forest (“Bosco Verticale”), a famous luxury residential complex in Milan, Italy, featuring trees and plants.

The Vertical Forest (“Bosco Verticale”), a famous luxury residential complex in Milan, Italy, featuring trees and plants.

Buying a house is not something you would do everyday. It is an important decision in your life and, for this reason, it is something you should handle carefully. Maybe you are deciding to buy a house because you do not want to pay rent anymore and you want to invest in something you truly own. Maybe you want to set a basis, a point of reference you are sure you can keep and on which you can always rely, unlike a rented flat, that you may risk to lose after the expiration of your lease. Whatever is the reason why you want to buy a house, there are surely several advantages in doing it:

  • Independence: you do not have to pay anymore for rents and you can start living in a place you truly own. No more concerns about what to do if your lease do not get renewed after its expiration or about potential increase of your rent in the future;
  • Investment: a house may be an investment, if carefully done, For example, buying a flat in a suburb facing decay and/or lack of efficient public transportation, but which may go through a process of redevelopment of the neighborhood in the future, means you can eventually resell it at a much higher price;
  • Ownership: there’s nothing better than going to home. Your true home, a place you own, not a place owned by someone else and given to you in change of the payment of a rent. For some people, owning a house is a milestone in their life, sometimes because of the culture, like it happens in China, where in fact houses to buy are generally more expensive compared to rents, for this reason.

Buying a house now with a mortgage or waiting?

When it comes to buy a house, there are several questions that may come: it is perfectly understandable, as this is an important decision in your life and not certainly something you would do without a minimum of knowledge about every aspect involved in this decision. One of the most popular doubts is if it is better to buy a house right now with a mortgage or if it is better to wait until you have money (or buy your house now, still with your own money). There is not a best solution, so this article is going to give you an advice based on the situations where it may be better to choose one solution instead of the other.

A living room

A living room

When you should buy a house outright with a mortgage

There are several situations in which you may better benefit from buying a house outright with a mortgage rather than using your own money:

  • You are paying a rent and have found a very good deal you should not miss: in this case you pass from paying the rent to paying installments of a mortgage, so that you maintain a stability: if you were used to afford paying a rent, there is strong probability you may already be able to pay for your mortgage without particular issues, plus, you will not have any remorse in the future for having waited too much and have missed a good deal;
  • You already own the money for buying a house outright, but you have been offered a mortgage with a very good interest rate from your bank (maybe because you are a loyal customer and have also a very good credit score). Maybe you have also the opportunity to invest your money even in a safe way and still earning something more than the interest rate of your mortgage or even use it to buy a second house you can give for rental to others so that you can make a second income (it may be difficult to make a safe investment and earn more than the interest rate of your mortgage, still, it may happen, plus you may also consider more risky investments like stocks if you have the expertise to deal with them);
  • You have a stable job and are pretty sure you can afford to pay installments of a mortgage on the long term.

When you should buy a house with your own money

There are other situations in which buying a house outright with a mortgage may not be the best solution for you and you may go better with paying with your money:

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  • If you already own the money for buying your house, don’t plan to use it for other things and don’t want to consider investing it while paying for a mortgage, as this may bring opportunities but also stress: paying for your house and thinking you don’t need to give back money to someone may be a peace of mind for you;
  • If you are not in a hurry, maybe because you have already a house and you are simply buying another one to use for vacation or to plan moving there in a future;
  • If you are afraid you may face situations in your life in which it may be difficult for you to pay for a mortgage: in this case, not having a mortgage at all may be, again, a peace of mind for you, even if this would mean waiting until you have enough money for buying a house.

Conclusions

Buying a house outright with a mortgage or waiting until you have money are two solutions that have both pros and cons. You should try to think what solution may be the best for you, so that you are ready to say goodbye to rents and start to finally feel at home: your truly own home!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2021 Alessio Ganci

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