Renting vs. Buying A Home: Which Is Better?

Renting vs. Buying A Home: Which Is Better?

Are you trying to decide between renting and buying a home in the Philippines? It’s a tough decision for anyone, especially if you don’t have your finances squared away just yet.

We get it – there’s so much to consider when choosing where you want to live that it can overwhelm anyone. In this article, we’ll walk you through all the factors involved in deciding whether renting or buying is best for you. When you finish reading, you’ll know which route is best for you.


Renting a home: Pros and cons

If you don’t have enough money to buy a house now, renting is a good option. You won’t think about monthly home loan payments.

renting vs. buying a house

Pros of renting a home

  • It’s often cheaper than buying one outright, especially in expensive cities. It’s an excellent option for cash-strapped buyers who still want to live in a desirable area.
  • It also gives you the flexibility to move more quickly than if you were a homeowner. It’s beneficial if you are unsure about your long-term plans or if your job requires you to move frequently.
  • You may have access to amenities you would not otherwise be able to afford, such as a swimming pool, gym, or concierge service.
  • Enjoy security when renting in a condo, as there are security guards and CCTVs.
  • Save on repairs and maintenance since your landlord will cover these expenses.

Cons of renting a home

  • You don’t have the same level of security as homeowners regarding their living situation. A landlord could potentially raise the rent or evict tenants with little notice.
  • Renting a home limits your power to renovate or design it. Your landlord may impose rules on decorations, especially those attached to the walls.
  • Rent payments can increase over time, while the value of a home typically appreciates over time. You could pay more in rent than you would have if you had purchased a home.
  • You will have less control over your living situation when you rent. For example, you may have to deal with noisy neighbors or an unresponsive landlord.

Buying a home is expensive, but is it worth it?: Pros and cons

Buying a home is a milestone in life and one of the most important financial decisions you can make. Homeownership has pros and cons, and weighing up all the factors before taking the plunge is better.

renting vs. buying a house

Pros of buying a home

  • You won’t have to keep paying rent every month. This monthly expense can add up over time, so you pay for your home, which will be yours once it’s fully paid.
  • Build equity in your property, which means that as its value increases, so does your net worth if you’re in a prime location.
  • Homeownership offers more stability than renting. When you own a property, you can choose where and how long you stay there and personalize it according to your needs and tastes.
  • For many, having a house also signifies stability and security – something you can’t necessarily put into monetary terms.
  • The sense of accomplishment that comes with owning a property can provide immense satisfaction, especially if you’ve had to work hard to get there.

Cons of buying a home

  • High upfront cost associated with buying a home. Apart from the downpayment for the purchase price, there are closing costs, registration fees, legal fees, moving expenses, and other charges.
  • These additional fees add up quickly but are usually non-refundable, even if something goes wrong during or after purchase completion.
  • Home loans typically come with long-term commitments lasting 15 to 30 years. Suppose your circumstances change drastically due to job loss or relocation, for example. In that case, pulling out without suffering a financial penalty or recouping any losses incurred through foreclosure proceedings can deplete your savings.
  • Homeownership locks you into staying put since selling property can be challenging (especially when done in haste) plus, there are more transactional costs associated with selling than buying real estate like agent commissions and taxes.
  • Depending on market conditions, you may be unable to sell your home at your desired price due to economic shifts.
  • Regular upkeep of one’s residence requires budgeting for repairs/replacement/improvements like plumbing problems, painting, landscaping, and new appliances.

How much does it cost to buy a home in the Philippines in 2023?

The cost depends on your location, with various factors to consider, such as the price per square meter, materials for the construction, taxes and closing fees, and more.

Here are the rough estimates from the Philippine Housing and Land Use Regulatory Board.

  • Small house and lot — ₱1,219,000 — ₱2,046,000
  • Medium house and lot — ₱2,047,000 — ₱3,674,000
  • Large house and lot — ₱3,675,000 to over ₱10 million

If you prefer a condominium, you can get one at an affordable price via preselling. For example, a studio unit costs about ₱2 million in prime locations in Metro Manila, and one to two-bedroom units cost about ₱4 million to ₱6 million.

Which is better: rent or buy a home?

The decision depends on your preference – whether to rent an apartment or buy a new home. Think about the following.

renting vs. buying a house

1. Financial considerations

Renting requires fewer upfront costs since it usually only requires monthly payments such as rent payments and a security deposit. In contrast, buying a house requires a substantial down payment and ongoing payments like mortgage costs, property taxes, and insurance premiums.

If you’re looking at affordability, renting might be better for now while waiting until you can afford a house.

2. Lifestyle

If your employment situation or lifestyle entails frequent moves from one place to another, renting might be more suitable than investing in real estate due to the flexibility that renting provides without incurring capital gains taxes each time you move out of the property.

On the other hand, if you’re looking for stability, then buying a house could give you more control over when and how often you move out because it eliminates the risk of lease renewals each year or being evicted by landlords.

3. Future plans

If you live in a small house and plan to have children, consider moving to a bigger space. Living in a studio unit is better for couples, but if they decide to have two to three children plus a helper and a yaya, a house with two or more rooms is more suitable.

On another note, if you see your family staying in the city for about five to ten years, you can also consider rent-to-own condos. If you plan to stay longer in the province, a house and lot is also good option.

Final thoughts

Overall, there’s no definite answer on whether it’s better to rent or buy – these decisions depend entirely on individual circumstances and goals.

It would be wise for everyone considering either option, including yourself – before making any major decision related to this type – to seek professional advice from certified financial planners and advisors.

They can assess the current financial situation objectively so that whatever decision is made would have a greater chance of yielding positive results both financially and personally in the long run.