Owning a home in St Lucia is a big step and if you are currently thinking of moving from renting to buying property in St Lucia, you may wonder if this is the right time for you to buy. A home is the largest investment in St Lucia that most people make and it should make financial sense if you are deciding.
Some basic questions to ask
- How much rent do you currently pay?
- How expensive are homes in the area?
- How much interest will you pay? (This is the direct cost of your mortgage).
Advantages of renting in St Lucia
- Do you like knowing you can move quickly?
- Are you likely to stay in this area for at least the next 5 years?
- Buying houses have a lot of upfront costs and should only be bought with a long time horizon and remember When you rent the landlord is responsible for the upkeep of the property so if you have a problem with the plumbing he sends the Plummer and pays the bill now you will.
- Buying a house takes time.
- If you are new to the area it is best to rent while you look for a place to buy because it will take a number of months to purchase a new property.
- Do you need use of your savings soon?
- Buying a house has a lot of upfront costs such as deposits, taxes and fees.
Advantages of buying a home in St Lucia
- It gives you a permanent place in the world, a place to raise kids as well as being an investment for the future, it is also an inbuilt desire for many of us to own ones own home.
- If you buy right it can prove to be a very valuable investment. Remember you make money on a house when you buy it not when you sell it. The skill is in choosing the right house, at the right time for the right price.
- No more having to deal with a landlord.
- You may be entitled to tax breaks.
- You will build equity as you pay of the mortgage and by the increasing capital value of the loan (although as we have seen they can decrease as well).
The great thing about renting is that you aren’t tied down and your costs are quite predictable. The landlord is responsible for general upkeep and safety. It is also faster to find a place to rent. The big drawback is no place is truly your own.
- Home owning is a bigger financial commitment but if you buy right you will reap the rewards and gain the benefits from home improvement.
- Are you likely to have a change of circumstances in the near to medium term.
- Have you looked at the financial costs of buying home and included closing costs? And compared them to the cost of renting?
Disadvantages of buying a home
The upfront costs
- Real estate agent fees
- Down payment
- Mortgage related fees
- Legal fees
- Home Inspections
- Transfer taxes
- Title searches
- Insurance
Recurring payments
Principal
This is the amount of cash you borrowed from the lender.
Interest
This is the money you pay the lender and it can be fixed (The rate doesn’t change for a period of time) or variable (adjustable rates) which mean it goes up and down.
Insurance
This can include a number of insurances such as home owners insurance which will usually protect the contents against fire, theft, vandalism, wind damage and other disasters. It will also cover injury of a third party on your property.
If you live in an area prone to flooding you may have to take out flood insurance.
Mortgage protection insurance provides cover if you fall ill for a period of time or you or your partner dies. (terms vary depending on policy).
Repairs
You will have routine repairs but as the property gets older you may have some larger repairs such as replacing the water heater, building new walls, fixing a leaky roof etc.
Remodeling
You will also decide to change carpets, chairs, buy new appliances, change the wallpaper etc.
Property taxes
Property taxes and the associated rules can change quite quickly.