Is It Better to Buy a Freehold or a Leasehold?
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Buy Freehold
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If you buy freehold, you get absolute ownership of a property in perpetuity (i.e., until you transfer the title to a new owner). You can do anything to your property, as long as it's within the laws, bylaws and building codes. Freehold ownership also offers tax advantages, investment opportunities and, if you're looking for it, privacy.
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Buy Leasehold
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If you choose leasehold, you're granted the right to use a property for a fixed number of time as determined by the lease. For all intents and purposes, you're a tenant and must abide by the details of the lease/contract. In many cases you can depend on the property owner to help with repairs. You also have more freedom to move if your job changes locations, you avoid the burden of closing costs and making a down payment, and you can't sell for a loss during a down market.
Bottom Line
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Whether you should rent or own depends on your income, savings, tax situation, job security and other factors that dictate your individual situation. Use a "Should I Rent vs. Should I Buy" calculator to determine whether you'd be able to carry the costs of home ownership and how that might affect your life goals.
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- Photo Credit new home 3 image by Kathy Burns from Fotolia.com
