So you’re thinking of buying a home but you’re not sure if renting would be cheaper and more convenient in the long run. It can be a tough decision, especially when you’re just starting out.
Consider this:
When you rent, someone else is responsible for the costs of property maintenance, taxes and repairs. But if you buy, it’s your responsibility to pay for these things. As a new entrant to the property industry, there are many moving parts and different factors involved in deciding whether to buy or rent.
When deciding whether to rent or buy, there are many factors to consider.
Some of these include:
Location: Will you be living in an area where renting is more common than buying? If so, it might be difficult to find a house for sale in your price range.
Timeline: Are you setting down roots for the long-term, or does location not matter as much?
Budget: How much can you afford to pay each month and still have enough left over for necessities?
Think about your personal situation:
You should also take into consideration your personal situation when deciding whether or not to buy or rent a house. If you are planning on staying in an area for an extended period of time, it may be beneficial for you to buy a house because of the investment opportunity it provides and also because of the tax benefits that come along with owning property. If, however, you are planning on living but you’re not sure how long you’ll be living in the area for, renting may be the best option for you.
Pros of Buying
The Pride of Homeownership
The ability to purchase your own home is a very commendable milestone in someone’s life. You have saved enough for a home deposit so now you’re onto the next step of the homeownership process. Investing in property is a great steppingstone to diversifying your income and establishing a source of income for the long-term.
Suburb popularity, increasing land prices and surging buyer interest are all factors that can increase the value in your home over time. Not only will you be able to reap the benefits of property price growth, you will also be able to invest in other properties using the equity from your first home purchase.
Remodel, Renovate and Landscape
Another benefit to owning your home is the creative freedom to redesign, renovate and landscape to your liking.
Things as simple as getting a new pet or putting in a shed are now within your control as you no longer need to ask for permission. The ability to design a space that accommodates your interests and lifestyle is one of the main reasons people opt for homeownership.
Financial and Personal Security
Financial and personal security is another big pro to owning your own home. Knowing that you won’t have to be moving constantly as your leases expire or are denied a lease renewal, provides peace of mind. Living in your own home means that you are not at risk of your rent becoming unaffordable.
Cons of Buying
There’s Still Some Risks
With any big investment comes risk. Not only do you have to be financially ready to purchase a home, you also have to be emotionally ready. Buying a home is a large commitment which involves a lot of responsibility. As a homeowner, you are in charge of all maintenance and repairs as your home begins to age. As the landowner, you are also liable for any council charges such as rates, water and insurance. If you were renting, these are costs your landlord would cover.
Large Upfront Cost
Purchasing a home involves large upfront costs such as an upfront deposit and sizeable home loan repayments. However, the initial deposit and cost of loan repayments is dependent on variables in your financial situation such as your annual income, credit score and repayment history. It is important that when you feel ready to step into the property market, you approach an industry professional to discuss the best way to enter with your situation.
Pros of Renting
Renting Can Be Cheaper
For those who aren’t ready to bear the responsibility of owning a home, renting is the next best thing.
As a renter, you are able to experience all the affordances of owning a home, just without the price tag. Renting may appear cheaper than owning a home as you aren’t the one footing the bill for repairs and property maintenance issues. A positive to this is that if you are renting, you know exactly how much you will be spending on rental repayments each month.
If you’re lucky enough, you might be able to secure a good deal in terms of rental price which could help you save money in the long run.
For those who work FIFO or have to travel frequently for work, renting is a very flexible accommodation option as you won’t have to bear the responsibility of maintaining the property.
Cons of Renting
Paying Rent Can Be Complicated
Although renting might look great in the short-term, its long-term implications can be quite eye opening for some. As a tenant, it is your responsibility to make weekly, fortnightly, or monthly as you fulfil your lease requirements. These repayments are your contributions to the landlord’s mortgage.
For example, if you pay $500/week in rent on a one-year lease, you will be contributing $26,000 towards your landlord’s mortgage.
Changes Require Approval
As a renter, you cannot make any changes to your rental property without the approval from your rental manager and landlord. Any unapproved changes to the property could result in extra charges or in worse case eviction if they are not compliant with the initial lease agreement. It is important that if you are looking to rent, you understand your rights as a tenant.
For those willing to invest in buying property, the opportunity is worth the handful of difficulties.
First home buyers who are taking proactive steps because of planning long-term will reap the rewards of their efforts in the years to come.
As a first home buyer, now is the time to take advantage of what the property market can offer. Wealth, equity and investment security are all achievable goals for those willing to put in the effort to explore their options.
Talking to the right people will put you a step ahead of the rest. If you’re looking to buy a home in the near future, whether that be in one month, six months or a year, get in contact with our team today on 1300 248 514 or receive a free Homeownership Assessment online.