To buy or to rent?
Owning a home is a key goal for many Australians. But rising property prices have led some people to question whether to give up on that dream and continue to rent.
In some areas it is cheaper to rent than to buy, but there are still suburbs where buying a home is affordable. If you have a reasonable deposit saved you may find your mortgage costs are comparable to rent, or even lower.
There are also non-financial benefits to buying a home, although renting has its advantages as well and there are downsides to both.
WHY BUY?
If you buy, you could build equity in your property. Once you’ve fully repaid the mortgage, you’ll own it outright.
Buying allows you to put your personal stamp on the home, decorating or renovating to your taste and perhaps adding to the property’s value. As a result, you’ll typically feel a greater emotional connection to a property you’re buying than to one you rent.
You’ll also have greater security and stability if you buy. As long as you comply with your obligations under the loan, you can live in your home as long as you want – and leave it as an inheritance to your loved ones.
The downsides to buying are that if you do wish to move, you’ll have to rent out the property or sell, which involves time and transaction costs.
Owners also have costs such as repairs and maintenance, strata fees, council rates and water levies which tenants do not have to cover.
WHY RENT?
Flexibility is a key benefit of renting. If you wish to move at the end of a lease, you can easily do so.
You may also find you can afford to rent in a location where buying would be out of your reach, particularly if you don’t have much savings.
The drawbacks are that you’ll never own the home you live in and you could be asked to move out if the landlord decides to sell or move into the property themselves.
Tenants must seek landlord approval for simple changes, such as hanging pictures on the walls so it’s hard to create a home that perfectly matches your style.
Quick tip: Buying offers stability, security and the chance to build an asset. Renting provides flexibility and freedom.
TO FIND OUT HOW RAMS CAN HELP EASE YOU THROUGH THE PROCESS, GET IN TOUCH WITH YOUR LOCAL RAMS HOME LOAN EXPERT OR DROP IN FOR YOUR FREE FIRST HOME BUYERS’ GUIDE.
For more great property advice and tips on buying your first home from RAMS subscribe to The Great Australian Dream property series.
For your free Property Observer eBook from RAMS, 12 tips for first-time buyers, covering everything you need to know when it comes to purchasing property, click here.
Disclaimer: Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances.
