Taking the plunge and entering the property market or choosing to rent is a decision many encounter throughout their lifetime. The age-long debate of whether it is better to buy or rent can be a confusing and complex decision for some. With recent housing affordability challenges, some believe that the great Australian Dream of owning your own house is a bridge too far. It is now that this debate couldn’t be more relevant as many ponder their options and future.
Ultimately the decision comes down to each and every individual situation and the first step is to work out whether renting or buying suits your own financial and personal situation.
Here are the pros and cons of each option as well as the main things to consider if you are considering to buy or continue to rent.
- Flexibility to live in different suburbs and properties
- Allows for potentially greater savings and diversification of investments
- Live in an area that you couldn’t necessarily afford if you were to buy
- Cheaper monthly outgoings of rental payments as oppose to mortgage repayments
- Avoid costly maintenance and rates that are to be covered by the landlord
- You never stop paying rent as opposed to those that pay off their mortgage in the long-run
- Cost of renting steadily increases due to inflation
- Restrictions to what you can and can’t customise within the rental property
- Reduced stability and uncertainty with landlords having the right to put their property on the market at any time. This may impact your need to be living in certain school zones or close to transport links to work.
- Sense of stability and freedom to create a world around your home and make changes to the property to sure your particular needs
- You can add value to the property and access equity within your home for other investment or lifestyle needs
- Based on historical property prices, it is likely your property will increase in value over time
- Large financial outlay and utilisation of savings
- Paying interest for the life of the loan
- Restrictions on lifestyle costs as most of the money can be tied up in the loan repayments
- Responsible for maintenance, council rates and any other costs associated with keeping the property in a liveable state
The truth is that what works for someone may not necessarily work for another. Understanding and deciding what works best for you is the fundamental question before you commit to either option. Additionally, it may be that for the next 5 years it is better for you to rent, then look to buy at a later date…. Or the other way around.
If you would like to understand fees and charges involved with purchasing property, or you wish to find out more about your capacity to apply for a loan, then contact the team at 40 Forty to arrange an appointment.