To rent vs buy? That really is the big question that is currently plaguing many young people in Australia. With house prices continuing to rise in many of the capital cities, moving into your new home is becoming more difficult. More and more of us are renting longer, or moving back in with parents to save for a house deposit. But what really are the differences between renting and having a mortgage, both financially and for your lifestyle and are there any other options?
Rent vs Buy? Which One Should You Choose?
Renting
There is no hiding that renting comes with many disadvantages, which is why a lot of families like to own their own home. Most notable is the uncertainty of renting, with leases generally lasting 12 months. But there are also a lot of advantages depending on your circumstances.
Advantages of Renting
- Flexibility: If you’re someone who doesn’t really have a long-term plan, might be moving for work commitments or are wanting to travel, then renting is probably for you.
- Low up-front costs: You don’t need a large amount of money up-front to rent a house, compared to owning your own home, where you generally need 10% of the purchase price as a deposit, and often 20% these days.
- Upkeep costs: Heating not working, or is there a water leak? If you’re renting, you don’t have to come up with money to repair these problems. Leave that to your landlord.
Disadvantages to Renting
- Uncertainty: For the adventuress renting might be a fantastic idea, but if you have a secure job, a family or simply don’t like moving, then renting can be a huge burden! Constantly moving can mean that you have to spend weekends at house inspections or worst case, you have to move further than you planned.
- Decorating & creating a home: There is a particular sense of home that comes when you can decorate and make improvements to your home. If you are renting, forget it. You might not even be able to hang up your pictures!
- Saving for the future: Renting may initially be a cheaper option, however, ever hear of the saying ‘rent money is dead money’. When you pay your rent, that money is going into the pockets of your landlord to secure their future, not yours.
Having A Mortgage
Although deciding to own your own home is a huge financial decision, it also has a massive effect on your lifestyle. With more security and long-term benefits, many families or couples decide to own their own home. Transitioning from renting to building? Find out how.
Advantages of Owning Your Own Home
- Securing your future: Apart from the lifestyle owning your own house guarantees, one of the main benefits is that property investment (including paying off the mortgage on your own home) is an investment into your future and retirement. The longer you own the property for, as a general rule the greater the equity you will create in your home.
- Creating your dream home: Think your backyard could benefit from a decked alfresco area, or would you like to freshen up the walls? If you own your own home, the sky’s the limit. You can hang up all the family photos you like!
- Certainty: No more guessing where you are going to be living in the next year. When you own your own home, you will never have to worry about whether the landlord will extent the lease or not, especially when you don’t want to move or ideally need to stay in the local area to access schools ect.
Disadvantages of building your new home
- Upkeep: Unlike renting, you will have to deal with any maintenance or upkeep in the property. You need to factor this into your budget as most homes have some maintenance costs year to year.
- Mortgage payments: While you still owe money to your lender, you will have to repay your mortgage, either monthly or fortnightly. However, when you finally pay it off, you will be able to free up a lot of cash.
- Location: With property prices increasing in suburbs close to cities, being able to afford a property within 20 km of the CBD will generally cost you more than you planned. Owning your home may mean that you have to move further out.
What other option are there?
Neither renting or owning your own home going to fit your financial and lifestyle needs? Rentvesting is a great option for individuals who want to benefit from investing in property, as well as still maintaining their previous lifestyle.
If you would like to continue living inner city, but can’t afford to purchase a property in that location, and don’t want to move to a location you can afford, then purchasing an investment property before your own home is a great alternative. You will also be able to benefit from tax deductions, and a rental income from your investment property.
If you are interested in rentvesting, make sure that you speak to the experts. At iBuildNew, we can help you through the process of purchasing an investment property in a simple manner so you can spend your time on the things you love!
Alternatively, if you are interested in securing your future by building your dream home, we have experienced phone consultants who can match you with builders and developers who will meet your needs. Call us on 1800 184 284 or book a call online.
Let us do the legwork for you.
- We’ll ask the right questions to better understand your needs
- We’ll create a recommended shortlist ideally matched to you
- We’ll answer specific questions or concerns related to home building, land purchasing or financing
Zoe Langenberg
Zoe is passionate about coffee and interior design. You can find her most weekends exploring an art gallery or devouring a good book.
1800 184 284
