It’s a common dilemma: home loan interest rates are at historical lows but the cost of housing and maintaining a mortgage has steadily gone up over time putting home ownership out of reach for many Australians.
Yet the pursuit of the great Aussie dream remains. But as house prices continue rising in the capital cities, many are asking, “Should I rent or buy, and what is better”
At the end of the day, it’s a personal choice that will be determined by your own financial circumstances and needs. There are pros and cons to both and we shed light on the important advantages that can’t be missed.
First, let’s look at the advantages of buying a home.
You’re more disciplined with your money
Getting into the momentum of paying your mortgage instead of your landlord’s gives you the motivation to put your savings towards owning your home sooner, instead of spending it.
You can make your home your own
Unlike when you’re renting and can’t make any changes or renovations, owning your own home gives you free reign. You can literally make yourself at home.
A good way to build wealth and prosper
House prices have historically delivered one of the strongest returns and are considered a solid investment. Choosing your house and its location wisely could pay rich dividends over time.
You can budget for repayments
While interest rates may fluctuate, a mortgage still gives you a certain level of control over managing your repayments by choosing either a fixed rate or variable rate loan or split loans to get the best of both.
When renting you’re at the mercy of your landlord who can hike the rents at any time.
You know when your loan ends
Owning your own home gives you a sense of security and once you’re living in your own place you’re not at risk of being caught in the endless rent cycle or having to move due to a rental lease ending.
Now let’s look at the advantages to renting:
Lesser financial stress
Renting can usually be cheaper than taking on a mortgage. This can leave you with spare cash to save or invest for the future, including saving a deposit for a home loan.
Fewer ongoing costs
When you’re renting most of the costs like strata fees, council rates, water bills and repairs are taken care of by the landlord. You would have to factor in all these extra costs with your own mortgage.
You can choose where you live
Rents usually being cheaper than mortgage payments means you can afford to live in a suburb you like, like in the inner city closer to work. You may not be able to afford the mortgage on a property in the area but renting makes it affordable.
Freedom to choose your house size
The needs of a young couple are far different from a family with three kids. The benefit of renting is that it’s easier and more cost-effective to move frequently as your needs change.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage.
