A hotly debated topic at the moment, whether to rent or buy has pros and cons for both options and ultimately is a personal decision based on your financial situation. If you are unsure of your borrowing capacity might be, we recommend you jump onto our Borrowing Calculator and speak to a trusted Mortgage Broker. If you would like us to put you in touch with a broker that will assess all of your needs and has access to many different products, please get in touch with us.
Renting – The Pros
The single most advantage to renting is flexibility; as a tenant you can freely relocate from home to home and area to area once your lease expires.
But because of the costs associated with buying and selling property, as a home owner you have less flexibility when it comes to moving house.
Often the Cheaper Alternative
Particularly if like many young professionals you prefer the lifestyle and career opportunities that inner and near city locations provide. Many young people can’t afford to buy in these locations, but can afford to rent there.
In the event that rents begin to rise (which is just a matter of time), more often than not your monthly rental payments will be less than what your mortgage repayments would be if you were to buy a comparable property.
The Other Cost Savings
One of the big bonuses to renting is that you avoid costly maintenance, repair, rates and insurance bills that go hand in hand with home ownership.
As a tenant, it’s your landlord who is responsible for taking care of such ongoing expenses.
Renting – the cons
Uncertainty as to whether you will be able to remain in a home you have grown fond of has to be the biggest disadvantage of renting. When signing your lease, you do run the risk of the property being put up for sale. A tenant’s existing lease agreement is honoured when a property is sold.
Lack of changes
You cannot make any changes to the property to improve your living space or even put pictures up on the wall without the landlord’s permission. This extends to painting the walls or changing window treatments. Should you make changes without consent, or damage to the property such as holes in the wall, you are responsible for bringing the condition of the property back to it’s previous state.
The other consideration as a tenant is the rising cost of renting. Even though renting may currently be the cheaper option, rents will always continue to rise in line with the increasing values of properties.
Further, you never stop paying rent, whereas most people will pay off their mortgage within 25 to 30 years.
So, which way to go?
Most people will still purchase their first home as oppose to renting forever, because it’s a lifestyle decision and not a financial decision.
However, there are many successful property investors with significant portfolios of properties around Australia who still rent their homes and enjoy the financial flexibility this affords them, so the option is yours!
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