Renting Versus Buying
Knowing what the best strategy is when it comes to property in today’s market can be tricky and partially depends on you financial and domestic situation as well as the area in which you live. We outline the major pros and cons of both to help you make that difficult decision.
Why stay as a tenant?
Australia’s major cities are among the most expensive places in the world to buy property, and none more so than Sydney, which makes buying a home a huge commitment. Rather than spending all your savings on a deposit and ploughing money into mortgage repayments, you could keep cash free to travel, for unforeseen circumstances, or simply to go out and have fun. If you have a family, you may want that extra cash to pay for school fees and all the extra things a growing family needs. As a retiree you may want to be without the responsibility of maintaining your own home and all the work and expense that involves.
Maintenance is a very real reason to stick to renting. When you own your own home, there’s always something that needs fixing or improving, always something for which you need to keep a contingency fund readily available. As a tenant you simply need to call up your landlord when the heating malfunctions, a pipe bursts, or the electrics falter. There’s no need to organise for someone to come round and fix it or to try and fix it yourself, and you won’t need to fork out a huge amount of cash. Many landlords also organise for someone to maintain all the outside areas, including keeping the garden looking great, the windows clean, and the exterior in good shape.
Why become a homeowner?
If you’re still on the fence about whether to move from rented accommodation and invest in a place of your own, consider this: as a tenant you have no security of tenure. At the end of your fixed tenancy, a landlord has the right to terminate the tenancy with just 14 days notice. In a market where rented accommodation is becoming increasingly sparse, that’s a frightening prospect. By investing in a home of your own, you’re investing in your future. As long as you keep up with your mortgage repayments no-one will ever be able to take your home away from you, you’re able to make alterations whenever you wish to suit your changing needs and tastes, and you’re wealth-building rather than chucking away money into a bottomless rent pit.
If there is one reason to bite the bullet and buy property it’s that one day you will no longer have to pay to live anywhere, whereas if you keep renting you will be paying to put a roof over your head until you die. Every cent of money you give to the bank each month contributes towards the paying off of your loan. Plus, over time, you should develop equity from your property, which means that you actually profit from it. That can never happen if you continue to rent.
To buy or not to buy, that is the question – but hopefully we’ve helped you to answer it!
By Corey K (follow me on Google Plus)