Buying vs. Renting
It’s a common debate, should I be buying a property or renting a property and which option is going to put me in front in the long run?
Purchasing your own home certainly has upfront costs but renting essentially means you’re paying off someone else’s mortgage.
Coming from someone who purchased a their first home at a young age, there are huge benefits in owning property but it does come with plenty of sacrifice.
When it comes to buying, the most obvious benefit is that you’ll one day have a home that you own in full once you pay off your mortgage and when you retire, the cost of renting wont need to be considered into your retirement plan.
Even before you pay off your home, you are still the owner and are able to change and alter the home as you wish, this can include landscaping, painting or whatever renovating you like, giving you flexibility and the ability to personalise your home.
Owning your own home offers security, which can make it easier to plan for future and consider things like children and pets without the risk of your living situation changing.
However, home ownership often requires a large upfront payment for a deposit on the property you wish to purchase, as well as other costs such as legal fees. There are also costs associated with the upkeep of your new home which should be budgeted for before you commit to a mortgage.
There is no guarantee that when you come to sell your home that you will be able to make a profit, or even sell it for the same price. It’s impossible to predict how much of a return you will achieve when you come to sell but factors to take into account are how long you plan to own the home, whether additional work needs to be undertaken and how they would be financed and other long term facts which could influence the area either positively or negatively.
Renting is a cheaper option, in the short term anyway. Rent is typically paid weekly which means you don’t need a large amount of money to secure the property straight away. Most rental properties require a bond and rent in advance which is typically the equivalent of 6 weeks rental payments in total and the bond will be returned to you once you leave the property, providing it’s in the same condition it was when you arrived.
Any maintenance required is undertaken with any costs covered by your landlord, and you could potentially have the ability to live in a suburb which may be too expensive for you to purchase a home in. Renting a property offers flexibility that you won’t be in a long term commitment like you would be with owning your own home. Once your lease expires you are free to move on to another property, change jobs, travel or just simply change your mind about where you want to live.
You may not be allowed to have pets at a rental property and long term renting definitely has it’s downfalls. If you are still renting once you get to retirement you will need to budget for rent even once you have left the workforce. This may be possible if you have saved well however you may need to relocate to a less desirable area or a far more modest home if you are unable to afford the rent.
There is a certain amount of financial stability while renting as things like interest rates and maintenance costs are not necessary to work around, however, at the end of the day the home will never be your own.
It’s your choice.
Its a personal decision whether to buy or rent and can be dependant on what your long and short term plans and goals are.
“Weigh-up the personal pros and cons of your situation to figure out the best option for you.”
Sales Consultant at Harcourts Beckenham.
Chelsea can offer advice to help you decide what the best options are for you and assist with any of your real estate needs.
If you want to know what your property is worth in the current market, call me today to schedule your free, no obligation property appraisal.