Should you be renting, or buy your first home? Let's delve a little deeper, taking a look at both these options and provide you with the information you need to make a decision.
To rent or buy? That is the question. Let’s take a look at both options.
Like any significant financial decision, there are pros and cons associated with renting and buying. In this article, we’ll take a look at both to help you make the right decision for your situation.
Renting may be cheaper
You may find the price of renting cheaper than buying a home. Buying your own home requires a deposit and regular payments over the term of the loan which may work out to be more expensive than renting.
To put it in perspective, last year the average monthly rent in Sydney was $1956[i], making it the second most expensive city for property in the world. But, the average monthly mortgage repayment is over $ 3,031[ii]. Buying and paying off a mortgage means you are taking steps towards home ownership.
Paying for the upkeep
As a renter, you may have some maintenance and bills paid for by the landlord. These could include things like council rates, water, general maintenance and repairs.
Live where you want
Renting may be viewed as ‘paying other people’s mortgages’. But, you can view it in a more positive light. You’ve got a roof over your head, and you’re in the suburb that you want to be in - a suburb that you may not have been able to afford otherwise.
Renting may mean less responsibility for example if you decide that you want to live overseas or interstate, you may be able to more easily and not have to worry about what you’re leaving behind.
When you rent, you don’t have the same freedom that homeowners do. While renting has its pros, you don’t know how long you’ll be able to live there. In your lease usually the landlord will have a specified amount of time that they need to have to let you know if they want to alter the premises.
The Great Australian Dream. Owning your own home has been an Australian dream for generations. - Hannah Madill - Aura Development Manager
“The Great Australian Dream. Owning your own home has been an Australian dream for generations.”- Hannah Madill, Aura Development Manager
A mortgage is enforced savings
Having the discipline to make regular mortgage repayments is a great way to ensure you save. Plus, your loan repayments, depending on the type of loan you might have, may be going towards your principal which means you can keep taking steps towards home ownership.
Your home is your castle
Owning your own home may give you more freedom compared to renting. For example renting may limit or restrict you making modifications to your home but when you own your own home, you generally have more freedom to make changes. This can be as small as simply hanging up a picture frame or painting a feature wall.
Don’t forget about building your first home
A forgotten option for a lot of first home buyers is the option to buy a house and land package and create their own Australian Dream, a house that suits their needs.
“My role as the development manager is to ensure our Stockland communities are well planned; they have all those fantastic amenities schools, shop, good coffee and excellent access to parks.” - Hannah
There are the costs
Buying a home comes with its costs. There's obvious ones like stamp duty and conveyancing fees. And there are less obvious ones like inspection costs, mortgage registration, transfer and establishment fees. Depending on your circumstances, there may be more, so it is best to talk through these with your lawyer, conveyancer or other advisers.
As always, it’s best to make an informed decision rather than rushing. Speak to the experts and think about what’s best for your situation.
The final word
As always, it’s best to make an informed decision rather than rushing. Moving from renting to your own place is no easy feat, so make sure you speak to the experts and think about what’s best for your situation.Click here to go back to Stage 1: Working out what you want