For many Australians, rate hikes and inflation have made the dream of property ownership feel ever more distant. But a recent analysis shows that meeting mortgage repayments could actually be cheaper than renting for more than a third of Australian properties. In this guide you will learn what to consider when making the decision between renting vs buying.
Look, we get it. Often the biggest obstacle in the way of home ownership is saving up for a deposit.
But once you’ve got that sorted – which we’ll help you tackle below – a recent CoreLogic analysis found servicing a mortgage was more affordable than average rent prices in 518 Australian suburbs. In fact, in some areas there were savings of over $900 a month.
Not to mention that with rental prices surging by about 10% across Australia over the past year and vacancy rates at a record low 1.1%, home ownership has possibly never looked more appealing!
So we’ve got some tips to help you switch from renter to homeowner in a timely (and confident) way.
Take advantage of the buyer’s market
Buying now or in the near future could mean less competition for properties and sellers willing to negotiate.
And recent rate hikes mean that, even during the spring selling season, we’re seeing fewer buyers. In fact data shows the median number of days that properties sit on the market is now 35, compared to 20 days last year.
And in response, property prices are holding.
So by shopping around in the right areas and putting your negotiator hat on, you may get a price that could make buying cheaper than renting.
And most importantly, buying property and making mortgage repayments can create equity for you … instead of your landlord.
Get in on government schemes
There’s no denying that saving a big enough deposit to buy can be a bit of a slog.
But what if there was a way to sidestep the standard 20% deposit? And possibly avoid stamp duty too?
There are a number of government schemes you may be eligible for that can fast-track house buying by an average of 4 to 4.5 years.
The federal government offers low deposit, no LMI loans for eligible first home buyers, single parents and regional first home buyers.
Also, all state governments (except South Australia) have first home buyer stamp duty concessions for those eligible.
And you can stack these schemes together for more bang for your buck.
But you’ll have to move quickly on the no LMI schemes – they’re allocated on a first-come, first-served basis every financial year.
Certainly, here are some advantages and disadvantages of both buying a property and renting:
Renting vs Buying:
The decision between buying and renting depends on your financial situation, long-term goals, and personal preferences. Consider factors such as your financial stability, mobility needs, and the real estate market in your area before making a decision. Following are the top considerations to renting vs buying.
Advantages of Buying a Property
1. Ownership and Equity: You build equity and ownership in the property over time, which can be an inv
estment for the future.
2. Stability: You have long-term stability and the freedom to make changes to the property as you wish.
3. Potential Appreciation: If the property’s value increases, you could benefit from potential capital gains.
4. Sense of Belonging: Owning a home can provide a sense of stability and belonging in a community.
5. Tax Benefits: In some cases, you can benefit from tax deductions on mortgage interest and property taxes.
Disadvantages of Buying a Property
1. Initial Costs: High upfront costs, including down payment, closing costs, and maintenance.
2. Maintenance and Repairs: You’re responsible for upkeep, repairs, and unexpected maintenance costs.
3. Limited Flexibility: Owning ties you to a location, making it harder to relocate quickly.
4. Market Risk: Property values can decline, potentially leading to financial loss.
5. Higher Monthly Costs: Mortgage payments, property taxes, and insurance can be higher than rent in some cases.
Advantages of Renting
1. Flexibility: Renting provides flexibility to move without the burden of selling a property.
2. Lower Upfront Costs: Initial costs are usually lower, requiring only a security deposit and possibly a few months’ rent.
3. Maintenance Responsibility: Landlords are responsible for property maintenance and repairs.
4. Investment Diversification: You can invest your savings elsewhere instead of tying them up in a property.
5. Lower Monthly Costs: Rent payments may be lower than mortgage payments, especially in high-cost areas.
Disadvantages of Renting
1. Lack of Ownership: You don’t build equity or ownership in the property.
2. Limited Control: You may have restrictions on making changes to the property.
3. No Potential Appreciation: You won’t benefit from property value increases.
4. Rental Increases: Rents can rise over time, impacting your monthly budget.
5. Less Stable: Landlords could decide not to renew your lease, leading to the need to move.
Ultimately, the decision between buying and renting depends on your financial situation, long-term goals, and personal preferences. Consider factors such as your financial stability, mobility needs, and the real estate market in your area before making a decision.
Give us a bell
Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances?
We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.
And while we’re at it, we can assist you in applying for any money-saving government incentives you may be eligible for.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.