Should you rent or buy, and why?
The question of homeownership versus contributing to a landlord’s investment is an age-old conundrum when buying your first home.
Homeownership is a worthy goal that can build wealth and provide security. But depending on different lifestyle stages and priorities, buying versus renting is not necessarily for everyone.
Pros and cons of change
If you’re ready for a change and have a regimented savings plan in place, property purchase could be your next move.
On the other hand, if the onus of homeownership seems daunting, and you are in career or relationship limbo, now might not be the right time to take the ownership leap.
Affordability versus lifestyle
When starting out on the property ladder, your disposable income can seem obsolete. However, this needn’t be the case.
Careful financial planning and adhering to budgets should ensure that renters and owners can afford occasional lifestyle perks.
Adding interest to equity
Even though interest rates are at record lows, if you have decided to commit to a property purchase, be mindful that the bulk of your repayments for the first few years will go towards interest.
Lenders and financial experts advise that you should combat this and cut your loan duration in half by paying double the required amount, especially in the early stages, if possible.
On the move or staying put?
If you have amassed a healthy deposit, plus extras, are able to get into the market and have firm plans of settling down, now could be the best time to buy.
Real estate is an investment, like any other. So, if you are uncertain about career or relationship developments, or are unwilling to rent your property to tenants, estate agents and investors advise postponing your purchase plans.
Continue in the meantime to build upon your savings.
Limited budget and not handy
If the thought of ongoing repair costs stretches the finances to breaking point, and you’re not the DIY type, renting could be your best option.
One of the major perks of renting is that your landlord is responsible for incidental property repairs.
However, if the thought of unforeseen costs is not off-putting, potential homeowners are advised to save at least $5,000 for emergency repair funds before starting your property search.
For further information, contact your property manager or estate agent to discuss the pros and cons of renting versus buying.