Most people consider that rent money is dead money – after all, there’s even a saying that goes just like that. Naturally, when we say most people, we refer to those that are either working or heavily involved in the real estate industry.
On top of that, housing affordability is an issue all over the world. In some countries, the fresh adults, so to speak, are thought to be faced with a generation of rent, with little to no chances of being able to buy a house.
Moreover, to decide between keeping on renting or buying a house is not something as easy as it sounds. You cannot jump onto the property ladder without facing a couple of issues beforehand.
As you may know, whether you rent or buy depends on what is better for you and your financial situation, as well as the pros and cons that each option comes with. Obviously, keep in mind that a pro can and could be a con if you would have different circumstances to take into account.
With these being said, it is important to assess your situation properly before you make the final decision. We’re here to help you with that!
Frees Up Savings
Naturally, when you rent a home, you will not have to worry about the deposit associated with buying one. Those funds can be used to invest in something else or simply keep as savings for rainy days.
If you pass on using your savings as a deposit for a home loan, you may engage in an alternative investment that would bring you a greater return on investment. In short, you wouldn’t have to put your savings and a great deal of your monthly income towards a mortgage and a deposit.
More Flexibility
You are clearly way more flexible when renting a house. When your lease expires, relocation won’t be a problem – you just have to find a new place to crash in, so to speak.
On the other hand, there are a lot of costs that come with selling and buying a new property – because of this, you are left with little to no flexibility in terms of buying a home.
Investments’ Diversification
Buying a home means that most, if not all of your savings and income will go towards this one particular asset. The question that you need to ask yourself is: do you feel comfortable with investing in one single thing?
Investing in only your home comes with great risk – a risk that much people often avoid taking. When you rent, you can use your income and savings to expand your portfolio, decrease risk, and increase your chances of getting a nice return.
History Lesson
According to history, the costs associated with renting will increase over the years – in a steady manner, mainly due to inflation and the increase in property prices.
For example, you may initially have to pay more in mortgage repayments than in rent, but after you pay off the principal, the situation may turn itself around – thus making buying a house the more viable option.
No Forced Savings
Naturally, a mortgage can be seen as forced savings. Since you must pay your mortgage every single month, you also put money towards an asset that could increase in time.
When it comes to renting, you are not forced to save money. Instead of investing – or saving – you may be tempted to spare cash and not think about your future financial situation.
Freedom and Stability
First of all, you cannot be displaced by a landlord once you buy your own home. You are not trapped in by a lease term – there’s always some sort of certainty when you buy and own a house.
On top of that, you can freely decorate and renovate your home when you are the owner.
Long Term Investment Strategy
As you may know, home ownership is considered a long-term investment strategy. Even though they do have periods of weaker growth or even fall in value, homes are known to consistently rise over the long-term.
Thus, home ownership is considered and eventually chosen by many people because of the great thought of having an asset with a value that will most certainly increase over time.
Equity
Equity is probably the best thing about owning a home. It is basically the percentage of the home that you personally own.
For example, if your home’s value increases, your equity will increase as well, as you pay off your loan. Eventually, you will most likely make use of that equity to fund whatever investment you have your mind on.
Interest
The life of a loan comes with fees and interest that can be quite significant.
For example, if your fixed-rate period expires or you have a variable interest rate, be ready to experience fluctuating interest rates!
Opportunity Costs
When buying a home, your money will be essentially tied up in property. You’ll have to save money for a deposit and probably pass on many things that you wish to do – traveling, studying, entertainment, and so on.
Buying also means that you have to postpone any investment opportunities that could yield you quicker or greater returns than a home.
Ownership Costs
Naturally, buying a home doesn’t mean only saving up for a deposit and loan repayments. According to data provided by the Reserve Bank of Australia, it costs about 6% of the purchase cost to buy a home and about 4% of the sale price to sell.
On top of this, you will also have to take into consideration repairs, depreciation, council rates, body corporate fees, as well as water and insurance costs.
Buying a home is not for everyone – similarly, renting is not the same or meant for everyone. Each of these two options comes with its advantages and disadvantages that have to be carefully analysed if you want to make a good investment, for example.
For instance, you may have to decide between investing in a business or owning a home. In such cases, you have to remember that your financial situation and its surroundings will provide you with the right answer!
If you need any help or have questions about either buying or renting, feel free to contact our office for home loan help. Our team will use its experience to help you find the best loan – they’ll guide you through the entire process!
Reach out and contact us today – we’re more than happy to help you!
Contact us on 02 8530 1107 or Submit your scenario online
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks
With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution
Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.
Buying a home or a property may imply a deposit. You may come across home loans that require no deposit at all, but their approval criteria are known to be tough.
Therefore, you are left with only one thing to do – namely, to save a deposit so that you will be able to purchase a home or a property.
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
When you’re applying for a home loan, your lender might want to know how you plan to exit it. After all, it is a lender’s job to make you understand that you do have to plan your loan repayments and so on.
In this respect, you will need to come up with a proper mortgage exit strategy. You have to make sure that the financial path that you choose will be able to make you exit your mortgage on time and avoid missing any payments.
One in five Australians is self-employed. This means that there are quite some people here that are their own bosses and, in short, command over their very own businesses.
Of course, being your own boss sounds great and all, but there are a couple of things that may be uncertain for most self-employed people. For example, what do you have to go through in order to obtain a home loan?
What you need to know before you purchase your first property and how to fast track it. We have designed this guide to get you up to date with everything you need to know about being a first home buyer. Whether you have a short term goal of purchasing your first property or are thinking about it sometime later down the track, this guide will cover important essential aspects of this exciting journey.
What the banks won’t tell you and how to save serious money on your home loan. By Investing 10 minutes of your time to read through our guide, not only will you learn the tips and tricks the banks won’t always tell you to assist you with paying off your home loan sooner, but also gain an insight into some techniques that will allow you to minimise the interest you pay to the bank.
The best way to take control of your finances is to use a budget planner. This is a simple tool that helps you understand the money going in and out of your household. With our Highline Lending Budget Planner, we’ve got you covered. This handy tool allows you to log and track your goals, track your savings, track your debt and expenses and keep a monthly record for an end of year evaluation.
