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Buying a home is a big deal. Should you take the plunge, or continue renting? Here, we weigh up some pros and cons of both, so you get an idea of what works best for you.
Pros of Buying
1. It’s yours
There’s something about having the security of calling your place of residence 100% yours. There is no risk of a landlord deciding to kick you out tomorrow, putting your living situation in the hands of someone else. Plus, the piece of land under your name is entirely yours to play with. You have more control.
2. Wealth creation
Buying a house sounds like a huge commitment of 30 years, but it comes with huge benefits. Home ownership allows you the option to rent out the house and use it as an investment, selling it can earn you a considerable profit, and you are more attractive to financial institutions when borrowing money.
3. Creative command
When you own your own home, you can do whatever you want to it. Kids want to paint a wall bright green? You can do it. Want to replace the backyard with a deck? You can do it. The house is yours, and (almost) anything goes.
Cons of Buying
1. Many costs
Buying a home comes with many costs, such as maintenance, stamp duty, rates, taxes and more. Being a homeowner means taking on a large responsibility in both repayments and ensuring everything is working. When something breaks, you can’t call up the apartment handyman – you have to DIY.
2. Hard to up and go
Having a house makes moving time much more difficult. You need to put the house on the market, arrange for a suitable real estate agent, make sure you get a good deal when selling and many other back and forth decisions that need to take place. Renting can be much more simple and takes less time.
3. Location restricted by your budget
The area you buy your home in is solely determined by how much money you can afford to put down. If your budget is tight, you will only be able to enter certain suburbs, and compromise on either location or home size and type. Renting gives you the ability to live in many more places.
Pros of Renting
1. Freedom and flexibility
Renting offers a lot of freedom to the individual or family that wants a change of scenery every now and then. It allows you to adapt your home to your lifestyle. Another benefit is that you can live in an upscale suburb that you might not be able to buy for the full price.
2. Fixed costs
Renters generally know what to expect when they sign a lease. The cost they pay every month generally stays the same, and there are less expenses than paying for a mortgage. Furthermore, any maintenance or damage is covered by the landlord.
3. Ability to spend your money elsewhere
When you have a big chunk of your money tied into a house, it can feel like a huge burden. If there are things you would much rather spend your hard earned cash on, it might have to wait, and that can be agitating. When you rent, you can do whatever you want with your savings.
Cons of Renting
1. No wealth creation
Renting might give you freedom, but at the end of the day, you are paying someone else’s mortgage. Each month you give an amount to your landlord and it doesn’t go towards building any personal wealth for yourself. After 30 years, you won’t have anything to pass down to your children or a house to comfortably live in and call your own.
2. Nothing is in your control
If the landlord decides they want to increase the rent, it’s going up. If the landlord decides to do an inspection next weekend, they’re coming. If you wanted to hang 7 paintings on the wall but the contract says no hooks, you can’t. Renting comes with a lot of restrictions on what you can and can’t do in your home.
3. Bound by the lease
A lease has all the agreements between you and the landlord down in writing, including the duration of your stay, the rental payments, what is provided and included and any other responsibilities. Once you have signed your lease, you are bound by its terms, and breaking it can be costly and tedious.
Buying vs Renting- Decision time
If you’re still unsure about the best option for you, get in touch with Chris and the team at Arnold Property and we can discuss your current situation and the best option to suit your lifestyle. Call us on (02) 4969 2600.