Stop Renting and Buy
For many years, there has been a debate on whether you should be a renter or buy your own home. Getting on the property ladder has always been looked at as a crucial part of becoming a successful adult in life, yet more recently this theory has been knocked on its head.
There are many experts which are now saying that when you rent for life, this could actually be a sound financial option, especially compared to mortgages which can become crippling or homes which may not actually be as good an investment as first thought. But, most people want the dream…
Dream of Owning a Home
The idea that renting means you are wasting money is a bit misleading, you are getting somewhere to live, so it is not actually a waste of funds. Once you have a mortgage, you are hoping you will eventually be able to own your own home outright, yet there is always the worry it will not end up at the value you were coming to expect after all you have spent on it.
Many of these costs are hidden and not really accounted for, examples being repairs, maintenance, property taxes and insurance. There is also the “opportunity cost” which is never considered where you can place your cash into high-interest savings or stocks and shares.
However, the attractive option of owning your own home, the bricks and mortar you have purchased should be a solid investment and appreciate more than you have paid in mortgage interest, taxes, and maintenance. This should leave you with no payments and with a possible profit when you are at retirement age.
If you do research and choose wisely, the correct property and location can help you to achieve this sooner, rather than later, especially if you can offset some of your costs with the current tax benefits or first-homebuyer incentives which may be available.
Whichever option you finally decide, you should not rush into buying a home before you can actually afford it, because you face a risk of becoming “house poor” if your mortgage payments become too high.
The downside of renting in Australia is most leases are only for 12 months, so renters can struggle to find long-term options where they can be secure in life, it maybe they are asked to leave, or the landlord wishes to increase his rent, or in fact, live in the home or sell it.
When you look at all these variables, it makes renting a not very ideal situation for long-term gains and affects the security of knowing where you will be. This is not the perfect option. Buying has much more viability and structure.
Image Source: Metricon