Housing affordability is a matter of concern. The dilemma of buying a property or continue renting is really difficult. Knowing the pros and cons of both options can help to make an informed decision that suits an individual's personal and financial situation best. While renting a house, one can avoid the costly maintenance and repair as the landlord will take care of the expenses. Whereas buying a house one needs to manage on their own for the ongoing maintenance expenses.
On renting a home, tenants will always be uncertain as to how long they can occupy a rental property. It totally depends on the landlord who can always ask to move once the lease expires. Moreover, tenants can’t make any change to the rental home without the landlord’s permission.
Choosing a rented house is a cheaper alternative than buying a house. Many young professionals can’t afford to buy a house in good locations however they can afford to rent. Monthly rental payments are less than the total mortgage payments paid to buy a house. So, renting helps saves money which can be spent elsewhere. Through investing, one can get a good ROI than buying a house.
Gives More flexibility
One of the best advantage of renting is flexibility; as a tenant one can freely relocate from one point to another once the lease expires. On the contrary, buying a property is very costly and thus a home owner has less flexibility when it comes to moving house.
Allows to try other investment portfolios
Renting allows to use the savings across a wide range of investments. Buying a home means that all the savings going toward a single asset or investment.
The cost of renting can increase over the years due to inflation or rise in property prices. At retirement when the income gets reduced then it will be difficult to absorb increased rent.
Renting a house is like spending the money rather than investing it. Buying a house is the investment on an asset that will become one’s property after the full payment.
Buying a House: Pros
Gives stability and freedom
Buying a home brings a sense of stability and there's no risk to be displaced by a landlord. The home owner has full freedom to make the changes according to their choice. One can make changes/renovate/decorate as they like which therefore increases the value of home as well.
Home Price Rise over time
The value of a land/home increases with time. It’s an asset with a long term investment strategy. When the value increases, the equity increases as well which can be used to fund an investment such as buying another property.
First Home owners grant
If you are buying a house for the first time then you may be eligible for first home owners grant. This can save you a lot of money and make your experience of buying a new home easier.
Buying a House: Cons
Owners need to pay Interest
Homeowners need to pay interest of a loan which can fluctuate during the term of the loan.
Ownership costs are more
Owning a house is not cheap. The total cost of owning a property includes council rates, repairs, depreciation, water and insurance costs. These can be a big amount for some of the families who are not prepared for it.
So what’s the Best Option?
Both buying or renting isn’t simple. There are various factors to consider including the financial resources, lifestyle, family needs, investment goals etc. Make sure you know your finances well before you decide on buyinga new home. Proper research and talking to an expert is a good idea to make an informed decision.
Fortune Living's expert team can help you make this decision by guiding you in the right direction.