Should You Buy or Rent? The Pros and Cons
The ongoing dilemma of homeowners: should you buy or should you rent? You want to own your own home - but you also enjoy the flexibility of apartment living. Which do you pick? Here are the pros and cons of buying vs renting to make life easier.
Buying a Home
Before you look at listings, first consider the advantages and disadvantages of buying your own home.
Pros
Once you buy a house, it becomes your legal property. This means that you have the freedom to style and renovate it any way you want. You have the creative freedom to decorate the home, unlike when renting.
You have more privacy. You can do whatever you want inside your home (within the law of course).
A home’s value will appreciate over the years. If a few years down the road you decide to sell the home, you can earn profit from the sale.
If you don’t want to live in the house, you can always rent it out to generate more income.
You have a fixed amount to pay. Unlike renting, where landlords can increase rent payments as often as they want. When you buy a home, you are paying a fixed rate - no room for surprise increases.
You don’t have to pay a body corporate fee of an apartment when you own a home. You can save a lot of money which you can use for other important things.
Cons
You’re in charge of doing and paying for everything, especially insurance, council rates and maintenance.
You can’t just leave anytime you want. Unlike when you’re renting, once the lease expires you can leave immediately. When you own a home, you would need to wait for your home to sell (or for you to finalise buying a new home) before you can move out.
While it is true that property values might appreciate over time, there’s also the risk of not making any profit once you sell it. Economic factors such as recession or being in a less desirable location can affect your home’s value.
Interest from the home mortgage can make a huge dent in your wallet.
The costs of buying a home doesn’t stop at deposit and loan payments. You should also keep in mind that you need to save up for costs that involve buying (stamp duty, agent fees, inspection costs, solicitor fees, mortgage establishment fees) and selling (advertising, agent fees, renovations).
Renting a home
Does renting a home look appealing to you? Here are the things you need to know...
Pros
If your job requires you to travel a lot, renting is the way to go. Renting doesn’t need long-term commitment, unlike when you buy your own home.
You have the chance to live in an area in which you can’t afford to buy. If homes in a certain are way out of your budget, you can consider renting a home in the same location - this could cost less.
It’s easier to move out - you won’t need to wait for a new renter before leaving.
Renting frees up your savings. Unlike when you buy a home where you spend money on deposit or other costs, you can spend it elsewhere or save it.
You don’t need to spend money on maintenance - it’s all part of the rent you’re paying.
Insurance is also covered by the amount you’re paying.
You can diversify your investments. You can put extra money on stocks or mutual funds. This way, you won’t put your eggs in one basket and lessens the risk of losing everything.
Cons
You don’t have the creative freedom to decorate or renovate the apartment unit the way you want it. Any renovation would have to go through the landlord or the owner first.
You have to transact with the renting agent all the time, having a third party in all dealings. This could result to delay in communications and issues taking longer to resolve.
There is no return on investment when renting because the property will never be legally yours.
You would have to deal with unpredictable rise of rental fees. There’s also no guarantee that your lease would be renewed when it expires.
The Verdict
Ultimately the decision comes down to your personal preference and your lifestyle. Think about your needs, priorities, and your budget carefully before you decide. If you still need to weight it up, buying vs renting calculators like this can help you out!
If you need more help in deciding, feel free to reach out any time by sending me a message, or giving me a call on 0402 909 727. Until next time