When it comes to property, the decision between renting and buying is often a difficult one. While renting will often be cheaper in the short-term than paying a mortgage, the benefits of buying a home may leave you financially better off in the long run. However, you’ll need to have a deposit and some stability in your finances to get started.
Renting a home can give you more flexibility both financially and socially – for instance, if you’re young and want to go travelling, you can simply give up your lease rather than still having a mortgage to pay. It’s also usually cheaper to rent on a monthly basis than to pay a mortgage, although this will depend on where you live and what interest rates are currently being offered on the market.
The downside of renting homes rather than buying is the lack of security. You could be forced to move house if your landlord decides to sell the property, or your rent payments could increase unexpectedly. You’re also unable to make significant changes to the property without consulting your landlord, so you won’t be able to customise the property to your needs.
Buying a home gives you the security of always having a place to live, as well as an asset you can rent out for an income if you choose. Additionally, the capital value of most properties increase over time, meaning once you’ve paid off your mortgage, you will most likely have made a significant profit on your investment.
The biggest obstacle of buying a home is the deposit you need to save to get into the property market, usually at least 10% of the home value. Many first home buyers find it difficult to get a large lump sum like this together. In addition, the interest on mortgage repayments can often make them a larger monthly expense than rent, so before you make an investment into property you will want to have a comfortable, secure income.
If you’re thinking of entering the property market for the first time, Choice Home Loans can help. Our knowledgeable and experienced brokers can talk through everything you need to know about applying for a home loan, and help to find a loan to suit your needs. Make an appointment online to talk to one of our friendly staff today.