Renting vs. Buying a House – How to Make a Decision

In some cultures owning your own home is seen as a sign of success in life. But, in other cultures owning or renting is irrelevant, a house is simply somewhere to live while you enjoy life.

Although the culture you live in will shape your view of owning versus renting, there are several other factors you should consider before committing to one or another.

Do you move a lot?

The cost of buying a home is more than just the purchase price. There is also an array of fees that need to be paid to complete the process. Unless house prices are climbing steeply, you’ll need to plan to live in your home for between 3-5 years to ensure you get your money back when you sell.

If you’re someone that often moves from home to home, buying is probably not a good idea for you.

Unless you’re planning on buying it to rent out.

Your job

In the same way that moving frequently makes house buying an unviable option, you need to consider your job and how often you are transferred. This could affect your decision of whether to buy or not.

Can you afford a home

Homes are expensive and you’ll need finance to help you make the purchase. However, you’ll also need a downpayment before you’ll be able to secure a mortgage. 

This means you need to save up your initial deposit and then be certain that you can afford the monthly payments. It’s worth noting that houses are often cheaper when purchased through a reputable auctioneer Sydney, but you’ll still need to have the finance ready.

Alongside the purchase price and the deposit, you’ll need to remember the importance of homeowners’ insurance, inspections, and purchase taxes.

You’ll also need to have the funds available for furnishing the home and completing any necessary repairs or maintenance.

Although this can all seem gloomy, it doesn’t mean that purchasing your own home is a bad idea, you just need to be ready for all the costs first.

Long term prospect

In the long term, you’ll be able to live without needing to pay rent, that will make a significant difference to your finances when you’re ready to retire. 

This is perhaps the greatest benefit of homeownership. In fact, it can also be used as a type of pension pot. Selling your home will release the funds you need to live comfortably in a smaller house and enjoy your later years.

Alongside this, the value of your home is likely to naturally rise as you age and improvements you make can also increase the value, giving you an even better return on your investment when you’re older.

Renting

Renting still costs, you’ll need a deposit and the first month’s rent before you can move in. But, you will have the advantage of not being liable for maintenance and repairs on the property, that will be the landlord’s responsibility.

The simple fact is that renting is usually the only option when you’re young. But, once you have the funds available for a deposit you’ll need to consider purchasing a home, if nothing else, it makes a great pension pot.