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Renting versus buying: pros and consRenting vs Buyting: Pros & Cons

Deciding to rent or buy a property is a personal decision based on individual circumstances.
We’ve taken a look at the pros and cons of buying versus renting, and the considerations you need to take into account when looking at both.

Buying

Owning a home might be your idea of living the dream and there are definite advantages to it!

Pros

Building equity and investing in the future. You may be familiar with the saying that “rent money is dead money”. By paying down your mortgage, you could potentially be building equity in your home (instead of making monthly payments to a landlord) which could benefit you in the long run.

Creating future freedom and stability. It can be a longer-term family home or you can fix it up and sell it on (hopefully for a profit). You won’t deal with landlords or agents and you will be in direct control – no-one will ever put up the rent! You will also be kick-starting your financial planning goals for the future.

A sense of community. Owning your own home means a commitment to an area and becoming part of a community that can often be missing when you frequently change rental properties.

Cons

Costs – not just the house price! Aside from house purchase, you will also need to take into account any associated costs, such as stamp duty (varies by state), legal/conveyance fees, and in some cases, mortgage insurance (if you have a smaller deposit, the bank might ask you to pay Lenders Mortgage Insurance or LMI). Other potential costs include costs for valuation reports, building inspection and pest inspection reports, Government title transfer fees, mortgage registration fees and loan establishment fees etc. Also, as a home owner, you are responsible for repairs, dealing with pests or general maintenance

Location, location, location. You may have to compromise on where you live and look further afield. You may have to adjust your lifestyle; however you are still making a major investment for the future.

A major commitment. Having your own mortgage is a significant undertaking and will no doubt impact on your current situation, your lifestyle and your plans. You need a reliable and stable income to cover your home loan repayments and you will find that you may have to make some changes to other aspects of your life. Never fear - we are here to help! To find out how much you could borrow and what your repayments will look like, please contact us on 1300 747 747 or visit our website to use our Home loan calculators.

Renting

Renting often gets a bad wrap and we’ve all been told how it is dead money and does not compare to owning your own home, but there can be advantages to being a renter depending on what you are after.

THE BENEFITS

Flexibility to live where you want to. Renting may allow you to live where you want to live, whether it’s by the beach or close to the city. Most rental contracts are for a defined period of time so you can move on when it ends and test out another area to live in.

Less commitment. Your rent could be the same (and in some cases higher) as mortgage repayments but you haven’t made the kind of financial investment that home ownership entails – such as general repairs and maintenance.

Low maintenance. Renting a house or apartment also means that you could avoid most maintenance tasks associated with ownership. It is the responsibility of your landlord to generally maintain the property and pay taxes, even though you might have to look after the day to day maintenance.

THE NEGATIVES

Security and permanence. One of the downsides of renting is that your ability to hold onto the property is less certain. Your lease may not be long-term, the rent may increase or the landlord’s circumstances could change, forcing you to look elsewhere for a place to live. You will also be subject to regular rental inspections; ultimately you have little say in your housing situation.

Making it feel like your own. The inability to decorate (like hanging lots of pictures), keep a pet or carry out any renovations can also make it feel like someone else’s abode.

Renting isn’t an asset. No matter how affordable renting is, you will not have the opportunity to sell an asset when the time comes to move on.

If you would like to chat to us about your property goals and receive advice on securing a home loan, call us on 1300 747 747 or find further information here at qantascu.com.au.

Qantas Credit Union

The information in this article is of a general nature and does not constitute as advice in relation to any investment of purchase. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Prior to making any decision you should conduct your own investigation and analysis of any benefits or costs associated. You should seek your own independent legal and financial advice. You should also read the terms and conditions available on our website before applying for financial products and services. Terms and conditions apply and are available on request. Qudos Mutual Limited trading as Qantas Credit Union ABN 53 087 650 557, AFSL/Australian Credit Licence 238305.