Should you own the roof over your head?

When it comes to the rent-versus-buy debate, like many of our clients you may be weighing up the pros and cons.

You might be thinking that you’d love to buy a house but it all seems out of reach right now. Are you asking whether it’s still a good idea to invest in property at all?

You’re not alone. In today’s housing market, many people are considering the pros and cons of buying a home and whether renting could be a better option.

If you rent can you still get ahead?

The simple answer is yes. But buying property is not just a financial decision; it can be a lifestyle decision too. You might prefer to rent in the suburb you really want to live in and invest in buying a property in a suburb that’s more affordable.

It’s a matter of considering everything: your own situation, your goals, the property market, the costs and the risks you’re willing and able to take.

When it comes to the financial side of property, it’s important to understand the difference between just renting and renting plus investing.

Just renting a home—without investing—means your money’s unlikely to grow and you can end up paying off someone else’s loan. In this scenario, you may not get ahead.

If you come and chat with us about renting combined with investing, we can show how you can get ahead without having a foot on the property ladder at this stage.

It may turn out that renting is a better choice for you right now. Instead of paying home loan interest charges and the ongoing costs of owning a property, we may be able to set things up so you have some money left over to invest and build wealth in more readily accessible options like super, managed funds or shares for example.

The value of buying

As hard as it can be to get started in the property market, if you do put money into a home loan there can be long-term benefits.

A home loan can help you force yourself to save and build wealth. It all depends on your situation. Generally, as you pay off your home loan you’ll lower the interest charges (providing you have a principal and interest loan, not an interest-only loan) by repaying some of the capital you initially borrowed.

Your house may also increase in value at the same time and eventually be worth more than the amount you owe.

Owning your own home can also give you security and freedom. You could rent out a room to help through the early days of your home loan and paint the walls as you please.

The long and short of it

When it comes to any financial decision, it pays to consider the needs you have right now and your long-term needs and circumstances.

Could renting short term and buying later on be a good strategy for you? Say you plan ahead and rent for a certain period of time. We may be able to create opportunities for you to put extra money in shares with the aim of boosting your deposit for a home loan down the track. Your deposit may build more quickly than in a savings account and you could buy a place more quickly or perhaps borrow less with a bigger deposit.

What’s the best option for me?

The thought of buying a home can be as daunting as it is exciting. Because the upfront costs can be so high, it may be better for you to rent for the short term or even longer. Call us if you’re debating the pros and cons. We can explore the ins and outs of renting and buying and work out how and when property may fit in with your plans.