Making the leap into the property market can be a daunting decision, but the benefits of buying are many.
Here are just a few reasons why you should stop renting and start looking for your first home.
Buying or building a home has long been a major component of living the ‘Australian Dream’, but jumping into the property market is no easy decision. Buying a home comes with major financial responsibilities, but it often pays off in the long term. If you’re thinking about making the leap, here are five reasons why buying is better than renting.
If you’re currently renting, you know how frustrating it can be to always be at the mercy of a landlord. Renters have very little say in how long they can occupy a property outside of a lease agreement.
With the end of each lease comes the possibility of rent increases or complete termination of your tenancy. This can mean paying higher rent prices, finding something cheaper or being forced to find a new place in a competitive market. It’s probably safe to say you’ve had more than one address in the last two or three years.
Buying a home comes with stability. Not only do you get a permanent address for the foreseeable future, but you will also have some control over your mortgage. Fixed rate loans come with relative stability and the opportunity to budget for repayments. You can also choose a variable rate loan, which can mean more fluctuation in your repayments but the opportunity to pay less interest.
You don’t have to ask for permission
Because renting means you’re occupying someone else’s property, making any changes often involves a long process of asking for permission. Even if a room is in bad need of a fresh coat of paint, the property owner gets final say. And oftentimes the answer is no because renovations can be costly — in time and money.
Buying your own property means you get to make all the decisions about your home. If you want to repaint a room, you can. If you want to plant a new garden, you can. If you want to knock down a wall and create a new open plan layout, you can!
You will have the freedom to create a home that perfectly reflects your own personal style without having to check with a landlord or property manager first.
Helps you build your wealth
Renting can be a cheaper living option, particularly in highly competitive property markets. However, paying your rent doesn’t help your bottom line. You’re putting your money toward someone else’s mortgage or income stream.
If you buy a home, you’re making an investment that will help you build your future wealth. Most homes continue to appreciate in value, which means they’re worth more money as time goes on. As you pay your mortgage repayment, you’re investing in your future wealth, securing an asset that you may be able to sell in the future for more money than you paid.
Even if you decide to move into a new home, you have the option of keeping your existing home and using it as an investment property. This can mean renting it out to someone else. You can use the rent toward your mortgage or as added income. Of course, you can also sell it and out the profit toward a new home, savings or anything else you may want to buy.
First home buyer grants and benefits
You’ve probably heard of all the different grants and schemes available from the Australian government that aim to help first time buyers into the property market. These vary from state to state, but they can be a real boost if you’re looking to buy a home. For example, first home buyers in Queensland may be eligible for a one off payment of $15,000. Those looking to buy in New South Wales can get up to $10,000.
It’s well worth doing your research to see what’s available to you because you may be able to get on the property ladder sooner than you thought.
You can use the equity
Buying a home helps you build equity. This is something that renting just doesn’t offer.
If you’re not sure what we’re talking about, it’s pretty simple. Equity is the difference between the market value of your home vs the amount of money you owe your lender on your mortgage. In other words, it’s the money you would receive if you were to sell your property.
Building equity is a good thing because you can use it to invest in other properties without having to sell your home. For example, if you have $100,000 in equity on your existing home, you can use this as a downpayment on an investment property. You may even be able to access better loan terms because the loan is leveraged against a real property.
Equity makes it easier to build a property portfolio and your wealth that will see you well into retirement.