The great Australian dream…..owing your own home. For most people owning a home is part of their dream for the future. For some of these people that make it a reality – know how to pay down their mortgage in less than 30 years, and some need a little guidance. But there are still the few that think it’s out of their financial reach – they put a mortgage in the “too hard” basket or don’t understand the financial difference in paying your own mortgage as apposed to paying off someone else’s. Below we look at the major differences in Renting V’s Buying.
So lets look at RENTING….
We all have to start somewhere right? Not many of us are able to come out of school/university and buy their first home (plus who has the 5-10% deposit at this age?). So we rent, pay someone else’s mortgage and save a deposit. But have you ever thought about how much rent you have paid in the last 3/5/10 years and how much of that could have been off your own mortgage? Recently a friend and I had a chat about this and the estimated amount that they have paid in the last 10 years in rent at about $400 a week is $208,000! Yep that’s right, sounds like a lot!? Wouldn’t you be happier knowing that came off your own mortgage and not someone else’s? In most cases the cost of a mortgage per week is similar to the cost of renting. You also need to think of the better financial position you will be in if this came off YOUR mortgage…..maybe you could use the equity to go on a big family holiday to Disneyland,buy a new car or start building your property portfolio to help with cash flow/retirement and buy an investment property. But with renting someone else’s home you don’t have this flexibility. Keep in mind also the restrictions with renting…. if you want to make any changes to the home or yard you need the owners approval first and then it’s even more wasted money. Then again if there are major repairs or renovations that need doing, this falls on the landlord and not you.
In Comparison to OWNING….
I certainly knew the feeling after I bought my first home….wow! It feels great! Your own place that you can do what you like with it, you want to paint walls – you can! You want to put in a pool – you can? Change gardens, add in extras – you can! Yes there is the $$$ aspect to it but the benefits can outweigh your financial concerns. With the right help of a mortgage broker they can make sure you have the best home loan option suitable to your situation not just now, but for the life of the loan. If you want to change some things in your home in a few years time, you get your mortgage re-assessed by your broker to make sure you have the best loan at the time and if you have enough equity you can draw this out and use it to your advantage. Paying the renovations/holiday/new car at home loan rates and not the high personal loan rates can also save you on interest payments!
If you are unsure what is best for you or you want to find out more about renting v’s buying give me a call anytime and I can help you get to where you need to be and show you how you can pay off that dream home sooner.