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Renting vs Buying - Which is Best?

The question of whether to buy a house or to rent it has always been a hot-button topic, with a lot of debate from both sides. And with the current economic climate and the rising costs of owning a home, it really is an important decision that could end up impacting how you live now and into the future. So rather than give a definitive answer either way (that of course would be impossible, as personal circumstances are always huge factors with these issues) instead we will list the pros and cons of each.

The Case For Renting

Renting is seen as something of an intermediary step to owning - at least in Australia. Owning your own home is something that ties in closely with our national identity (this concept even has it's own name, The Australian Dream). Nevertheless, renting can be a viable alternative, especially during these times.

Pros

  • Typically you will be able to afford to rent nicer places than you can buy - so if you want to live in that apartment in the city but can't afford to actually buy it, renting is definitely a good option.
  • Relatively static fixed costs, which is great for planning budgets and savings
  • Broken sink or toilet? Let the owner deal with it
  • Rent going up? Just move out

Cons

  • You are more likely to have to move more frequently than a home owner - and nobody likes moving
  • All that money you're paying is going straight into a landlords pocket, instead of building equity
  • Evictions - those are never fun

The Case For Buying

Owning your own home is still seen in Australia as an aspiration and goal - securing your financial future and building a nest egg for your retirement. While it may be a little harder to achieve these days, it is still worth going after, and there are always good deals to be had.

Pros

  • Your mortgage repayments will gradually become smaller and smaller - one day you'll be paying for nothing but household bills and maintenance
  • Home renovations/modifications are within your control
  • Greater sense of security
  • Numerous tax benefits

Cons

  • Saving for a big enough deposit can take a while
  • Broken sinks and toilets are your responsibility
  • Higher costs (initially at least)

While there are some other considerations to be made, the one thing that everybody seems to come back to is cost. And while it may be more expensive initially (finding more affordable home loans will obviously lessen this) owning your own home will eventually be the best option, which is why most people will eventually look to home ownership.

*Disclaimer:The advice in this article is of a general nature only. Seek the help of a professional advisor before making any financial decisions.

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