How to decide between renting and buying
Category 3%.Com Properties
In the past year, many people have realised that it is becoming more and more viable to switch from buying to renting and (for some) to switch from owning to renting. With rates for bonds on properties being more affordable under current market conditions, the gap between the cost of renting and purchasing has narrowed. Here are some questions to help you decide which is better for you:
Can you afford a bond?
Unless you have the capital to buy a home outright, you will need a bond to finance your property purchase. If you can afford a bond on the property you want to purchase, you're off to a good start. If not, you might need to keep renting for a while longer. To see what bond you could qualify for, use our free calculator (available here).
Can you put down a deposit?
While there are banks that have been approving 100% property bonds, being able to put down a deposit on your home will drastically relieve the weight of monthly payments and interest payable on your property over the years. A 10-20% deposit can make a noticeable difference.
Can you afford the upfront costs?
There are more costs to consider than merely your bond repayment. This will include things like transfer fees, transfer duty, bond registration costs, attorney fees, etc. Make sure you are able to afford all the costs involved.
Have you considered the monthly costs related to your property?
As soon as you purchase a home, you will need to pay monthly fees called rates and taxes (or levies if you purchase sectional title property). Depending on location, these monthly expenses can make a big difference to your budget. These costs are often not payable by renters, and thus the real difference is more than just the discrepancy between the rental cost and the bond repayment.
Do you plan to live in one place for long?
Selling a home comes at a price. The sale of a property is subject to 3-7% commission on average. With average house price growth at around 2-3% under current conditions, it could take a few years to make up the deficit, which means that you will lose on your investment if you move too soon.
Do you care about renovating?
Renters simply do not enjoy as many freedoms as homeowners do - which means that if you truly want to go all out in customising your living space, you might want to switch from renting to buying.
Can you deal with maintenance?
Renters often rely on the landlord to fix problems that occur with normal wear and tear. But owning a home puts ad-hoc maintenance costs on you. This is just another aspect to consider before buying.
Do you want to continue feeding someone else's pockets?
At the end of the day, nothing beats having a place to call your own. Property ownership puts you in possession of a real asset that has value and not just a monthly expense to cover. In the long run, buying is much better for your wealth and estate than renting.
3%.Com Properties - We Know Property and the Law®
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Can you afford a bond?
Unless you have the capital to buy a home outright, you will need a bond to finance your property purchase. If you can afford a bond on the property you want to purchase, you're off to a good start. If not, you might need to keep renting for a while longer. To see what bond you could qualify for, use our free calculator (available here).
Can you put down a deposit?
While there are banks that have been approving 100% property bonds, being able to put down a deposit on your home will drastically relieve the weight of monthly payments and interest payable on your property over the years. A 10-20% deposit can make a noticeable difference.
Can you afford the upfront costs?
There are more costs to consider than merely your bond repayment. This will include things like transfer fees, transfer duty, bond registration costs, attorney fees, etc. Make sure you are able to afford all the costs involved.
Have you considered the monthly costs related to your property?
As soon as you purchase a home, you will need to pay monthly fees called rates and taxes (or levies if you purchase sectional title property). Depending on location, these monthly expenses can make a big difference to your budget. These costs are often not payable by renters, and thus the real difference is more than just the discrepancy between the rental cost and the bond repayment.
Do you plan to live in one place for long?
Selling a home comes at a price. The sale of a property is subject to 3-7% commission on average. With average house price growth at around 2-3% under current conditions, it could take a few years to make up the deficit, which means that you will lose on your investment if you move too soon.
Do you care about renovating?
Renters simply do not enjoy as many freedoms as homeowners do - which means that if you truly want to go all out in customising your living space, you might want to switch from renting to buying.
Can you deal with maintenance?
Renters often rely on the landlord to fix problems that occur with normal wear and tear. But owning a home puts ad-hoc maintenance costs on you. This is just another aspect to consider before buying.
Do you want to continue feeding someone else's pockets?
At the end of the day, nothing beats having a place to call your own. Property ownership puts you in possession of a real asset that has value and not just a monthly expense to cover. In the long run, buying is much better for your wealth and estate than renting.
3%.Com Properties - We Know Property and the Law®
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Author: 3%.Com Properties