The ongoing debate continues are you better off renting? Or should you buy and own your own home? Let’s take a look at the realities of renting versus owning.
When it comes to renting, one major benefit is having more flexibility about where you live, and how long you live in a particular place. If you have a job which requires you to move, or have not yet decided where to settle down, then it’s often easier to give notice to a landlord, find another rental home in the new location, and move. You don’t have the hassles of having to sell one house and buying another. Remember, even if you decide to rent out the old home, you need to make sure you can afford to meet the payments on two homes, find a suitable tenant, and maintain both properties.
Another advantage of renting is that, depending on where you buy, the rental payments may be less than the equivalent loan repayments you would have to make on the purchase of the equivalent property. As a renter, you also needn’t worry about maintaining the property or paying various rates and taxes.
But despite those advantages, buying your own home has a host of benefits that can’t easily be dismissed.
First of all, when you buy a home you get equity in the property. As you pay off your home loan you get more and more equity. Eventually you’ll have a paid-off home that’s all yours. If you need or want to sell, you’ll get hard cash for that equity. And although property prices may go up and down in the short term, they do increase over the long term. This means that your home will increase in value.
So although you need to make mortgage repayments which may or may not exceed what you’d have to pay in rent ñ as you pay off the principal of the loan, you’ll get more equity in the home. That sure beats paying rent ñ where you NEVER get any equity.
Another huge benefit of buying a home is that the interest you pay on your home is tax deductible. This means that your tax rebates will possibly double when you own a home. And while, as a home owner, you’ll have property taxes to pay, these are also tax deductible. If you rent, you cannot claim a tax deduction on rent!
Apart from the financial considerations, you also have much more freedom with your own home. If you want to make changes and additions to the property, you can. When you rent a property you are limited in terms of what changes you can make and need to get permission when you want to make a change. At the same time, spending money on changes to a rental property is generally a huge waste not only are you putting money into a home that isn’t yours, but you may well end up increasing its rental value… which means you’ll have to pay more rent!
Finally, it should be noted that taking out a home loan and then meeting all your repayments not only helps you get into the property market, but can give you more financial opportunities down the track. As you pay off your mortgage, your credit score will improve, and the better your credit score, the greater your ability to buy investment properties or borrow money for other investments. If you are interested in investing, this shouldn’t be overlooked.
While renting may be practical for some people, it just doesn’t beat owning your own home for either the emotional satisfaction of having a home that’s yours or the overall financial benefits.
