Most Australians dream to own their own home. The benefits of a mortgage over long-term renting are pretty straight-forward, with ownership of the property usually leading to capital growth in the long run. Rent on the other hand is often referred to as ‘dead money’,with many individuals feeling as though the money could be put towards owning their own home instead.
But when do you know whether it’s the right time to leave renting behind and become a property owner? The financial burden of a mortgage is a common barrier, however understanding the timing of when you should take the leap to become a property owner depends on more than just whether it is affordable.
Before purchasing a home,a number of factors should be researched thoroughly, such as the suburb, the demographic you’re buying into and any future council plans that may affect the suburb or the valuation of your property more broadly. Undertaking research can shed some light on whether a property will offer you benefits that outweigh the high upfront cost.
As property prices have steadily increased over time, some individuals prefer to keep their options open. Therefore, the flexibility and low commitment of a lease are reasons why many Australians prefer long-term renting over a mortgage.
But as property prices continue to soar in major cities, the rental market has become a separate industry altogether, with many individuals wanting to live in areas they love but can’t afford. The convenience of living closer to the city may suit some individuals more than living in outer suburbs or rural areas.
This lifestyle choice may be more expensive in the long run, but ultimately you’re paying for convenience and choosing a suburb you want to live in, as opposed to buy in.At the end of the day, it comes down to each individual and their financial goals and lifestyle choices.
Previously, individuals would only purchase an investment property if they already owned their own residential home but nowadays, we’re seeing more and more individuals purchasing properties that are primarily intended to be used as an investment property, whilst continuing to live in a rental property.
Many Australians have a specific type of house they wish to buy, however they often do not have the funds to fulfill the criteria that they are looking for. As a result they choose to use an investment property as a stepping stone to leverage e the equity for when the time comes to buy a home to reside in.
This may not be of interest to everyone, as you may prefer to rent long-term and save until you can afford your dream home, skipping the route of owning an investment property first.
Any large investment like a mortgage needs a high degree of attention and consideration,but there are encouraging financial circumstances that make it beneficial to purchase a first home as early as possible, as the sooner you’re in the market, the sooner you can begin paying off your own mortgage repayments.
As a renter, you need to be diligent with your financial goal setting, as it will help you in the long run, regardless of whether you wish to buy a property or not. At the end of the day, you should always consider and weigh up all the options available to you,as we have seen individuals thrive from not from making the decision based on their overall lifestyle and long-term goals.
Alain Warisadi is the General Manager of Xynergy Realty