Q: I live in Perth and have been renting for a few years, and it’s not cheap! My landlord keeps putting my rent up, and with interest rates so low and property prices declining over here, I’m wondering if now is the time to bite the bullet and buy my first home. I have good savings, but am just wondering what the pros and cons would be in moving from renting to owning.
A: Buying a first home is a really exciting step in everyone’s life, but you’re right to consider it thoughtfully.
Australia’s current record low interest rate environment certainly is attractive, and if you have good savings and can afford to make home loan repayments then it’s definitely worth considering.
There are plenty of pros and cons to home ownership versus renting, but it’s your personal circumstances, future plans and goals and financial situation that should really guide your thinking.
Pros and cons to renting versus buying your own home
Renting isn’t always the cheaper option
Renting is generally regarded as a cheaper option than owning your home but that’s not always the case. For example, Aussie’s average loan size in WA last financial year was just under $390,000. Say you have a 20% deposit of $78,000, it means you’ll need to borrow around $312,000. Based on an average interest rate of 4.64% for a 30 year loan term, your fortnightly principal and interest repayments would be approximately $740, or $370 per week.
The latest figures from REIWA show metropolitan Perth’s median weekly rent is $430, so you could even save yourself money by purchasing your own home.
If you decide to buy a property
I believe purchasing a first home is one of the most exciting steps we can take in a lifetime. It may seem like a complex process, especially for first home buyers, however plenty of help and support is available from Aussie Mortgage Brokers, and I believe the result is certainly worthwhile.
A well-chosen property should rise in value over the time while the balance of your home loan will steadily reduce as you make principal payments. It may be hard to imagine it now, but one day your home could be paid off completely and you can enjoy life without a mortgage or paying rent.
If you can’t afford to buy on your own, there may be other options. Can you buy with someone else, like a family member? Or, could your parents guarantee your home loan to help you get an approval?
Do you want to ask John a question? Submit it here and check back each Sunday to see if it’s been answered.
If you found this article useful please share it using the buttons below.