This is a big question that we all have to answer. Now in reality I’m sure most would love to own their own home but depending on situation and area you would like to live for work, family or whichever reason, it’s not always an option. Trying to save enough money for a deposit alone is a big hurdle.
Assuming you have the money for a deposit, you need to decide where to buy. Do you compromise on quality and buy a fixer-upper so you can buy where you want? Or do you buy the house you want in a different suburb and compromise where you live? Depending on your tastes, it may suit you to buy a house to do up, but you still have to remember that you will need the money to do the work and also have to live in the house as is, until you can afford to do it up.
Then there is the type of loan to consider. Do you want all the bells and whistles, mortgage offset accounts, easy access to equity or a simple no frill minimum fuss loan? Loans are complicated and you may want to see a mortgage broker to help you understand what your future repayments will be for the loan you choose. A good broker will also give you repayment costs if interest rates were to go up again. Mortgage brokers do not cost you anything. They are independent of the banks and are paid a small amount for signing you up. All banks do this and the brokers are there to help make sure you get the best deal.
Which brings me to interest rates. Now if they go up your repayment will also go up. But bear in mind, as people sell houses because they can’t afford mortgages, they go into renting, so the rental market gets tighter and your rent goes up. Double edged sword really; interest rates will affect you either way.
You will then have building insurance, land rates, water rates and any maintenance costs on the house to pay throughout the year.
Now the other option here is to rent. The bond up front is much less than a house deposit. But the house is not yours to do with what you want. You will pay as much weekly as you might on a mortgage in that area, you may also be able to afford the house you want in the area you want. There is the risk your lease will not be renewed and that you will have to find another house.
Also depending on work if you move around a lot then buying might not be an option. In the current fluctuating market you should not mortgage yourself too far and the house you buy should be for you, not an investment. There are no guarantees you will sell for a profit.
There are a lot of pros and cons for both. The cost is about the same. There is security in owning the roof over your head and knowing you don’t have to move because your lease is up. On the other hand, if you are renting, it is much easier to move if you have to than trying to sell one house to buy another.
Whichever way you go, you just need to make sure it is the right choice for you in your situation.
Do you own or rent? By choice or by necessity? What do you think of the current housing market?