So the Reserve Bank Board met on Tuesday 5 July and, drumroll please, official interest rates remain on hold at ??%. Great news for those looking to buy, however is this a big enough push for those on the fence? Let’s look at the common factors and myths affecting one of the most asked questions in the real estate world? Is it better to Rent or Buy? There are several factors contributing however I shall be focusing on three.
Lets take the first factor, most often the most critical…money. ‘It’s cheaper to rent than it is to buy!’ Who said that? Let’s take a quick example and have a look. The median rent at the moment in Applecross at the moment is $400 per week and the median house price is $1,460,000. At the current bank rate of 2% with a 20% deposit then the repayments for a 30 years mortgage at this level would be $996 per week. So yes, in Applecross, it is cheaper to rent than to buy. However in Orelia where the average house price is $230,000 the weekly repayments would be $188 per week whereas the median rent is $230 per week. Obviously the level of deposit would be considerably different but that wasn’t the question. So if you want to buy in Applecross, don’t it’s cheaper to rent.
Now for the second factor. Maintaining a property is easier when you rent. The more correct and definitive assumption is that maintenance of the property is the responsibility of the owner, not the tenant. The problem is that it was not the responsibility of the tenant before you, or before them, of before them. In some instances a property is only well maintained if it is looked after by the occupant. When renting it is not always easy to get a full history of the property therefore there can be some underlying issues which are not easily identifiable. You might not have to pay out for the maintenance issues, and it will be more convenient, however you may have to be patient whilst some investigations on issues take place. You will also have little say in the resolution to these issues. Maintenance is maintenance, fashionable maintenance doesn’t exist just yet.
The final issues I’d like to focus on is flexibility of living situation, bit of a mouthful. Many reasons people prefer to buy is because they want some stability. In reality it is quite easy to have a long term rental. There are many landlords who would relish having a long term tenant, particularly in a situation where the market has been unpredictable. (Where does that ring a bell?). On the other side when you purchase a property then you are tied down. Of course you are not able to give notice in the way you are with renting however you do not have to remain in your property for the length of your mortgage. A home can be a stepping stone on the property ladder plus any appreciation in the property eliminates the need for some dreaded savings.
Whether you wish to rent, or buy (yes we are able to offer some assistance here) call Rentwest Solutions today or Custom Finance Solutions to see if you are eligible to buy.