PROS

One day, you’ll own your home
The obvious pro of buying versus renting is that once your mortgage has been paid in full, you’ll have a home that you own. This means you won’t have to consider the cost of renting into your retirement plan. If you plan to sell your home after retirement, there’s the potential that the property has increased in value, and you’ll have more cash to put towards your nest egg.

You can change the home to suit your needs
Even before you pay off your mortgage, the house is still yours to change as you see fit. This means painting, fencing, landscaping and large-scale renovations are up to you. This gives you a certain
amount of flexibility too, if you buy a home in an area you love, but it’s too small, or in need of work, then you can always address these issues down the track.
Whereas when renting, if the home doesn’t fit your needs in the future, you’ll be looking to relocate to another rental property.

Security
There’s definitely a certain amount of security that comes from owning your home versus renting it. For instance, no one is going to tell you need to vacate because they’ve decided to sell the property or move back in themselves. There’s no risk a rental agreement won’t be renewed for any reason, or that certain conditions will change
that may impact your lifestyle.
This security can make it easier to plan for your future and consider things like pets and children without the risk that your living situation may dramatically change through no fault of your own.

CONS

Upfront costs
It depends on your location, but across the globe one thing about home ownership is generally the same, and that’s the requirement of a big lump sum up-front as a down payment or deposit. This means you’ll need a hefty amount of cash just to enter the property market.
There are other initial costs too depending on your country, like taxes, stamp duty, solicitor bills and title fees.

The cost of upkeep
Unlike renting, the costs associated with the upkeep of your home falls to you. Depending on the age and state of your home, location and whether or not you have a free-standing home or apartment/unit will all determine how much you may be spending in maintenance costs over the course of owning your home. It’s best to factor this into your budget before committing to a mortgage.

Your return on investment is not guaranteed
Of course it depends on your area and how this area fairs in the long run, which can be pretty hard to predict without a crystal ball, but the costs of owning your home versus how much of a return you’ll receive if you decide to one day sell might mean you could make a loss at the end of the day.
Other things to factor in here are how long you plan to be in the home, how much work is needed on the property (could you see yourself taking out additional loans to cover things like renovations?), has the area experienced recent growth? What other long-term factors could impact the neighbourhood positively or negatively?

PROS

Cheaper in the short-term
In a lot of areas, the option of renting property is usually going to be cheaper, at least up-front if not week to week, than paying off a mortgage on the same property. Not to mention that in most
countries, the only up-front cost is usually a bond, a relatively small amount of funds kept in a trust in the event the home is damaged or unreasonably worn at the expiry of the lease.
This also means costs associated with owning a home, like land/property taxes, building insurance and maintenance are handled by the landlord.
Another plus is the ability to rent a home in a desirable suburb, close to transport, offices, entertainment and other lifestyle amenities as
a rented home in these areas is usually within most peoples’ budget versus the sale price of a home in the same area.

Flexibility
One of the obvious pros to renting is the flexibility. That’s the flexibility of not being locked into a long-term commitment, as you are with a home you buy. At the end of your lease, you’re free to move, or stay on if it suits. When it comes to selling a property you own, you’re faced with the prospect of selling the home for the price
you need, you’re up for the costs associated with this, and you’re at the mercy of current market conditions.
This kind of flexibility allows you to move jobs, travel or simply change your mind about an area with the opportunity to move relatively quickly.
In some areas, particularly popular ones, you may even be able to break your lease early if the property manager/landlord is able to find a replacement tenant easily, or for a pre-determined fee. In some cases, there are even rental clauses which stipulate acceptable reasons for breaking a lease, such as a job transfer.

Financial stability
When it comes to your monthly expenses as a renter, your budget can be more stable than that of a mortgage holder. Without fluctuating interest rates, taxes, and maintenance costs to worry about, and the cost of rents generally only changing upon renewal of some leases, you can potentially have more financial stability than a home owner.

CONS

The home will never be yours
It’s true that at the end of day, the home you’ve been paying to live in will never be yours, whereas the mortgage repayments of the home owner will mean the home will one day belong solely to them. Whilst renting gives you flexibility, it can also mean that at a time when you’re looking to settle down, you don’t have the stability of a home of your own.

You won’t be able to personalise your home
Things like renovations and home improvements usually can’t be done on your rental property unless negotiated with the homeowner and even then, you might find that some things will be at your expense or will mean that your rent could potentially increase.
It could also mean that things like pets aren’t permitted, and you’re restricted to looking for properties that will allow animals.

So the look and feel of the home will usually not be up to you, and if you’re looking for extras, like air-conditioning or ceiling fans, or features like security screens, your landlord may agree to put these in only if you agree to a higher weekly rent amount.

Renting long-term has its pitfalls
If you decide to rent until retirement, unlike a homeowner who very well may have paid off their mortgage and will now have no ongoing loan repayments to make, you will need to be able to afford rent even after you leave the workforce.
Depending on your other investments, and how well you’ve saved for retirement, it may be feasible to continue renting for life. But if you’re unable to continue renting in your area during your retirement years, you may only be left with the option of relocating to a less desirable area or a far more modest home.

Budget
Create a budget to determine what you can realistically afford to spend on mortgage repayments. Your budget should include all
your regular outgoing expenses along with estimates for the cost of ownership of a home (insurance, rates, interest on your mortgage,
applicable body corporate charges and maintenance for your home).
These costs will vary depending on where you live and the type of home you wish to buy.

Mortgage Calculator
Once you’ve worked out your budget, you can use a home loan repayment calculator to get an idea of what your mortgage repayments would be. It’s probably a higher figure than you are used to paying in rent but the benefit is that instead of being an expense, your mortgage repayment is paying off a capital investment.
If you’re happy that you can afford to pay this amount each month, then you can start looking at financing.

Pre-approved Finance

Approach lenders to get finance pre-approval so that you know what price range you can look at for your new home. Given your income and financial commitments, banks will provide a pre-approved amount (to which terms apply) beyond which they would not lend.
This gives you a ceiling for the maximum you can spend on buying your first home.

Mortgage advisors
Mortgage advisors or brokers can help you find the best deal from lenders. Remember, mortgage advisors’ fees are paid for by the lender, not you.
A Mortgage Express mortgage advisor has the knowledge and expertise to find the best option to suit your individual needs. A home is one of the most significant investment decisions you will
make and we’re here to make sure that you know the different ways you can structure your loan and what the different lenders will offer you.

Financing your home
If you already own a property, depending on its value you may be able to use the equity in your current home to help secure financing for the purchase of your new property. Talk to your mortgage advisor about the options available to you.

THE DWELLING’S STRUCTURE

When inspecting a property, chances are the current owners are going to present the interior of the property in the best possible light. They will have cleaned and tidied, perhaps added a new
coat of paint, or even had the home styled with beautiful furniture. Whilst these things will help you to appreciate what the home could look like for you, at this stage, it’s more important to focus on the dwelling’s structure.

Some things to look for include:

• Damage from pests. Recent termite damage in wooden structures is a huge red flag. Have a look for bores through wooden frames, or dirt tubes in the foundation or exterior walls that hint to termite infestation.
• Poor construction. Windows and doors that jar, or cracks in the walls around doors and windows are both signs of poor construction.
• Wet spots on walls or ceilings. Condensation within the home can lead to mould build-up, timber decay, leaks, corrosion and even loss of structural integrity.
• Cracks in the foundation. Some small cracks in a home’s foundation can be harmless, but large cracks either running down the foundation or across could mean a home is shifting, which can cause significant structural damage over time.

If you’re not entirely sure if what you’re seeing is cause for concern, and you are interested in the property, the best course of action is to enlist the services of a qualified building inspector.

THE NEIGHBOURS

If you’ve got to the stage where you’re inspecting the property, then you probably know a bit about the neighbourhood you’re looking in, but what about the neighbours? Take a look at the neighbours on each adjoining border of the property for any clues you might not be comfortable long term.

• Are the neighbours’ yards neat and tidy? It might not directly impact on the property you’re considering, but what about when it comes time to sell the property? Would untidy yards next to yours reflect poorly on the area?
• Do they have pets? It might not be an issue, particularly if you have pets of your own. But look for problem pets. Is a neighbour’s dog barking non-stop during the inspection? Are animals loose or roaming? Is there evidence of pet damage to shared fences or common areas?
• Do you have a comfortable level of privacy? Take a look at different angles around the home, particularly on smaller blocks or apartments. Are you too close to neighbours? Can you easily hear them through the walls? Are certain windows placed directly opposite a neighbour’s window? Is the property fenced off from neighbours?