Buying Property vs Renting Property
Many renters considering switching from a lease agreement to a mortgage can find it difficult to fully asses which path is more beneficial. According to leading mortgage broker, Loan Market there are some easy steps available for anyone weighing up their options.
Loan Market Corporate Spokesperson Paul Smith said that while some public data could be used to justify both sides of the argument, at the end of the day a borrower needs to consider their own personal circumstances and financial goals to determine if they’d be better off owning or renting.
“If you’re looking at purchasing a property, you should research similar properties in the area and see what type of rental payments are being asked for. You should then work out exactly what your mortgage repayments would be after establishing your home loan,” Mr Smith said.
Mr Smith said that when comparing rental and mortgage repayments, it is crucial to evaluate the property from both a renter and home owner perspective taking the different calculations and costs that need to be factored in for each.
“There are advantages to being both a renter and a home owner and those benefits should align to your own financial goals. With so many factors influencing buyers’ repayments, it takes some investigation to determine if you’re better off renting or buying.”
Top Six Tips for Renters Considering Purchasing
1) Create an educated estimation of rental repayments of the properties you’re interested in
2) Calculate inflation of both rent and property value based on current inflation rates, not targeted ranges
3) The interest rate on your property won’t stay at its initial rate through the course of the loan. Make sure you determine exactly how much future rate rises and falls will impact you
4) Choose your loan term wisely, longer terms will lower your repayments may cost you more in interest
5) Your home loan deposit has a substantial impact on several factors influencing how much interest you will pay over the course of your loans. Look at how your repayment levels are adjusted if you have a bigger deposit
6) Determine the water, council and strata fees for different types of properties.