Renting vs Buying
Reduced interest rates, softer property prices and a range of government incentives makes the dream of home ownership still an attractive and achievable proposition for most Australians, according to leading mortgage broker Loan Market.
Loan Market Sunshine Coast finance broker Dominic Polifrone said despite continuing global economic uncertainty, the conditions for those looking to enter the property market in recent years have remained ideal.
“Overall, it’s far more advantageous to be paying off your own home than someone else’s,” he said.
“Approximately 70 per cent of Australians are owner-occupiers. Paying off a mortgage is usually more beneficial and affordable than continuing to hand over large amounts of money to rent a property.
“Over time you will develop equity in the property from your home rising in value and the mortgage debt being reduced.”
Mr Polifrone said those who argue in favour of renting point to benefits such as freeing up cash flow and allowing for more flexibility in moving for work or other lifestyle changes.
“Those advantages only exist if you actually use them and also invest elsewhere,” he said.
Mr Polifrone said interest rates were still at near historical lows and even fixed rate products currently being offered by lenders were highly competitive.
He said the key to entering the property market was ensuring you had a sufficient deposit – normally a five per cent minimum - and a solid credit history.
“The federal government has a $7,000 grant to assist first time buyers of established homes while there are even greater incentives being offered by state and territory governments for those purchasing new properties,” he said.
Mr Polifrone said some lenders also recognised rent as genuine savings for a home loan deposit.
“A few lenders will accept rent as a form of savings for a home deposit if there is evidence of a minimum of 12 months’ continuous, satisfactory rental history and the property is leased through a licensed property manager,” he said.
Mr Polifrone said the federal government’s $1.2 billion First Home Saver Account (FHSA) was another scheme designed to help those looking to enter the property market.
Under the FHSA, the government contributes 17 per cent on the first $5500 of individual contributions made each year.
“Account holders are required to keep savings in the FHSA for four financial years before they can use the funds to buy a home,” Mr Polifrone said.
Mr Polifrone said a mortgage broker was best placed to assist first home buyers navigate their way towards the great Australian dream of property ownership.
“A mortgage broker can offer advice on the most suitable home loan products and deal with all the paperwork and other issues,” he said.
For further information: Dominic Polifrone Mb: 0403 304 449