Should you rent or buy your own home?

As a homeowner, your mortgage repayments might be higher than your rent, and yes, a home loan is a long term commitment. But in many ways, repaying a loan is a form of forced saving.

Renting vs. buying

When renting, you can live where you want, and you don’t need a huge deposit. But when you buy, it's your asset which has the potential to grow in value. You’re not just paying for a roof over your head, you’re building equity in an asset that is likely to grow in value over the years.

Watch this video to find out more.

Could it be cheaper to rent than buy?

According to ABS Data, the average loan size for all owner occupied housing commitments is: $357,2001.

The average standard variable rate of our lender panel is currently 4.93%. As such, the average weekly mortgage repayments are: $439. According to RP Data, the average median rent is: $3762.

According to these statistics, repaying a mortgage costs about the same as the average national rent – the only difference being once you have paid off the mortgage, the property is yours.

Renting versus buying - pros and cons

The pros of renting
  • Allows you to live where you want
  • You don’t need a huge deposit to start renting
  • You can move as often as you like/need
  • You don’t have to pay for maintenance/repairs
The cons of renting
  • You’re spending money on something that isn’t yours
  • With low vacancy rates, you can face stiff competition
  • In a competitive market, landlords are able to increase rent as they wish
  • There’s no certainty around rental payments

The pros of buying
  • You spend money on an asset that grows in value over time
  • A property is a lucrative asset - values climbed 2.4% in the 12 months to June 2016 across the combined capital cities3
  • Owning a home puts you in a good financial position for the future
  • You are able to make repairs, alterations to the property and truly make it your own
  • Interest rates are at historical lows
  • Australia’s lenders are aggressively competing for business – they want to finance your property dreams at a good interest rate
The cons of buying
  • You're spending money on something that isn’t yours
  • Purchasing the property isn't the only expense - consider maintenance fees, bills & repairs
  • With property values surging, you may be forced to buy where you can afford and not ideally where you’d like to live
  • Costs associated with buying a property can be significant – Lenders Mortgage Insurance, solicitor’s fees, conveyancing fees, pest and building inspections
  • Buying a property requires a significant deposit, which may take years and considerable sacrifices

1Data from ABS Housing Finance Data – Feb 2016
2Data taken from RP Data’s Quarterly Rental Report – June 2016
3Source CoreLogic RP Data

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Get all the information you need when it comes to buying your first home