Safety and Security or Freedom and Flexibility - what's the vision for your life and your future?

To Rent or To Buy – that is the question!

People buy homes because it’s important for them to have a place to put down roots. Home ownership gives them not only a sense of achievement but a sense that they are providing well for their family, giving them a safe and stable environment. People also see home ownership as an investment that can grow and create equity for their future.

On the other hand, people who choose to rent often do so for the flexibility and minimal responsibility it offers. Renting allows the freedom to move cities, states and even countries if and when required. Renters also have the flexibility to amass a large net worth by spreading their funds out over different types of investments instead of their money being tied up in one single purchase.

You need to consider the pros and cons of each to figure out whether renting or owning your own home is best for you.

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Owning

·       Homeownership brings stability, belonging and pride of ownership.

·       It can be a way to build wealth, especially if you make your purchase wisely and in an area that is likely to see growth.

·       You have complete flexibility in what you can do to your house, where you can hang your pictures, what sort of a garden you can develop and whether you can keep a pet or two or three.

·       A mortgage is a form of enforced savings, making better use of your money by putting it into your mortgage rather than spending it.

·       Your mortgage is paying off your property, not your landlord’s.

·       It is a considerable asset to help build your wealth and your investment is likely to grow in the long term.

Renting

·       You can move without penalty each time your lease comes to an end, however, you could also have to move suddenly if your landlord decides to sell the property.

·       Your rent will more than likely increase at the end of each lease period so you may be better off taking a longer lease if possible.

·       You know exactly how much you will spend each month on housing and are not responsible for the ongoing maintenance and repairs of owning a property.

·       If you travel frequently, like having your evenings and weekends to do as you please, and don’t want the commitment of needing to take care of and constantly maintain a property then perhaps renting is the right decision for you.

Be very aware of the fact that in the longer term and when facing retirement, you will need a substantial amount of money to maintain renting as a pensioner and it’s a lot harder to move frequently when you’re 70 as opposed to when you are 30.

Financial experts say it is possible, although challenging, for lifelong renters to comfortably cross the finish line into retirement.

At the end of the day, it is not an easy decision to rent or own a home and the option that is best for you isn’t just about money. You also need to consider the vision for your life and your future. Ultimately, the decision to rent or to own is not just financial, it’s also emotional. 

If you are looking at purchasing your first home, my question for you today is

 “are you home loan ready”?

To be ready for a successful finance application you will need to ensure you consider the following 5 things:

1.       If you have a credit card you are not using, cancel the account. The reason you should cancel your account is because, even if you are not using your credit card, but you have a $7000 limit on it, the lender will see this as you having a $7000 debt.

2.       Avoid any out of the ordinary expenses during the 6 months leading up to your finance application – this can include things like Netflix, Uber Eats, and any purchases the bank may deem as frivolous.

3.       Show genuine savings over a 6-month period and at least 5% of the purchase price of the property you wish to buy. 

4.       Start to live as though you already have that loan. Factor into your budgeting your current living expenses and commitments, as well as the new mortgage (based on 6% to cover interest rate rises), rates and water charges and ongoing house maintenance costs.

5.       Consider very seriously putting a Spending Plan in place. This will give you, not just a 12-month picture of your finances in advance, but also a 10-year forward projection, which will allow you to plan for your ideal lifestyle, and also show your lender that you are more than capable of taking on the responsibility of a home loan, giving you the very best chance of a successful loan application.

If you would like to have a chat about your own situation and the best way to achieve  home ownership, eliminate debt, stop living pay to pay, and reach your goals and  dreams, please book your FREE Money Success Breakthrough Call by going to www.moneysuccess.com.au and have a chat with either Kellie or myself.

We are here to help and absolutely passionate about giving people the opportunity to take charge of their own destiny.

Carolyn