Which option is right for you – to rent or buy?

To rent or buy? For some, renting makes good financial sense. For others, it’s just money down the drain. For you it may be a question of short-term convenience versus long-term financial growth, which can make it a difficult decision to make. In this article, we break down the pros and cons of renting and buying, putting it into simple terms. We also let you in on a little secret – how to get the best of both worlds! Remember, your mortgage broker is a great source of support and information – if you need help to decide which option is right for you, then please get in touch.

Pros of renting

You can live wherever you want
Career and lifestyle are important considerations, whether you’re single or a family. Renting a place in a suburb or location that is close to your work, friends and ideal lifestyle amenities (like schools or shopping) can often be much more affordable than buying there.

Flexibility
If your work or lifestyle require you to be ready to up stumps and move at short notice, then renting gives you greater flexibility and mobility. Or if your situation changes and you find you need less expensive digs, you can quickly find a rental that fits your new budget.

Lower costs and less hassle
Renting is usually cheaper than buying and you won’t have to worry about ongoing expenses like rates, body corporate fees, maintenance, repairs and building insurance.

Cons of renting

The ‘dead money’ argument
Have you ever heard the phrase ‘rent money is dead money’? Many argue it’s much better to pay off your own home loan than someone else’s. It’s certainly true that capital gains on a property can potentially grow your wealth, and you can look forward to living ‘mortgage free’ within 25 – 30 years.

Restrictions
Common complaints from renters include living with the landlord’s décor, not being able to put hooks in walls, restrictions on pets, or even the number of people who live with you.

Uncertainty
Rental properties don’t offer long-term certainty. Moving can be expensive and you’re vulnerable whenever the lease ends or the landlord decides to renovate or move back in.

Inspections
Most rental properties require you to submit to inspections by the landlord or agent every six months. These can be stressful and inconvenient.

What the statistics say

* Based on the 2016 census

  • Percentage of Australians renting: 30.9%
  • Percentage of Australians who own their home outright: 31%
  • Percentage of Australians paying off their home: 34.5%

Pros of buying

Freedom to do what you like with the property
Buying your own property means you have the freedom to do whatever you want with it. You can decorate any way you like, and add value by renovating.

Capital gains and wealth-building opportunities
You’ll own an asset eventually, and while you’re paying it off the property could potentially increase in value. What’s more, you may be able to use the equity in your home to build wealth through property or other investments.

Certainty
You’ll have the security and certainty of knowing where you’ll be living for years to come. You’ll also obtain a degree of financial certainty – because you’ll own a substantial asset.

Cons of buying

Affordability constraints and costs
High housing prices and low wages growth have made buying difficult for some people. However, there are incentives available like the First Home Owner Grant to help you get started. Ask us if you’d like to know more.

Added responsibility
Becoming a home owner means you’ll have new financial responsibilities (such as paying your mortgage repayments and bills in a timely manner).

You may not be able to afford to buy where you want to live
As a home buyer, you may have to compromise on location or property type to find a property that suits your budget at first. However, once you get a foot on the property ladder, the potential capital gains could help to make your next property purchase more ideal.

Have you considered rentvesting?

Just because you want to live close to the action doesn’t mean you have to forfeit your dream of owning property. Rentvesting is a strategy that allows you to live where you want and buy an affordable investment property elsewhere! You could potentially get a foot on the property ladder now, enjoy the benefits of capital growth and having a tenant to help you to pay the mortgage, but still live wherever you like.

Talk to us about what’s right for you

Whether to rent or buy comes down to your personal situation and goals. If you’ re considering buying, then talk to us and we’ll help you decide what’s right for you. Keep in mind that even if you don’t have a 20% deposit saved, there may be other ways to get you over the finish line to buy a home or kick off your rentvesting strategy. We’re happy to explain everything you need to know, so please get in touch today!


This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.  Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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Ben Judd

Ben Judd

Ben has made finance his life and has more than fifteen years experience in the banking and finance industry. Spending nearly a decade working for two massive Australian retail banks, Ben mastered the intricacies of the loan process from every conceivable angle. This insight proved a solid foundation before his move to mortgage broking in 2006. Ben has a superior level of product, loan structuring and general industry knowledge. This knowledge and Ben’s enthusiasm for tracking down the right product for his clients, guarantees complete satisfaction.

25th June 2018

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Ben Judd

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