Home-ownership has always been a life goal for most Australians. In recent years, with property prices soaring, many hopeful first home-owners are wondering if they should take the plunge into the property market.
It’s important to carefully assess your circumstances in order to make a good decision whether to rent or to buy. Here’s a checklist of questions you should ask yourself before you come to a sound decision.
Reason for buying
What is your main motivation for buying a house? Are you looking to move in temporarily and sell later, or staying for the long haul? There’re definitely different criteria for owning a home as opposed to owning an investment property. Select the appropriate criteria based on what you plan to do.
Owning your own home comes with significant responsibilities are require lots of time investment. Are you ready to put in the work to maintain every aspect of the house? If the answer is no, then it may be better to rent and let your land lord take care of the roof repairs, the leaking tap or the irritating plumbing issue.
We’ve established that home ownership means extra responsibilities. So have you got a realistic budget in place? You’ll have to factor in your mortgage repayments, utilities, home maintenance, council fees, strata fees, insurance amongst other things. Most people under-estimate the costs involved in home ownership. Make sure you have the complete picture and be fully prepared!
Can you rent for cheaper?
After factoring all of the benefits and the costs of home ownership, then make an objective comparison between buying and renting similar properties in a similar area. Most likely owning a property will cost more, but consider if the benefit outweighs the cost. Does owning a property give you an extra sense of security? You’ll have to factor in both the financial aspect and the emotional aspect in order to make a good comparison.
What kind of loan can you get?
Based on your financial situation, there are various loans you can obtain – all with different loan terms. Consider things like fixed rate, variable rate, interest only or interest and principle. Getting the appropriate loan is more than just checking for the lowest possible rate. Shop around to make sure a suitable loan is available for you before you start your property inspections.
Have you done sufficient research?
Researching the property market is more than just turning up to inspections. Many people neglect to do adequate research on the property market itself. Consider the interest rate, research the location, local property trends and buyer/seller sentiments. House price movements are determined by the aforementioned factors. Merely buying a property is not a ticket to wealth, there are many factors and circumstances at play.
Your career trajectory
One of the biggest factors for deciding whether to buy property is your income. It therefore makes sense to consider your career and whether you have enough income and savings to get the right loan, then get the right property to suit your needs. Your income will determine what kind of property you can service, so perhaps making sure your career is on track is the basis upon whether you decide to rent or buy.
As you can see, deciding whether to buy a property involves a combination of financial and emotional considerations. Financially, it’s important to ensure that you have the means and the discipline to take on the responsibilities of home ownership. Emotionally, home ownership must give you a sense of security and pride. Once you’re ready, then it’s time to take the plunge.