Renting Versus Buying Property

When it comes to making the decision of renting versus buying property there are some things that you should take into consideration.

To determine whether you will be better off buying or renting will depend on a number of factors such as your affordability, the price to rent and more. However, if you can afford to purchase a property, it may be worth your while considering both options.

For instance, RateCity compared the difference between the average rental prices with the average mortgage repayments based on five capital cities (Sydney, Melbourne, Perth, Adelaide and Brisbane) in Australia, and based them on the average standard variable rate of 7.05 percent for a 25-year loan term.

The results showed that the national average to rent a house at July 2010 was $1,520 per month. While the average mortgage repayments were $1,991 per month, showing that it was cheaper to rent by $471 each month.

While some instances, such as the example above, it may be cheaper to rent you should also consider that if you bought a house, would you be better off if it increased in value?

For instance, if the price of your home increased by 10 percent over the next five years and your house was valued at $500,000 it would be worth $550,000. Based on the national average figures above, you would have paid $119,460 in mortgage repayments compared to if you were renting you would have spent $91,200 if rents don't rise. That means you would have made about $28,000 in five years by choosing a home loan over renting.

The important thing to remember is that the money spent towards paying off your mortgage is actually paying down a debt. So each repayment is one step closer to owning your own home. When you rent, you are paying off someone else's mortgage and the only person who has something to show for it is your landlord.

At the end of the day there are positives and negatives when it comes to renting versus buying property. There are also additional costs that you need to factor in when buying property such as maintenance, stamp duty, and lenders mortgage insurance. If you think buying a home is the right choice for you, compare home loans online to find a loan with a lower interest rate to keep your repayments down or pick one of the variable home loans from the table below.