Despite home ownership being highly regarded by Australians, the lack of suitable financing leaves many Aussies no choice but to rent a home.
Real estate expert and author George Astudillo explained that if your deposit and access to finance is limited then you might not be able to afford the property you find suitable to live in.
However, there are certain advantages to buying your own home. Gavin Fernando from Prosperity Advisers said that the key tax advantage of purchasing a home versus any other type of investment is the exemption of your main residence from capital gains tax.
Fernando also explained that a homeowner has the option to improve his property for either a lifestyle or an investment move or both. Renters can only do so with the permission of the landlord and improvements will also only benefit the landlord.
Another option is “rentvesting,” where one remains a tenant, while also buying a property within the budget that can then be rented out.
Fernando explained that renting is also a good choice for a potential buyer who wants to try a property first before purchasing in a particular area. Renting is an opportunity to experience the place without the long-term commitment. Renters also have no investment risk because property values do not affect the tenant.
It is also easier to enter and exit a lease than it is to buy and sell, according to Astudillo. “The 'neighbour from hell' moves in next door, move… Want to travel the world, put your things in storage and terminate your lease? Move,” he advised.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan