In a recent survey performed by the Australian Bureau of Statistics, 32% of Australians were paying rent to live in their home as opposed to paying a mortgage on a property.
Here we take a closer look at this and explore why so many Aussies are choosing to do this, the benefits of doing so, and the shifting attitude toward the age-old saying ‘rent = dead money’.
Take advantage of the benefits
Let’s take away the obvious ones (the price of a mortgage, confusing rates, and the rigmarole that is the associated costs). Here we’ll take a deep dive into the pros, listing the key benefits as opposed to buying.
- Maintenance and repairs: You won’t be responsible for home maintenance or repair costs. If a toilet clogs, pipe bursts, or the roof starts leaking, you don’t have to call anyone but your agent or landlord. Since they will have insurance, you can sit back knowing that a costly plumber isn’t your problem.
- Moving day: Moving to a new house at the end of your lease is much easier than if you had a property to settle on first. Moving as a tenant is less time-consuming and much cheaper. Younger people, those who change jobs or travel for work, or just those who like to change things up regularly, are some of the cohorts who tend to benefit from this. Although a sudden requirement to relocate may cost you to break a lease and pay the associated fees, they are generally much more inexpensive than that of a homeowner who needs to not only sell their current house but also needs to mortgage a new one. Talk about stressful.
- No need to deal with real estate pressures: We know that houses fluctuate in value in response to changing economic conditions and can sometimes decline over time. If you’re a tenant, you don’t have to worry about that. With a contract in place, your rent is decided prior to commencement and you are protected by agreement laws to preserve this.
- Credit requirements are generally less strict: Although most landlords require prospective tenants to provide proof of employment, they do not require you to undergo a full credit check – which can leave an enquiry on your account regardless of success or not. By contrast, mortgage lenders typically have high credit standards, with even small changes to your credit score potentially affecting your mortgage rates.
It just makes more sense
‘Buying is more logical’, ‘You’re throwing away money’, ‘Isn’t it just dead money?’
We hear these all the time, and perhaps you’ve heard them, too. However, we know that the Baby Boomer generation settled down young and typically only worked for a single employer with a healthy pension. However, these days – particularly amongst the younger generations – these rules no longer apply.
With an influx of contractors, part-timers and casual employees around, it’s important to be mobile. In fact, this may support why this arrangement is on the rise.
Let’s consider the top reasons why this might be the wiser solution for you right now:
- You may want flexibility to move around before settling down
- You don’t have a large enough deposit for your dream home
- You already have a great place at a fantastic rental price
- You’re new to living out of home
- Buying means a longer commute to commitments
- You’re not prepared to manage the maintenance on a property.
If you have any questions about why rentvesting could be the option for you, contact one of our friendly team members today for an expertly detailed consult. We’re here to help you through any concerns you may have to help maximise your potential.