We've been hearing a lot in the media lately about housing affordability worsening and the preference of many to rent as opposed to buying property.
Buying a home is a significant investment; for those used to renting it can sometimes be difficult to comprehend the financial outlay involved in making such a purchase. Many people I have come across are uncertain about the direction of interest rates, and worry about landing themselves in an expensive mortgage. Some would rather the ease of simply paying their weekly rental amount.
This is completely understandable – I think most people have worried about their mortgage at one point or another. However, the way I see it, mortgage payments are very similar to rental payments, with one difference.
Rent lacks the predictability that a mortgage repayment represents. If you opt for a fixed-rate mortgage, you can plan out your repayments in advance for quite a substantial period of time. Rent on the other hand can change depending on the length of your lease arrangement and is affected by market conditions. If for some reason you must leave your rented property, there is no guarantee that you will be able to find a similar place for the same price.
Every mortgage repayment made is a regular contribution, and after a period of time you will own a substantial investment. If you wish to do so, this investment can be liquidated, and when sold is often worth more than the sum of your repayments (including interest).
When renting, on the other hand, you are making the same regular contributions, however you will never see the money again.
Putting talk of money aside, there's something quite satisfying about owning your own home. You own your walls, can paint them any colour, hang anything on them, or even knock them down if that's what you feel like doing. Landlord inspections or maintaining maintenance standards will never be events that you have to deal with.
Owning your own property is not for everyone, but can definitely be worth the effort and saving. The way I see it, with rental payments in many cases equalling mortgage repayments, buying should be at least considered as a very real and financially sensible option.