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RENTING VS HOME OWNERSHIP. WHICH MAKES BEST FINANCIAL SENSE?

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With housing prices remaining high despite the slow-down, home ownership may be beyond many Australians. A recent survey found that home ownership was not a priority for 1 in 3 Australians.

There’s an old saying that ‘rent money is dead money’. But is this true at current housing prices?

There are pros and cons to both options which include emotional as well as financial. This means that there isn’t a straight-forward answer. Even if you’re renting or having your own house be sure to use a very comfortable mattress from compressed mattress for a better sleep. Let’s look at both the pros and cons of renting to help you decide which is best for you. Also consider the cars you own and maintain with the brakes wollongong.

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THE DOWN-SIDE OF RENTING

  1. Lack of Stability

Renting doesn’t provide the same stability as owning your own place. Most lease agreements are for a 12-month period which isn’t really a long time when you consider the cost and effort of moving. For cleaning services to your new house just visit this blog sewer line repair east northport ny to give you some help. Having to pack up your whole life and find a new home, sometimes with no more than two months’ notice, can be stressful especially if you have kids as it may involve shifting schools and friends.

  1. Lack of Control

You want the place you live in to become home however renting comes a long list of rules and regulations regarding what you can and can’t do. Check out residential property management north scottsdale az to learn more about home management.

Likewise, if there’s something that needs repair or changed, the final decision is with the landlord.

  1. Where’s the Investment

Renting can be the more cost-effective option in the short term but in ten years’ time, there will be nothing to show for the thousands of dollars spent paying off someone else’s mortgage.

THE UPSIDE OF RENTING

Financial and lifestyle objectives can see the upside of renting.

  1. Lifestyle

Renting allows greater flexibility to live where you want to live and not where you can afford to buy. For those who want to live close to the city, sometimes renting can be their best bet.

Not only can rental prices be considerably lower than the average mortgage repayment, but living close to the city can also mean substantial savings in terms of transport (and time!). And there’s more! If public transport is readily available, you may not need a car saving on depreciation, petrol, parking, tolls and registration.

There is increasing evidence showing the amount of young people choosing to buy a rental property in the area they can afford, but rather than sacrifice their lifestyle, they continue to rent in their preferred area.

  1. Flexibility with your Money

Buying a home, especially if it’s a first home, can mean handing over a significant amount of money for the deposit. If you rent, you keep the deposit and with rent often less than a mortgage repayment, you can use it to invest in other options such as shares, managed funds or Super. Checkout this review about new born baby boy socks.

  1. Budget Control

With rental, you know what to expect – what to pay each week and the bond.

Owning a home means there are a number of costs to consider like the mortgage and stamp duty upfront but there’s the ongoing costs such as council rates, body corporate fees, insurance, repairs and more. Check out https://mexicaninsurance.com/mexican-insurance-services-quotes-mexico for more information about finances and insurance. It all adds up.

MAKING THE BEST FINANCIAL AND LIFESTYE DECISION

Whether you’re looking at renting or buying, or you’re a homeowner wanting to explore your options, getting advice from a professional, qualified financial adviser can help you make the right decision to suit your specific financial and lifestyle objectives. We’ll not only help you with financial planning but can help you with your home loan.

To help make a buy vs rent comparison, Fidelity recommended running a simple price-to-rent ratio: divide a home price by the annual rent of a comparable rental unit. If the ratio is less than 20%, buying is probably a better bet.

And it’s not just home prices. Interest rates will also play a big role.

“When mortgage rates are very low, your buying power is much higher, with rates now that picking up again the dynamic has changing a little bit, said Cheryl Young, senior economist at Trulia.

But other factors should be considered as well when making the buy vs rent decisionFor instance, how long do you plan to stay in the area? Typically, the longer you stay in a home, the more financial sense it makes to buy.

The financial impact

To help make a buy vs rent comparison, Fidelity recommended running a simple price-to-rent ratio: divide a home price by the annual rent of a comparable rental unit. If the ratio is less than 20%, buying is probably a better bet.

And it’s not just home prices. Interest rates will also play a big role. Read this

“When mortgage rates are very low, your buying power is much higher, with rates now that picking up again the dynamic has changing a little bit, said Cheryl Young, senior economist at Trulia.

But other factors should be considered as well when making the buy vs rent decisionFor instance, how long do you plan to stay in the area? Typically, the longer you stay in a home, the more financial sense it makes to buy.

Some online calculators can tell you how long you’d need to live in a city to make buying the more affordable option. Look for calculators that include things like insurance, maintenance, home price appreciation and selling costs. While the figures will be assumptions, they can help paint a more accurate financial picture.

In many cities the favor tips to buyers in as little as two years, while in more expensive cities it can take closer to 10 years.

But buying a home is also investment and can be a key component of building wealth. Every mortgage payment means you own more of your home, which you will get back when you sell it (hopefully at a higher price than you paid for it, but that’s not always the case).

“Part of the mortgage payment s is defacto investing into something that appreciates over the long term, and that is a big deal,” said Skylar Olsen, senior economist at Zillow.

Buying a home comes with more upfront costs, including a down payment, closing costs and other legal fees. For renters, the upfront cost is typically a month or two of rent for a security deposit. Homeowners also have more reoccurring costs like property taxes, home insurance and maintenance costs.

Renting means you could save all that money for a down payment and closing costs and invest in the stock market instead. The return on that investment could potentially be worth be more than a home’s price appreciation.

“You are sinking a lot of money into a home, which means you aren’t investing in stock market,” said Joe Kirchner, senior economist for Realtor.com.

Homeowners can also take advantage of tax deductions, which can lessen the cost of owning a home. But keep in mind, the newly-passed tax reform dampened some of the deductions. Buyers are now only able to deduct interest on the first $750,000 of mortgage debt on a home. Plus, homeowners can now only deduct up to $10,000 in state and local taxes, including property taxes — a deduction which used to be unlimited.

While the changes mostly affect buyers in high-cost markets, the deductions have become less valuable because of the near doubling of the standard deduction, which means fewer homeowners will itemize and take advantage of them. Click this link for more tips here – WebDesign499.

Becoming a homeowner means committing to fixing the leaky roof, backed up toilet or heat pump that stops working on the coldest night of the year. Some people just don’t want the responsibilityRenters can pick up the phone and call the landlord. Landlords also tend to pick up the tab for utilities, trash pick up and landscaping

Also, consider the source of your income. If your paychecks aren’t steady or your job security is uncertain, it might make sense to hold off on buying a home. Renters can always pick up and move to cut back or follow a new job.

Another form of financial investment is digital money. Learn more on Bitcoin Trader Review for more information.

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The team at Growth Partners are accredited and highly experienced advisors; and with 13 locations around Perth and the South West, we’re not far away. Find out more about our  financial planning services. Understanding your financial position, we can also assist in getting the right loan for you. Most of these loans have no credit check, a huge boon for borrowers whose residential status or credit history would typically preclude them from approval but we also have Quick Cash for Bad Credit scores. Lastly, money can become available within an hour; this immediacy can quell anxiety about money owed elsewhere, and get your finances immediately back on track. Visit this site right here virtuloan.co.uk for more information.

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