Do you feel like you’re stuck in a renting cycle?
How do you know when it’s time to give renting the flick and buy your first home?
Here are 5 signs you’re ready:
1. You want to own an asset that will grow in value over time rather than fork out money on an asset owned by your landlord.
This is called capital growth. As your property value goes up, so does your equity (the difference between the value of your property and the balance on your mortgage). Later on you could potentially use your growing equity for things like a home renovation, a deposit on your next home, or property investment.
2. You are seeking greater stability.
The risk when renting is that you never know what the owner’s intentions are. If he/she decides to sell, you have no choice but to look for somewhere else to live (unless they sell to another investor and then you have to wait and see if they put the rent up). Owning your own home gives you stability.
3. You’re tired of being limited in terms of what you can and can’t do to make your home your own.
Are you tired of not being able to update the carpet, install an air conditioner, paint the walls or mount your TV on the wall? Buying a home means you have freedom to make changes as you see fit.
4. You have worked out that you can afford the mortgage repayments and other ongoing costs.
With historically low interest rates, a mortgage can work out to be more affordable than paying rent. Just be sure not to stretch yourself too thin. Don’t borrow to your limit as interest rates can’t stay this low forever. What’s more, there are some ongoing costs involved in buying a home that you don’t need to worry about when renting, like council rates, strata fees and property maintenance and repairs.
5. You have saved enough to pay the deposit (generally 20%) and other upfront costs.
Even if you are struggling to save 20%, it’s worth investigating your lending options. Some financial institutions will lend against a lower deposit as long as you meet certain criteria. Seek advice from a mortgage broker who can compare loans for you.
Think outside the box – consider ‘rentvesting’
Love the neighbourhood you live in but can’t afford to buy there? How about buying and renting at the same time?
This is known as ‘rentvesting’. It involves living in a rental property while buying an investment property in a more affordable area.
Make 2019 your year!
Now is one of the best times to buy in Perth in many years. But experts say don’t wait too long if you can afford to do it now.