Rent vs Buying: Weighing up the Pros and Cons

With house prices surging and somewhat unpredictable at the moment, many people simply give up at the thought of ever buying a home, especially in Sydney. But what is the alternative? Renting is hardly cost-effective either: in doing so you’re essentially paying off someone else’s mortgage – which is not exactly worth rejoicing about either. You know the saying: rent money is dead money. So, which is better? To buy or not to buy? Let’s take a look at the pros and cons. What are the benefits of owning a home?Home ownership comes with many advantages. For one, homes typically increase in value (unless you buy a real lemon), it provides a roof over your head and you may be building equity. This sets you up with a nest egg for the future – something to leave to your children, or something to sell and put towards retirement. How many years is a mortgage loan?Of course, you will be locked into a mortgage for the better part of 30 years, unless you pay it off sooner, which is definitely doable if you follow a few repayment guidelines and tips, many of which you’ll find on our repayments calculator page. What is a rentvestor?Another way to benefit from owning a home is to buy an investment property. This way you can rent where you want to live and buy where you can afford. This rent and invest strategy is known as rentvesting and it’s becoming more popular. It’s also a way for first home buyers to get a foot on the property ladder. Buying and selling an investment property means you can wait and hope that real estate prices increase over the long term. If you charge less rent than what you are making in mortgage repayments, the net loss can be used as a tax deduction, which is known as negative gearing or having a negative cash flow. Chief executive officer of the Real Estate Buyers Agents Association of Australia (REBAA), Rich Harvey says it’s better to be in the market than to rent forever. “You can’t save your way to wealth. If you’re paying rent and that’s your only interaction with the property market, you’re going to be renting your whole life,” he tells uno, adding rentvesting is simply renting where you work and buying in another area. “If you’ve got a rental property that you’re renting to someone else, you’re in the market.” Harvey advises people to start young and start early. “Property for me is like a forced savings program,” he explains. “If you don’t spend your money on property, you’ll probably spend it on something else: you’ll buy more holidays, a fancier car, more clothes – which are all depreciable items which decline in value the minute you buy them. “Sure we need cars, we need clothes, but you have to balance that out with saving for the future.” Where should I invest?Cracking the investment property market can be just as hard as finding a property to live in. It usually depends on your goals and how much you have to spend. There are a few rules of thumb that will serve you well:

  • Try to stick with capital cities: capital cities tend to have a large population, better infrastructure and more jobs, which can equate to higher rental demand.
  • Diversify your search: Because markets grow at different times, buying in what was a property hot spot last year may not be the best option this year.
  • Choose desirable neighbourhoods: If you wouldn’t live there, why would anyone else? Things like good quality schools, a low crime rate, good public transport options, a stable job market, shopping hubs and good amenities will appeal to renters. What are the advantages of renting a house?Renting a home comes with advantages too, of course. You won’t have to save for a deposit, you can avoid paying maintenance costs and you don’t have to directly worry about things like interest rates rising (unless your landlord puts your rent up) or property prices decreasing. Is it cheaper to rent an apartment or buy a house?When it comes to buying or renting, many people compare like for like. In other words, if you adore renting a two-storey terrace in Paddington, then you’re going to want to buy a two-storey terrace in Paddington, right? And that could be where you realise the cost of buying property is out of your league. But when it comes to buying property in Australia, a better way to look at it might be to compare apples and oranges. While you might not be able to afford a two-storey terrace in Paddo, you might be able to afford an apartment in Paddo – or a terrace in nearby Darlinghurst. A growing trend here tends to be rent where you want to live; buy where you can afford. A lot of people have to make sacrifices when they buy property and scoping out what are known as ‘bridesmaid suburbs’ could provide a great way to enter the market. But, while it might be cheaper to rent your whole life in some places in the US and Europe, renting an apartment probably does work out slightly better than buying a house in places like Sydney. It depends which way you choose to look at things though. And there are certainly ways to buy a property as an investment in a different area to where you want to live so that you can continue paying off someone else’s mortgage while also paying off your own. Keen to get started? Why not check your borrowing power quickly - you might be surprised what you can actually afford. What sort of loan do I want?The type of loan you want will differ depending on whether you do buy a property to live in or decide to invest. When you search online with uno, the online mortgage broker, our technology will filter through thousands of home loan options from more than 30 lenders to find the ones that will best suit your needs. You can find a great home loan rate here in minutes.

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles

TESTIMONIALS

What our customers are saying

Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
Read more
Rod
February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
Read more
Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
Read more
Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
Read more
Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
Read more
Gillian Kearon
January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
Read more
Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
Read more
Karaipu Brown
December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
Read more
Chris Anderson
December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
Read more
Stephen Broomfield
December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
Read more
Tarek Hussain
December 6, 2023
Can't thank Amy enough for her hard work, dedication and determination on getting multiple loans completed for me. I wouldn't hesitate in recommending Amy and the Uno team to any of my associates. Will definitely be back in the near future!
Read more
Linda
November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
Read more