You are here: Homes of Distinction Latest News News Buy or Rent? Pros and cons of each

Buy or Rent? Pros and cons of each

Category News

At Homes of Distinction we can assist you with both the buying and selling and your renting requirements but whether it is better to buy or rent a property is a subject which can be long debated and for which there is no single correct answer. In the end, it depends on your personal preference and your needs at the time.

Here we outline the pros and cons of each:

Buying a property

Pros

Offers the long term benefits of growing your financial wealth
Affords you the potential of a good return on your investment should you sell your home for a higher price than you paid for it
You may renovate and alter your home freely and as you wish
It's your property so you make the rules
With a fixed bond repayment, you know how much your monthly repayment will be
Buying a home is normally a long term investment which gives you a sense of stability and security
Paying your repayments on time each month can improve your credit score
You have the potential to refinance your bond to withdraw large funds in order to finance a large purchase.

Cons

It's a big financial investment as you need to have funds upfront for the deposit, transfer costs, bond registration fees and any repairs or renovation costs you wish to make
You are responsible for the monthly payments such as bond repayments, rates, taxes and homeowner's insurance
You run the risk of not making a profit when selling at a later stage should the market be depressed or the area become less favoured
Moving out is more complex as you will need to sell before moving on - you can't just pack up and leave after serving the notice period like a tenant
You are responsible for all maintenance or repairs.

Renting a property

Pros

Is ideal if you are not planning to stay for a long time
Allows for the easy flexibility of giving notice and relocating after serving out the notice period - usually 2 months
Apart from the rental, you are only liable for the insurance of the household contents
It gives you a chance to save and build some capital if you cannot afford to buy your own home at that time
You can enjoy a higher standard of lifestyle if you rent in an area that you cannot afford to buy a property in
You are not responsible for any maintenance costs
The rental amount is fixed for the duration of the lease agreement - usually 6 or 12 months

Cons

You do not have any sense of stability or security
There is no guarantee that the lease will be renewed when the lease agreement expires
Rentals usually escalate annually and by the amount listed in the lease agreement
You are bound by the conditions stipulated in the lease agreement
You have to obey the landlord's instructions
You cannot renovate or alter the property without the prior approval of the landlord
You are not increasing your financial worth but, instead, your rental payment is paying off the landlord's home loan.