Buying a home has always been a difficult decision, one of the life’s major decisions for many people.
With the right moves, you can make your Australian dream of owning a house come true. The question is not whether or not you should aim for it. It is “when” should you aim for it.
Two simple alternatives could lead you to own a home in Australia.
Either you can rent at the moment while you save up to buy a house later, or you can make the purchase right now and directly move into your place.
Let’s go through both and see which option is the most beneficial.
Saving Money and Renting Before You Buy
This seems to be the obvious choice. Most of us don’t have a large supply of cash in our early 20’s. The current housing crisis also makes home ownership a real challenge. However, instead of telling you to give up on the dream, a financial planner may encourage you to start saving - early.
Most Aussies at this point earn an average income which makes it difficult to make the down payment. Rents, on the other hand, seem cheaper. At least you wouldn’t have to pay thousands of dollars in a lump sum.
You can pay the rent from your monthly income, which frees your savings. These savings can be put into a profitable investment.
Furthermore, while you make money on your investments in shares and bonds—which are more attractive in Australia with low deposit rates and historically high returns—you get to enjoy flexibility.
This is important to consider as youngsters often switch jobs and need to move places. A lot of people in Australia are also preferring “house sitting” to renting, dependent on their availability.
The only real matter of concern here is that you may not be able to maximise on your investments, but that is rarely a case in the modern day.
Value and Benefits of Buying a Home Early
One of the best things about buying the home early is the potential for appreciation. If invested in the right property, prices can elevate by leaps and bounds.
Moreover, with the right guidance and research, you will be able to make more resources in a year than an average person in Australia will probably own in his lifetime.
In Australia, banks even offer you a significant part of the total price. In other words, you are borrowing money to invest it in your property.
The reason why this is extremely beneficial is that if you sell the property that has risen in value, your return on actual investment—which was a meager portion of the total price - is quite high, even if you account for all the interest and taxes!
Also, you don’t have to worry about not being able to pay the rent every month if you lose your job for a brief period.
That said, there are costs in owning and maintaining a property. They include regular house and yard maintenance, home improvements and more. Depending on where you live in Australia pest damage from termites and natural disasters can also wind up costing you a lot of money.
The other downside of getting a house this early in your life is that you tie your money up. In other words, you won’t be able to invest in other potential opportunities that may arise.
Getting a house is surely a crucial decision to make. Whether you go for it today or plan to wait a while, you will be able to make the most of your investment.
Image: Pixabay CC0 License
General Advice (Tax) Warning (Australia)
This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement.
