There are many reasons why you may want to purchase a home – you could have a growing family that needs more space, you want to invest your money and no longer want to pour it all into paying rent.
However, it would not be logical to just compare what you are paying in rent to what you would be paying with a low-interest mortgage. As even though owning a home would provide you with a financial asset, you may not have the funds to sustain such a decision.
It is always recommended that when considering home ownership, you should have a deposit of at least 10 to 20 percent and an emergency fund that covers 3 to 6 months of bill payments. But there are also other points to consider when deciding whether to rent or buy. Despite home ownership being presented as the best financial decision, some experts believe this is, in fact, a misconception and the idea is overrated.
A phrase often heard by people renting or planning to rent is “you’re throwing your money away” and “you’re paying the landlords mortgage”, but this could be far from the truth. In fact, by renting, you avoid having to pay for maintenance and repairs and most of all – you still have a place you can call home!
Despite all of this, don’t disregard home ownership as if you do have the funds to purchase a home then after paying off your mortgage, you will have a home that belongs to you. Also, if your home has appreciated more than the taxes (stamp duty), mortgage and interest you have paid in, then you could also earn yourself a healthy return. But keep in mind that, even though you may own your house outright, you will still have to pay a significant amount of taxes and interest.
Making a decision is a matter of researching all of the small and big pros and cons of home ownership, crunching numbers and scrutinising your finances and lifestyle. Can you get more of a return on a home investment or by investing your money into methods such as the stock market? These are the kinds of questions you must ask yourself before making a final decision on whether to rent or buy. But make sure you never compare yourself to others when deciding what to do, as in the end – it all boils down to what feels right to you.