rent? That is the dilemma facing many potential homeowners today. It seems that
buying a home is more costly - and time demanding - that renting a home.
However, if you can comfortably afford to do so, and you have plans to stay at
your location for a while, buying a home has significant advantages.
feeling of having a home that is all yours, a home where your own personal
style will tell the world who you are, could be reason enough. A swimming pool
in the backyard, a water feature in the front, a kitchen in the colour you like
– you can do it all your way if you own it. But there’s more…
ADVANTAGES In some
countries your property can become a deduction for income tax purposes. Even in
you can deduct some, or even all of the interest you pay on a mortgage bond, as
long as the property is used to generate an income (rent or home office).
Interest will compose nearly all of your monthly payment for more than half the
term of the bond. This could add up to hefty savings at the end of each year.
this also applies to all maintenance and other relevant property costs
not least, the value of your property is likely to increase every year at the
average property appreciation rate, or more, if you buy in a good location and
the equity in your mortgage is available at low cost and tax-free. If you rent,
your money is gone forever.
owning a home is often promoted as a better choice than renting. Even if you
cannot get the home you want right now, start with something smaller – and
maybe needs a bit of work – use the equity you build up there to move to the
homeowners build equity both by paying down their mortgage and when their home appreciates
in value. In a few years, you will be ready and the banks will be willing to
let you invest in your next or even another property.
homebuyers increase their equity more quickly by buying homes that need
cosmetic improvements (such as decorating) or minor structural renovation
(walls need moving). These minor improvements can significantly increase the
value of a home over a relatively short period of time with a modest
MAINTENANCE Most people
who rent still want to add a personal touch to the home to make it feel like
it’s their so they incur costs in painting and decorating anyway. All this
maintenance work is purely for the benefit of the landlord whose property
increases in value.
If you own
your property, every cent spent on maintenance is an investment in your future.
CONSIDERATIONS There are
times when renting a home is the more sound choice to make. For example, if you
are only going to be at your place for a couple of years, it might not make sense
to buy the home, as this would be the more expensive endeavour. If you buy or
sell in a short period of time, you may actually lose equity. Check with your
agent first whether they are expecting quick returns in an area.
renting also makes good sense if you've identified the general area in which
you want to live but haven't made a final decision as to the specific neighbourhood.
If you don't know whether you'll feel comfortable in a particular neighbourhood,
it may be better to rent a house or an apartment there for 6 months or a year,
to get more comfortable with it.
LONG TERM SUMMARY Property
keeps going up - ask your father and grandfather. They will tell you
what they paid for their first home. You do not have to be a math or
economics wizard to do the sums.
If there is an opportunity for you to own your own home, the general advice is go for it.
For more detailed information on Finance issues go here Go back to Buyers main page