Renting Vs Buying – What are Today’s Top Tips?

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Mortgage Choice encourages renters to give merit to property ownership

If you are one of many Australians fed up with rising rents and a lack of available rental properties then you might be surprised to hear that in the current economic environment you could possibly afford to purchase a property with little to no change to your current expenses.

Housing affordability is within reach for many. With historically low interest rates and stable housing prices looking set to stay for a while, now is a great time to consider buying. Mortgage Choice recommends renters reassess their long term property goals.

The median weekly asking rent for a house in Sydney, Australia’s most expensive capital city, is $450 per week or approximately $1950 a month**. In comparison, a $300,000 home loan with a basic interest rate of 5.26% per annum over a 30 year loan period would be $1658 per month in repayments.

This is a notable initial saving, however potential home buyers need to factor in ongoing expenses associated with property ownership such as mortgage insurance, council rates, strata fees, maintenance and repair work, etc.

Mortgage Choice Senior Corporate Affairs Manager, Kristy Sheppard said, “Renters should definitely consider moving into property ownership, whether to buy a home or an investment property. At present, opportunities are fantastic for potential property owners who are confident of their job security and/or financial situation.

“The historically low interest rates, Government incentives such as the First Home Owner Boost, low rental vacancy rates and continuing high levels of population growth are all positive factors for Australians looking to buy a property,” said Ms Sheppard.

“Those who are currently renting are paying their landlord’s mortgage repayments when in fact they could be paying their own. Earning a rental income themselves can also be motivation for many renters to make the move into property ownership.

“Purchasing a property in today’s ‘buyers market’ should give current renters a great start to their property portfolio and help them make better use of their income. Building assets now will help them to get ahead in the long term.”

Consider Mortgage Choice’s top tips to saving for a deposit to buy property.

Putting cents to good use
Work out a property purchase plan and timeline. Firstly, go through your incomings and outgoings and establish a weekly or monthly budget (depending on your pay schedule). Secondly, set yourself limitations and realistic expectations of what you want to achieve, then adjust your savings plan to suit. Finally, consider any sacrifices you could make. You may find that if you knuckle down now you are able to afford some luxuries further down the track, when you are closer to the goalposts.

Make it, don’t fake it
There are simple ways to save money week to week. One idea is to make your lunch. Takeaway food is expensive; purchasing your lunch each day usually costs upwards of $30 per week. If you’re a coffee drinker or smoker now is a perfect time to give up your addiction and improve your long-term health and wealth.

Other cost cutting ideas include contacting your pay TV service provider to see if you can reduce your package to suit your lifestyle by eliminating unwatched channels. Buying in bulk is another easy way to save, and public transport systems often offer discounts to passengers who purchase multiple trip travel cards in advance.

Rent a room
Why not ask someone else to move into your spare room and help to pay half your rent. This means you will be able to save half of your weekly expenses (or more if you’re clever).

Cheap Tuesday
If you want out to see the latest movies then wait until Tuesday when ticket prices are reduced. You may also want to keep in mind that many restaurants have a weekend surcharge and often have weekday specials, so consider getting the gang together for a mid-week catch up instead.

Visit www.mortgagechoice.com.au or call 13 MORTGAGE.

** www.homepriceguide.com.au – Quarterly Australian Property Monitors Rental Series December 2008

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