According to the Australian Bureau of Statistics, around one-third of households rent their home. Out of these renters, some may have a goal of buying their own place and controlling their property.
But how do you know when the time is right to make the big jump from renting a house to buying it? The decision takes a leap of faith, but it can be easier when you work with knowledgeable professionals. Here are some of the best questions to ask when trying to make a choice.
Is rent increasing?
Rent has been increasing in some states, which can make it more difficult to make ends meet. However, if rent is more, there may be other options when it comes to living situations. Here are the latest median rental prices in different major Australian cities according to Mozo:
- Sydney: $630
- Melbourne: $460
- Brisbane: $530
- Adelaide: $480
- Perth: $480
- Hobart: $540
- Darwin: $600
- ACT: $670
In some of these areas, rent has increased as much as 9%. When rent rises, tenants should consider if they would rather pay a mortgage instead.
Can you afford a down payment?
Even if a renter can afford a monthly payment, it's important to consider whether or not they can afford a mortgage. The bigger the down payment on the mortgage, the less the mortgage bill will be. In most situations, a 20% deposit for the down payment is most acceptable. For example, a house that is $500,000 would require a $100,000 deposit.
In addition, you'll need to think about the other costs that come along with the initial costs of the house. Here are some examples:
- Stamp duty.
- Transfer fees.
- Building and pest inspection.
- Legal fees.
- Loan application fees.
Are you looking for a lifestyle change?
When someone goes from renting a house to buying it, there is a lifestyle change that comes along with the decision. You'll have to prepare for house maintenance costs, but that could be a small price to pay for the ability to do what you please with the real estate that you own. However, it's always best to have a stable job and a great credit score before making the commitment of homeownership.
You may be ready for a lifestyle change if your family is growing or if your kids are leaving the nest. Maybe you are newly married and ready to have a place of your own. There are many reasons that someone may be ready to switch from renting a house to buying a piece of real estate.
Luckily you don't have to make the decision alone. Ray White Surfers Paradise is ready to guide you in the right direction. Reach out today to learn more!