Is it fair to compare renting to buying?
Mark Polatkesen at Mortgage Domayne doesn’t think it’s fair to compare renting a home to buying one.
On one hand, renting a property to live in can be less expensive than buying a home and paying a mortgage.
Mark says it’s a mismatch because paying a mortgage means you will eventually own the home if you see it through.
“Paying principal and interest (for the mortgage) means every month you're paying off your loan balance. That will result in increased equity.”
Equity is the difference between the value of the property and the amount owed to the bank.
While renting you don’t accumulate any equity in the property, the rent is accumulated by the landlord.
Long term, a mortgage or home loan might be paid off and the homeowner would not need to make any repayments to live in the home, though other fees, taxes or rates may apply.
Continuing to rent a home means continuing to pay rent into the future. Depending on personal circumstances, the property manager or landlord, the amount paid in rent could increase over time.
Meet your neighbours: ‘Home Sweet Home’ couldn’t be easier
Since moving into her brand new Townhome in the Lollipop Hill neighbourhood of Manor Lakes, Ramanpreet Kaur has been revelling in that super sweet feeling of owning your own home.
“When you are renting, you are filling someone else’s pocket,” she explains. “When you own your home, your money goes on your mortgage and you're getting your own space. This is real value for hard-earned money to me!”
Having watched on the sidelines as her sister purchased a house and land package in Manor Lakes and worked through the process of building, Ms Kaur decided purchasing a townhome with everything done for her was a better option.
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Choose from residential land lots, house and land packages, town homes, turnkey villas and more.
About Mark Polatkesen
Mark Polatkesen is a senior mortgage broker and director at Mortgage Domayne.
Disclaimer – TO BE APPROVED BY LEGAL
This article does not take into account your personal financial circumstances or objectives and may not always be entirely accurate, complete or current.
We recommend speaking to an independent legal or financial advisor before making any binding decisions.