- Posted 21 Sep
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As a renter struggling to save for a deposit, you may wonder if buying a home is really worth the sacrifice. Home prices are rising and it can be difficult for first home buyers to get a break. But there are several good reasons to become a property owner, some financial and some personal. Here are some of the main pros of buying a home:
Personal reasons why buying makes sense
Owning a home provides a sense of security that you won’t get from being a renter. You’ll never have to move because your landlord sold to a new owner and you won’t have to complain to a property manager who doesn’t handle repairs and inspections.
You’ll also have the freedom to truly make the space your own. If you want to paint every room a different colour or replace all the carpets, build an extension or turn the attic into a playroom, you won’t have to get your landlord’s permission. And the money and time you spend fixing up your new home will bring financial benefits if you decide to sell.
Financial reasons to buy
There are also very compelling financial reasons why purchasing a home makes sense. As real estate value continues to climb, rents are likely to keep rising over the long term. Home loans, on the other hand, tend to be relatively stable unless interest rates fluctuate wildly. If you buy a home this year, your mortgage payments won’t change much over the course of the next few decades while you are paying off your house.
Additionally, while you’re making payments on your mortgage you are building equity in your new home. At some point down the road you may decide to tap into this equity to finance renovations or to fund other investments. Renters don’t get this benefit. All the money you pay as a renter goes towards paying off someone else’s mortgage, not creating benefit for your own future.
Finally, no matter how much profit you make when you sell your home, you won’t have to pay any capital gains tax as long as it was your primary residence. This can be a huge benefit in a hot real estate market where values are climbing. Note that this tax-free status does not apply to investment properties, only to a home where you plan to live. Check with an accountant for the specific regulations in your state.
Making it happen
Many renters want to become owners but haven’t been able to save up a substantial deposit. The good news is that first home buyers may qualify for a government grant. The First Home Owner Grant (FHOG) program is a national scheme designed to help Australians become home owners. FHOG is administered by the states. and conditions vary depending on where you are purchasing. But if you are eligible you may be closer than you think to making home ownership a reality.
If you are searching for a home loan, let Australian Credit and Finance help. Contact our knowledgeable experts for all of your mortgage needs.