Buying versus Renting

A home can be your biggest asset, and your biggest debt… Renting is less responsibility, but there’s no return on your money. To help you decide which is best for you, here are some points to consider:

Can you afford a Mortgage?

Factor in how much deposit you have (usually 20% deposit is required), and any other expenses, such as Rates, Insurance and home maintenance.

Mortgage and Budgeting advice at sorted.org.nz includes Home Buying Guides, a Budgeting Tool and a Mortgage Calculator to work out how much repayments might be, how much interest you would pay, and how long it would take to pay off a Mortgage.

Impartial Advice

Everyone’s situation is unique. By all means, talk to friends and family, your Bank/possible lenders, but we also suggest you get an impartial assessment of whether you can afford a mortgage and how much you may be able to borrow. 

A Mortgage Broker can help you with Mortgage applications and negotiate with lenders on your behalf. Their help can also include (if you qualify), helping with applications for the KiwiSaver First Home Withdrawal, and KiwSaver Homestart Grant via Housing New Zealand.

Valuation Partners can provide contact details for recommended Mortgage Brokers - contact us to find out more. 

Rent or Buy Report

It’s also worth looking at the ‘bigger picture’. For a national overview, interest.co.nz writes a monthly report which includes their assessment of the affordability of Renting, versus taking out a Mortgage: 

http://www.interest.co.nz/property/rent-or-buy

Some Pro's and Cons
Buying
Renting

Capital Gain

The property may increase in value… More equity gives you the opportunity to ‘move up the property ladder’ later.

Less Responsibilty

The landlord/Property Manager organises and pays for maintenance and repairs.  

Stability

Having your own home provides a sense of security; no worrying about the property being sold or rent going up.

Freedom

You have more freedom to change your mind about where you want to live, and how soon you move.

You Can Make Changes

You can DIY and decorate to your heart’s content!

Cost

Renting may be cheaper than paying a mortgage, and flatmates can help lower outgoings. 

Interest Rates

You’ll have the uncertainty of future interest rates, and possibility of increased repayments. 

No Asset

You pay rent but there’s no asset gained for it; it’s ‘dead money’.

Responsibility

Repairs, maintenance, Rates, Insurance… your responsibilities and outgoings increase. 

 

Insecurity

There’s no guarantee the property won’t be sold… Your lease may not  always be renewed… The rent might go up.

Selling

If you decide to sell, how long it will take and how much it will sell for, is unknown.

Hard To Make It Your Own

There will be limitations as to what you can do to make the rental more to your taste/feel more like ’your’ home.

 

 

CONTACT US

E: admin@valuationpartners.co.nz
T: 03 974 1320 Christchurch
T: 03 927 4685 Queenstown

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