When does it make more sense to rent than buy?
There comes a curious stage in every twentysomething’s life when Jagerbombs are substituted for a couple glasses of cab sav with dinner, fuel efficiency becomes more important than horsepower, and all your friends stop renting and start comparing home loans and buying houses.
While there are some pretty sweet benefits to buying your own home in New Zealand, sometimes it actually makes more sense to rent than purchase. Here are three reasons why renting can be superior:
1. Greater flexibility
When you lock yourself into a mortgage, it goes without saying that you sacrifice a little bit of freedom. Being able to meet your financial obligations and consistently make loan repayments often takes precedence over many other aspects of life.
In contrast, as a tenant you have relatively few commitments, enabling you to pursue other options such as travel, study and possible career changes.
2. Rent can be cheaper than mortgage repayments
Depending on market conditions, rental rates can be significantly lower than mortgage repayments. For example, the average Auckland house price increased by about $88,000 in the last year, while weekly rents increased just $1 across the same period, according to figures collated in the latest Trade Me Property Rental Index.
Of course, the real estate landscape is constantly shifting, making it important to compare New Zealand home loan rates to ensure you’re making a decision that best suits your financial circumstances.
3. No maintenance worries
Renting also eliminates most expenses associated with maintaining a property. As the New Zealand government’s Tenancy Services portal explained, landlords are responsible for repairing all damage caused by natural disasters, burglaries and fair wear and tear.
As a homeowner, guess who’s footing the bill if something breaks?