Buying versus renting
Choosing to buy your own home or rent and put your extra money into investments involves both financial and emotional considerations, according to Smartline Personal Mortgage Advisers.
The company's managing director Chris Acret says many people still want to own their own castle.
"While some may suggest that the great Australian dream of owning your own home is not as relevant as it used to be, it is still a goal for the majority of people," he says.
"When considering which approach has the most merit – buying or renting and investing – I don't think the two concepts should be mutually exclusive."
Having a solid level of equity in your own home can allow you to invest in more property, or create a diversified share portfolio, according to Acret.
In addition, he says the family home is a valuable asset exempt from capital gains tax.
Acret says renting also provides many benefits, such as avoiding the costs of maintaining a property, or having the flexibility to move without having the hassle or cost of selling a property.
"Renting may also be a good option for people who want to live in a suburb close to the city or the beach but can't afford to buy a property in that area," he says.
"You could buy a property in an adjoining suburb which isn't as expensive – but still has good scope for capital growth – and rent that out while you rent a property in your preferred suburb."
The key to that strategy, says Acret, is to make sure the money saved on mortgage repayments and maintenance costs is channelled into some other form of investment.
He says the most important thing is to be doing something proactive about creating wealth, whether that's paying off your own home to leverage into investments, or renting and putting all your spare money into investment property or shares.
Editor of Australian Property Investor magazine Eynas Brodie agrees.
"As the old saying goes, 'if nothing changes, nothing changes'," she says.
