# buying or renting - pros and cons



## littlegreenmartian

hey guys. i've always prefered the idea that a home is your own and you can do what you want as opposed to your living in someone elses house. i've been reading that its better to rent than to buy but i'm not totally convinced. maybe its just me but anyone got and advice?
cheers


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## Dexter

It is definitely better to have your own rather than rent. Given property shortages in Australia, rents are very expensive these days and it is cheaper to go into mortgage. I did that myself and today I am paying around $220 per week + $55 per week for strata, water, council (which you normally don't pay when you rent) comparing to nearly $400 per week for the same unit rented. Apparently, as I repay my mortgage, my repayments go down.


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## littlegreenmartian

is it difficult for foreigners to get mortgages?


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## Dexter

If you have permanent residence visa or Australian citizenship - no problem at all

If you have any different visa - I am pretty sure no bank will grant you one.


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## Nelly87

I have been told by my Australian partner and my "in-laws" that buying is a much better idea. They tell me it is not cheaper to rent (at all) and if you buy, you'll be able to seriously up the house's value with things like adding solar panels, etc, over the years. From what I hear the house market is doing good enough here to presume it's a good investment at least. If you have the financial means, you might as well buy - we will as soon as we do.

Not many countries will allow you to get a mortgage if you are not a resident. I worked in the mortgage area in my own country and no way did anyone without permanent residency get a loan - it is simply far too big a risk for a bank in good standing to lend money to that subgroup of people. Anyone who will offer you a mortgage when you are on a temporary visa should probably be steered clear from because they would have to implement some pretty big advantages for themselves to take that chance so they will probably make big bucks off you even if you end up leaving the country/without work.


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## robboat

Right now is a good time to buy - house prices are falling - rents are increasing.
The problem is how far they may fall....so make sure you do not overcommit yourself financially.

I have applied to Commonwealth Bank for a home loan and been provisionally accepted.
You need the PR visa.....and an income.

Good luck.....


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## ardevelopments

If you want to purchase house in Australia then purchase an under development town homes. Looking at a genuine financial investment perspective, development sites have a chance of price appreciation. So buying in the first stage of development will be a good buy and once the development is complete the cost of the same property or house would have shot up.The *ARDevelopments* Aspect North, Gumtree Woods and Narangba Valley Square is the newest discussion in the town.


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## miryam

is definitely a better idea to buy, in Australia mainly, the market is excellent , the land prices increase quite fast so is very good to invest, moreover, if you get a good mortgage like we have with the bank westpac you may be able to finish paying your house in only 6 yrs, yes, is amazing


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## FelixYHM

Dexter said:


> It is definitely better to have your own rather than rent. Given property shortages in Australia, rents are very expensive these days and it is cheaper to go into mortgage. I did that myself and today I am paying around $220 per week + $55 per week for strata, water, council (which you normally don't pay when you rent) comparing to nearly $400 per week for the same unit rented. Apparently, as I repay my mortgage, my repayments go down.


Wow, that's lot of saving. Will you mind sharing the Loan Term & Amount? Typically the initial payment is like 10% of the house value? How much loan can we apply like 20 yrs?


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## chifin

Here are some fun calculations to try out.

Take your weekly rent and multiply by 830. That is the purchase price of the property you can afford.
Take your weekly rent and multiply by 44. That's the approximate fees it will cost on top of the purchase price.
The above would work for you, if you have your weekly rent multiplied by 175 in cash savings as your deposit on the property.

Eg.

$300 per week rent.
= $300 x 830
= $249,000 house purchase price

Fees to complete purchase...
= $300 x 44
= $13,200

You will need saved cash (for deposit) of :
= $300 x 175
= $52,500

Your bank loan will be :
= $300 x 700
= $210,000 
= ~$300 per week repayments


Eg. Another example :

$425 per week rent.
= $425 x 830
= $352,750 house purchase price

Add fees to purchase...
= $425 x 44
= $18,700

You will need saved cash (for deposit) of :
= $425 x 175
= $74,375

Your bank loan will be :
= $425 x 700
= $297,500 
= ~$425 per week repayments

---------------------------------------------
The above is a bit of fun in numbers and works in the current market, based on following :

As you are paying your rent, I have assumed you would have an income to satisfy the banks requirements.
Bank loan interest of 6.3%
Deposit savings of 20%, hence a loan of 80% of the purchase price + fees.
Assumes 5% in fees on top purchase price.
Repayments are weekly, principle and interest, over 30 year term.

If you want an Excel sheet with the above easy calculations, just message me.


Ps : it's late... I hope I entered the above numbers correctly... Sorry if any errors!

Cheers
Mark


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## rufa

chifin said:


> Here are some fun calculations to try out.
> 
> Take your weekly rent and multiply by 830. That is the purchase price of the property you can afford.
> Take your weekly rent and multiply by 44. That's the approximate fees it will cost on top of the purchase price.
> The above would work for you, if you have your weekly rent multiplied by 175 in cash savings as your deposit on the property.
> 
> Eg.
> 
> $300 per week rent.
> = $300 x 830
> = $249,000 house purchase price
> 
> Fees to complete purchase...
> = $300 x 44
> = $13,200
> 
> You will need saved cash (for deposit) of :
> = $300 x 175
> = $52,500
> 
> Your bank loan will be :
> = $300 x 700
> = $210,000
> = ~$300 per week repayments
> 
> Eg. Another example :
> 
> $425 per week rent.
> = $425 x 830
> = $352,750 house purchase price
> 
> Add fees to purchase...
> = $425 x 44
> = $18,700
> 
> You will need saved cash (for deposit) of :
> = $425 x 175
> = $74,375
> 
> Your bank loan will be :
> = $425 x 700
> = $297,500
> = ~$425 per week repayments
> 
> ---------------------------------------------
> The above is a bit of fun in numbers and works in the current market, based on following :
> 
> As you are paying your rent, I have assumed you would have an income to satisfy the banks requirements.
> Bank loan interest of 6.3%
> Deposit savings of 20%, hence a loan of 80% of the purchase price + fees.
> Assumes 5% in fees on top purchase price.
> Repayments are weekly, principle and interest, over 30 year term.
> 
> If you want an Excel sheet with the above easy calculations, just message me.
> 
> Ps : it's late... I hope I entered the above numbers correctly... Sorry if any errors!
> 
> Cheers
> Mark


This great chifin!
Thank you for sharing 

Will definitely be using this in the future.


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## sakkoub

Dear all

Any idea after how long after logging into australia i can apply for a home loan I have been granted RP visa recently and I am intending to buy an apartment ASAP.

Many thanks for your kind inputa


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## chifin

Sakkoub,
If you have PR status in Australia, then generally you can get a loan from the bank... Although it may depend on which sub-class Visa you're on (if you are).

If you see my earlier post, you will see some quick-calculations to work out what you can afford. 
The bank will want to know lots more info before they give a loan.

Your income (eg. Are you still on probation in your job, is it permanent full-time, annual salary, etc)
Your debts/expenses (eg. Credit card limits, store cards, personal loans, car loans, etc)
Your relationship status (eg. Single, married, with child, etc)
Your savings (eg. How much cash do you have to buy a house?)

All the above (and more) can go into the decision to lend you money, and how much.

You're welcome to contact me directly, and I can go through in more detail if you want.

Cheers,
Mark


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## sakkoub

chifin said:


> Sakkoub,
> If you have PR status in Australia, then generally you can get a loan from the bank... Although it may depend on which sub-class Visa you're on (if you are).
> 
> If you see my earlier post, you will see some quick-calculations to work out what you can afford.
> The bank will want to know lots more info before they give a loan.
> 
> Your income (eg. Are you still on probation in your job, is it permanent full-time, annual salary, etc)
> Your debts/expenses (eg. Credit card limits, store cards, personal loans, car loans, etc)
> Your relationship status (eg. Single, married, with child, etc)
> Your savings (eg. How much cash do you have to buy a house?)
> 
> All the above (and more) can go into the decision to lend you money, and how much.
> 
> You're welcome to contact me directly, and I can go through in more detail if you want.
> 
> Cheers,
> Mark


Dear mark
Many thanks for your kind prompt reply on my concerns, your calculations are really very useful and will help me alot on expecting the amount of money required.
Actually I am coming with my wife as she is sponsored by her brother in aus, we are on visa class 176, based on ur inputs it seems i should try to push for the maximum down payment if i want to get a separate house as based on my initial searchs it costs around 600k.

Many thanks again bro, have a great day.
Cheers .


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## chifin

Sakkoub,
The figures I gave in the examples are based on 80% loan against the cost of the house (+ fees). Banks will lend higher amounts, so you need less 'savings' up front. Trouble is, you 'save for it now' or you 'pay for it during your loan'. For example, if you could save $20,000 over 12 months you could use those funds when you try buy a house. Or if you borrow more from the bank today, they may charge you a fee (LMI = insurance payment) of $5,000 to $10,000, which gets added to the loan and you end up paying for it for 30 years. It is essentially wasted money, but, it does allow you choices today, which may be more important.
Cheers,
Mark


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## akinahd

*Buy property before move*

Hi ,
i got PR and planning to move by the end of 2013.

Is it possible for me to buy a property - apartment/ house - while i am outside Aus ? Are their any agencies who can assist me on this, in my absence?

Will any bank give me a home loan, while i am outside Aus ??


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## Dexter

I doubt a bank will give you a loan when you are outside Australia and don't have a local job.

They usually look for people who have been in their current Australian job for at least 2 years.


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## Burrows

*Rent only if mandatory*

Hello,

In my opinion, there are two types of renters:
- those who don't intend to stay in that place/city for a long time (in this case, renting is the best solution)
- those who can't afford to buy without a loan and are afraid of a mortgage

Indeed, mortgage can be scary, because it implies massive amounts of money for something that you get to own after many long years. However, nothing good comes out of this type of mindset. If you plan to rent on the long-term, you're not putting your money to good use. Think about the possibilities you have once you buy a property: you can make it your home, you can rent it, and constantly invest in it so that it brings more and more capital gains. Owning a property is a guarantee for your future's security, so I'd encourage anyone to take this step.

Cheers,
Emil
Sunbuild Invest


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## liveseoservice

ardevelopments said:


> If you want to purchase house in Australia then purchase an under development town homes. Looking at a genuine financial investment perspective, development sites have a chance of price appreciation. So buying in the first stage of development will be a good buy and once the development is complete the cost of the same property or house would have shot up.The *ARDevelopments* Aspect North, Gumtree Woods and Narangba Valley Square is the newest discussion in the town.


Thanks sounds really useful


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## JandE

Buying or Renting? I know people who say both is a good idea.

Personally, if you are young, and can afford to pay a mortgage for 20-25 years, then buying is a great idea.

Renting is a great option if you are 60+ years old, and its too late to buy a house.

Some say that a mortgage will be for more than the 20-25 years that I mentioned.
However, if you repay a mortgage based on what the repayments would be at a sensible interest rate, and increase your payments as wages rise, a 30 year mortgage can be cleared in 20 years.

The average mortgage in 1990 was $71,000 at 17% interest rates.
The average wage was $523.60 and mortgage payments made up 45% of income.

By 2007, with average weekly earnings of $1071.70, the repayments were only 22%
By 2015, its down to 16%. 

But rent, which rises each year, is still 30-40% of an individual income.

But, be very wary of relying on repayments quoted today at the very low interest rates, these rates WILL rise, and repayments will not be as easy.


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