Nathaniel Fried
In 2013, the average homeownership rate decreased from 66.9 percent in 2006 to 64.8 percent. While many things can influence those figures, such as challenges with securing home loans, it makes you wonder whether buying or renting is better.
Many renters will tell you that you can’t beat the freedom of no financial ties, but what about ownership freedom and being able to treat your home as you wish? That’s something you can only achieve with homeownership. If you’re not sure whether to go down the road of ownership or to rent, then read on. We’ve included the benefits of each.
Homeownership: Your Future
When you decide to look at different home loans options to purchase a new property, you’re buying more than a house. You’re buying your future security and a nest egg that can prove valuable in the years to come. The retirement age in New Zealand is 65, but your Superannuation is not likely to accommodate rising rent costs over that time.
Let’s say you’re single and living alone. You would earn $411 every week, according to the April 2019 NZ Super rates. The median weekly rent for a 1-2-bedroom house was $390 per week. That leaves you with $21 per week for all other living costs. If you buy a home, you’re likely to pay it off by the time you retire.
Renting: No Financial Ties
On the other side of a coin, home loans are not everyone’s cup of tea. Some people prefer to have no financial ties or home loans, seeing them as a burden. Renting offers you the freedom and flexibility to travel the world.
You can end your rental agreement, sell your possessions, then jet set around the globe before returning and finding somewhere else to live. If, however, you change your mind, there’s always the option of buying a home and renting it out to someone else while you travel.
Homeownership: Plenty of Loan Options
The beauty of homeownership in New Zealand is that there are plenty of options to cater to many different people. There’s no denying that lending criteria for banks can be quite strict, but they are not the only option. There are also non-bank lending solutions available for when the bank turns you down.
Bank loans are often cookie cutter, meaning that you have to conform to the financial criteria they set out, with no deviation. Your financial situation may not fit into that shape. Non-bank lenders get to know your financial situation and work with you for the best possible outcome. Even as property prices rise, there is still a myriad of home loan options to give you the best chance of putting that ‘sold’ sign up.
Renting: No Obligations
When you’re a homeowner, you have to fix something if it breaks. If you’re cold, you have to put in insulation at your cost, and if you have a leaky tap, you have to call the plumber. If you are renting, you mostly have no obligations. You can’t carry out repairs, and only things that are your fault are at your cost.
If you have a leaking tap, you can call your landlord to fix it. They also have a strict timeframe to carry out repairs and maintenance.
Homeownership: Freedom to Renovate
One of the standout benefits of homeownership is your freedom to alter and change your property as you wish. While any significant alterations require council consent, you’re not answerable to anyone with paint schemes and making other changes.
If you want magenta bedroom walls, you can have them. If you wish to paint your bathroom yellow, you can do that as well. You can also make adjustments to your home loans – particularly as your property value increases – to help fund changes you make.
Renters, in many cases, are not offered the same freedom. If you want to make any changes, you must run them past the landlord or property manager, and they are not guaranteed to accept your request. If you don’t like something in a rental property, then you have to put up with it or move somewhere else.
Renting: Freedom to Move
One of the standout benefits of renting is your freedom to move. If you are a contractor who moves around a lot, then renting is often a more preferred option. You don’t have to sign up for lengthy home loans, knowing that in a year, you’ll have to sell and move on again.
Rental agreements are a set length, and when you have to move, you find another place to rent in a different town or city. The process is a bit more challenging if you own the house in which you live.
Conclusion
Renting and buying property in New Zealand both have their benefits. Homeownership offers a sense of pride and financial security, whereas renting offers unparalleled freedom. However, there may come a time when the renting life is no longer suitable, and you want to look at home loans to settle down in one spot. Fortunately, there are no shortages of schemes, programmes, and home loans to get you on the first rung on the property ladder.
