Is Renting Bad for Your Future Finances?

There is always a struggle when it comes to deciding whether renting or buying a home is more desirable for an individual or a family with financial stability concerns. A comparison on the better option will help assist future homeowners or renters on which option is indeed better.

Interest New Zealand mentions that there are many indicators and factors that will help one decide whether it is feasible to rent a property over buying one. Affordability issues are one of them. House selling prices are recorded to have increased by 6.9% making it difficult for average earning individuals with a growing family to keep up with the expenses. Renting rates on the other hand are unchanged since last year and takes 24.1% of your after tax income if you aim to rent for a 3-bedroom house.

However, it takes 27.6% of your after tax income to be able to pay mortgage for your new home. Last year, it was even more expensive with 28.6% covering expenses for mortgage for first household buyers. This basically shows that renting is less expensive than buying.

Investopedia on the other hand gives a deeper look into the said "sense of stability" that belonging to a community and owning a home offers compared to the often times restless and almost nomadic conditions when renting homes. The website explains that changing one's mind and opting for a different place to stay becomes more expensive when you have already purchased a property of your own.

Renting on the other hand offers flexibility and comes with no penalty each time your lease ends and you decide to move on to a different place. Renters also enjoys the freedom of not paying for items like water and sewer service, property taxes, repairs and maintenance, pest control and other payables that homeowners are bound with.

In the end, it all boils down on your capabilities to afford buying a home. However, the myth of "throwing money" becomes untrue in renting since it provides a more flexible and affordable options for those who cannot afford and would not want to invest in a property.