New data suggests that for Australians the cost difference between buying a home with a mortgage, or renting for 30 years, is almost nothing.
Financial comparison site finder.com.au analysed the RP Data Rismark Daily Home Value Index, and found the total cost for the national median house price with a 30-year loan term was around $1.2 million.
Nationally the median house price is $565,000. For a loan amount of $519,839 (with a 10% deposit) buyers would pay $3,485 in monthly repayments, including Lenders Mortgage Insurance (LMI) of $11,339 capitalised into the loan. Even with a 20% deposit the purchase would cost around $1.08 million, over the period.
For renters, the national median weekly rent for a house is $424. That washes out to around $998,830 over 30 years (considering inflation of 2.7% p.a.). Current low interest rates mean there’s negligible difference – which in turn gives prospective buyers more options. It’s more affordable to maintain a mortgage now than it was three years ago.
Finder expert and realestate.com.au contributor Michelle Hutchinson with so little in it, people should consider the financial gain and peace of mind of buying versus renting. “It’s more affordable to maintain a mortgage now than it was three years ago, because of the low interest rate environment,” she says.
“The important thing to remember is that when the loan term ends and you’ve paid off your home, that property is yours to keep and likely to be worth more, whereas if you’re renting that money has paid for someone else’s investment.”
Source: www.realestate.com.au
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