Is the Dream Beyond the Deposit Worth the Work?

February 2020

Saving a deposit for a home can often seem an insurmountable task.  At some point, first homebuyers often reach the point of wondering, is it worth all the sacrifice?

With Sydney now boasting dozens of suburbs that offer comparable rent and mortgage repayment prices, there may be no better time than now to take advantage of this minimal difference.  According to domain.com.au, as of July 2019 rent in Penrith was, on average, only $62 per month cheaper than owning your own unit.  This proves there is plenty of incentive to make the move into the market sooner rather than later.  Couple this with record low interest rates, and the argument in favour of homeownership may seem stronger than ever.

So once the hurdle of saving for a deposit is achieved, what does homeownership mean for your future? Taking care not to exceed recommended 30% mortgage stress threshold and keeping in mind that real estate is a long-term investment, there are several financial benefits to owning your own home.  Among them are basic concepts including viewing your home as a forced savings plan.  Another bonus may be using options such as fixed repayments for ongoing budget management rather than remaining vulnerable to rent increases.

In addition, your property will most likely increase in value over its lifetime and provide equity you can access in your later years. Security in retirement can be a strong driver, as renting in retirement years can be the difference between living comfortably vs. paycheque to paycheque. With the cost of living increasing rapidly, it is often pensioners that are feeling the pinch.

So while homeownership isn’t without risk, if you can commit to it long-term it will most likely bode well for your financial future. As with any investment, careful research and consideration and professional advice to create an overall strategy will help you put your best foot forward.  The short-term sacrifice may bring a lifetime of rewards.