Renting vs Buying: Which Living Arrangement Is Best For You

Renting vs Buying: Which Living Arrangement Is Best For You

Renting vs Buying: Which Living Arrangement Is Best For You?

Image Credit: Pixabay

Flexibility or security? Short-term savings or long-term gains? Rent fees or mortgage payments? Choosing which living arrangement is best for you is a dilemma that demands a lot of deliberation. 

Balancing financial circumstances and personal desires can be tricky. By assessing the pros and cons of renting and buying, you can make an informed choice that best suits your needs. 


Despite a drop in homeownership rates in recent decades, buying a house still seems to be the end goal for most people in 2021. 

Record-low interest rates and government grants have prompted a house-buying spree over the past year and a half. However, with prices rising, prospective buyers are advised against any impulse decisions. 

The pros of buying a house 

The advantages to buying include long-term financial security and stability of living arrangements. 

1. You build equity

Equity is the amount of value of your property that you actually own. With each mortgage payment, your equity grows. Over time, you can leverage your equity to build your investment portfolio or use it for personal spending.

2. You have a secure living arrangement

With homeownership, you can rest assured knowing that you won’t be evicted from your homeprovided that you cover your mortgage payments. Also, you won’t be susceptible to sudden rent increases and you can renovate your property as you see fit. 

3. Your property may increase in value

Homeownership should be seen as an investment. A range of factors, from the state of the economy through to town planning, can affect whether house prices rise or fall. Over the past year, for example, property values in major cities have surged. 

The cons of buying a house

The main barrier to homeownership is the cost associated with the large upfront downpayment.

It’s very expensive

Buying a house is expensive. If you are considering buying a house, here are the costs that you need to factor into your finances:

Upfront costs
  • Deposit, usually 20% of the property’s value.
  • Mortgage insurance.
  • Stamp duty.
  • Loan application fee.
  • Conveyancing and solicitor fees.
  • Building and pest inspection.
  • Utility rates.
  • Connection fees for utilities.
Ongoing costs 

Your property may decrease in value

The property market can be very volatile. Just as there is a chance for your property’s value to increase, it may also go down. 


The rate of people renting from private landlords sits at about 25% of all living arrangements. Although most people still want to become homeowners, there is a growing trend of renting by choice. 

Pros of renting

The main advantages of renting include having a more flexible living arrangement and saving money in the short term.

1. Flexibility

Many people embrace the instability of being a tenant, preferring to see it as flexibility. When renting, you have the freedom to relocate to another property in another area once your lease has expired. 

2. It is cheaper

Rent payments will typically be less expensive than mortgage payments. This is especially true of desirable inner-city areas where property values are higher. Saving money on monthly costs can help tenants save up so that they can afford to put money down on a house further down the line.

3. No upkeep fees

As a tenant, your landlord pays for any general maintenance. The landlord also covers any body corporate fees if you are living in a strata property. 

Cons of renting

The arguments against renting are that tenants get no long-term return on their money and have less security than homeowners.

1. Rent money goes nowhere

The main case against renting is that your rent costs do nothing for you in the long run. Unlike with mortgage payments, where you are investing into a property that you will eventually own outright, rent only lines your landlord’s pockets. 

2. Less stability

Property leases typically last six or twelve months. When they expire, your landlord can ask you to leave. As a tenant, you also have less freedom with renovation. Unless you have permission from the landlord, you won’t be able to make any structural changes to the property.