Buying a first home is a big life decision. It is important to consider everything when making that choice. Having a property can be great, but there are associated benefits, costs and risks when owning a home.

If you’ve been thinking of buying for a while, instead of renting, this may be a good first sign that you’re ready. Rushing into a half a million-dollar debt, is not something take lightly. Careful consideration is recommended.

First, we’ll cover some signs that it’s time to move away from renting. Then, we’ll cover some of the more common associated benefits and risks with buying property.

Is it time?

1.      Stable Cash Flow

Being able to afford mortgage repayments every month, for the next 20 to 30 years, is a big commitment. If your income is stable, and there is a history of regular salary payments into your bank, this is a good start. If you have any prior commitments such as gym memberships, credit cards etc, and these payments are always made on time, or before the due date, this is good sign that a mortgage may be a suitable commitment. There are some banks with special polices, like allowing a mortgage if someone has only been working casual for 3 months. But sometimes it is best to consider if that lack of stability is worth the risk.

2.      Having a Deposit

One of the biggest challenges to getting into home ownership is saving up a large enough deposit to cover the required amount, when buying a home. Especially if you’re also paying rent. Although there are ways of getting into home ownership sooner, with smaller deposit sizes, it is important that there is a history of savings, and you have some sort of cash buffer. 20% deposits are no longer required, as little as 2% can be used in some cases. However, 2% of $700,000 is still $14,000.

3.      Keeping a Stable Address

Renting is great if you move around a lot, or if you are unsure where you want to live long term. People that buy a home, tend to settle into a property for quite a few years. A fixed address is something to consider when buying a home.

Benefits and Risks

• Growth in Equity

Interest rates are starting to stabilise, and there are whispers of the interest rates coming down over the next few months, coming into 2025. The main benefits of owning property is having somewhere to call your own, and property tends to grow in value over time. As an example of this, Noarlunga Downs in South Australia, has grown 18.6% in value from 2023 to 2024. If you owned a property in that suburb worth $500,000, it would now be worth $593,000. That’s a significant increase in value.

• Somewhere to call home

No more rental inspections. No chance of being asked to leave because the owner is selling the property.

Reducing Risks Associated with Home Ownership

Everything in life has risks. It is a question of whether the benefits outweigh those risks. Home ownership is no different. The short list below is some of the more common risks, associated with homeownership, and how to reduce or avoid them.

• Defects or Deterioration

A common risk with buying property is in the integrity of the property and land. It is imperative to get a building inspection done before buying a home, to make sure there are no defects or deterioration.

• Property Damage

Building insurance is one way to limit the risk when owning property. Having adequate coverage is usually a prerequisite that the bank will ask you to get before they issue any funds to pay for the home

Income protection against Injury or Death

Although this is not a nice topic to bring up, it is important to consider these risks when buying a home. If you are purchasing a property with a family member or loved one, if something were to happen to one of you, and income decreased, is the remaining income enough to cover the mortgage and all other bills and living expenses?

*If you have not considered this type of insurance, and require a quote, please email [email protected]

Owning a home can be a fantastic experience, and one of life’s joys. All aspects of risk do need to be considered. If the above aligns with your goals, from here, the next step would be to speak with an expert to discover what your options are.

If you would like to learn more about options and speak with an expert, scroll below to find our calendar.