AMP's Tomorrow Fund

Am I better off renting or buying a home?

The thought of buying a home can be exciting and daunting. The deposit amount and ongoing interest charges can really add up, making home ownership seem out-of-reach—especially in today’s housing market.

It’s no wonder many potential home buyers are asking whether they’d be better off renting. The good news is renting and buying don’t have to be mutually exclusive.

Isn’t renting just throwing money away?

Yes and no. Rent money can be dead money. Because if you just rent and don’t invest, your money can’t grow and you’re simply paying off someone else’s home loan or providing rental income for them.

But the non-deductible interest on a home loan can also been seen as a waste. Renting (combined with investing) may work out better financially than buying your own home.

What if I choose not to buy at all?

Recent media reports suggest an investment in shares or super could work out better financially than buying a home. And with super’s tax concessions, it can be a cost-effective way to build long-term wealth.

Renting and investing in property

Say you don’t want to live in an area that’s currently affordable to buy in—you could rent in an area that suits your lifestyle and buy in an area that may be a good investment.

You could end up with the best of both worlds: your loan interest payments and various expenses for your investment property may be tax-deductible and you can enjoy living in an area of your choice.

Deciding on the best option

There’s a lot to think about when weighing up rent versus buy and what’s right for you—make sure you consider:

  1. The purchase price of property and the on-going costs associated with home ownership compared with the cost of renting
  2. Your lifestyle and flexibility needs—visit the ins and outs of property
  3. Whether you’ll be better off renting instead of buying— head to for our rent vs buy calculator.

And remember that whatever you decide, you can be better off by planning ahead. Speak with a financial adviser so you have a clear idea of your options and how to reach your goals—you’ll also develop good financial habits along the way to help you build wealth.

If you don’t have a financial adviser, call AMP on 131 267 Monday to Friday from 8am to 8pm and Saturday and Sunday between 9am and 5pm AEST and we’ll put you in touch with someone who can help.

What you need to know

Any advice in this article is general and does not take into account your personal circumstances so before making any decisions, consider your circumstances and the relevant product disclosure statement.