How renting can help you own your own home

One in three Australians currently rent their home, and that statistic is only increasing as property prices continue to rise nationally.

But did you know there are benefits to renting, and a good track record as a tenant can actually set you on the path to owning your own home?

Here’s a quick recap of the pros of renting and how tenants are using the rental process to get a foot on the ladder in the property market.

Renting a rising trend

According to the Australian Bureau of Statistics, renting has proved a rising trend in recent years. Back in 1995, just a quarter of the population rented, but by 2018 that figure had risen to almost a third (32 per cent).

The rise in renting has been partly driven by the increase in property values, but is also attributed to the benefits renting can offer when it comes to transiency and sheer convenience.

So, what exactly do we mean?

Renting benefits

While property ownership is often considered the great Australian dream, there are benefits to renting especially at a time in your life when you are likely to move on a regular basis.

Renting allows you to reside in a property without the expense of maintenance, and due to the fact leases generally last six months or a year, it also enables you to easily move if required.

Renting can also be a more affordable weekly expense than servicing a mortgage, especially in major cities like Sydney, Melbourne and Brisbane.

This has led to trends like rentvesting, where people rent in the cities where they need to live for work or study but purchase in areas where they can afford. They then use the rental income from their investment property to service their mortgage.

Meanwhile, renting allows you to get to know a suburb or region without the commitment of buying. Akin to “try before you buy”, it allows you to understand the pros and cons of a suburb or area to see if this is the place that you’d like to settle.

And did you know, a good rental track record can then also help you secure the property of your dreams or that rentvesting property you aim to buy.

How renting can help you own your own home

When you’re a tenant, the rent you pay is a weekly outgoing expense that some lenders look at as genuine savings when it comes to assessing whether you are eligible for a loan.

That means you may not be required to save as much as usual in order to apply for a mortgage, because if the lender can see a track record of consistent payments, that are made on time, it indicates you’re ability to manage a financial commitment.

In other words, it showcases your ability to service a mortgage.

You will still need a loan deposit, and not all lenders count rent as genuine savings, but if they do it can help you get into a property sooner.

Generally, these lenders will look for at least six months’ rental history, and the names on the lease will need to be the same as those applying for a loan.

It just goes to show that renting is potentially a viable path into your own property and in the process, there are some benefits to enjoy along the way.

How we can help

At Eview Group our experienced property managers pride themselves on establishing great relationships with both tenants and landlords. We appreciate as a renter, the property you reside in is the place you call home.

You can learn more about our current rental opportunities available here.