Contact Us

(02) 6061 4599


13/495-499 Dean St Albury NSW 2640

Online Enquiry

* Required fields

Top 4 Reasons Why a Mortgage is Better Than Paying Rent to Another Homeowner

Posted By  
10:24 AM

Are you planning to move to a new house? If yes, you've got 2 options; you can buy a house on a mortgage, or you can choose to pay the rent. Both these options are pretty feasible as you don't have to pay a huge sum of money upfront. 

Some people find paying rent payments is cheaper than buying a house, but if you ask us what's a better option, we would say a mortgage is a much better option. There's not one, but numerous reasons why we say so. 

When you pay rent to a landlord, you're just paying their mortgage for them for letting you live in their house. However, when you pay a mortgage, you're actually paying for YOUR house, and by the time you're done paying the price for the house, the property will be yours!

This is one of the many reasons we say paying a mortgage is better than paying rent. Let's look at more reasons in detail below:

1.     Mortgage Helps You Build Equity

For starters, equity is the market value of your property minus the amount you owe. When you buy a house on a mortgage, you're building equity which isn't the case when you rent a house. Equity is one of the most valuable assets of a homeowner that helps them build wealth. So, while you may think that paying a mortgage is exhausting your wealth (mortgage payments are much higher than rent), it's actually helping you build wealth.

2.     Mortgage Helps You Build Credit

Making timely mortgage payments can help you build good credit. When you're paying rent, any delays in rental payments can impact your credit score. Even if you pay your rent on time, not all landlords give this information out to the crediting agencies. This means making rental payments on time may not benefit your credit score much but not paying on time will definitely affect it negatively. However, the agencies record regular mortgage payments, which helps you build a good credit record. 

3.     Appreciation of Property Value

If you buy a house in the right location, the property's value will only increase with time. This means that by the time you complete your mortgage payments, your property will be worth a lot more than what you paid. As for paying rent, appreciation of the value of the house you're living in doesn't benefit you in any way!

4.     Tax Benefits on Mortgage Payments

Another reason a mortgage is better than rent is that you can get certain tax benefits on mortgage payments but not on rental payments. Homeowners qualify for some tax benefits which tenants don't. Homeowners' property taxes and mortgage interest are deductible from their annual income taxes. This means you'll have to pay less income tax every year. 

Closing Word

A mortgage is definitely better than rent. Although rent payments are lower than mortgage payments, which is why most people opt for living in rented properties, the long-term benefits of a mortgage make it a better option.

If you're looking for reliable brokers for a home loan, look no further than Humble Finance Brokers. We help people build their property portfolios and will help you the best we can!