Paying rent has become more expensive than mortgage repayments in many Aussie suburbs. But is the rent amount less than the mortgage amount in Melbourne?
Together with Sydney, Melbourne is one of the fewer suburbs where mortgage repayments are more expensive than rent. However, there are certain parts of Melbourne where it’s cheaper to buy houses than pay rent, specifically around 7.3% in number.
But why exactly is this happening, and why is it still more expensive to pay rent than a mortgage repayment in Melbourne?
The big capital cities are the exception
In many markets in Australia, weekly mortgage repayments have been noticeably cheaper compared to rent. The best example is Perth’s city unit market, with mortgage repayments around $584 less than the suburb’s rental prices. Darwin city units also follow close behind with a unit mortgage costing around $516 less than weekly rent.
This phenomenon happened because of the pandemic when most people worked and studied remotely. Multiple sources record low interest rates for mortgage debts at this time.
As we moved back to a face-to-face setup, the mortgage repayments rates have steadily increased to around $815 a month. Rent in Melbourne is considerably high due to returning tenants and tourists.
Benefits of paying rent in Melbourne
In a big city like Melbourne, there are many reasons to rent instead of buy. The main reason is its cheaper rental payments than house and unit mortgages. Apart from that, here are several other reasons why it can be better to rent than get a home loan:
Flexibility
For students, young professionals, and travellers, renting is better for flexibility. You can pick out the best spot near your school and office and quickly move out for relocation as needed.
No maintenance fees
As a young professional whose career has just started, paying rent is much better since you won’t be paying for the repair, maintenance, and lenders mortgage insurance.
No interest rates
Additionally, you won’t have to worry about high-interest rates. In a high-value city like Melbourne, the living costs and interest rates are not for someone just starting their career!
No down payment
Lastly, you don’t need a large amount of money to secure the home or unit of your dreams.
Renting with pets
Renting with a cat in Melbourne, or any pet for that matter, can be a challenge. Although around 2/3 of households in Australia own pets, pet-friendly rentals are still hard to find.
When you do, it’s important that you prove that you’re a responsible owner. Hence, landlords will most likely ask to see your pet’s documents.
Benefits of getting a home loan in Melbourne
Now if you have money to spend, then there are also a lot of benefits to getting a home loan instead of renting cheaper. Most especially for families.
Here are some of the best perks you can enjoy when you buy than rent:
Building equity
All home loan payments and maintenance costs will add value to your home. Hence, you can use it as an investment property.
Stable living
Mortgage holders have more stability and freedom. You can stay how long you want and renovate however you want. Plus, you eventually finish paying off your house and unit mortgages in the future and enjoy no monthly repayments!
Better credit scores
An Australian Credit Licence holder also benefits greatly from being a mortgage holder as it increases your credit score.
Get incentives and support
Lastly, you can enjoy tons of support and incentives. This includes the First Home Loan Deposit Scheme and so on.
Is buying a house in Melbourne with no deposit possible?
In some cases, you can buy a house without a deposit. However, the chances of you getting a zero down payment opportunity is much lower than finding a cheaper mortgage.
The best way to get a home with zero down payment is through a guarantor home loan. With one, someone lends you a portion of their home equity to pay for the supposed down payment amount.
Conclusion: is the rent amount less than the mortgage amount in Melbourne?
Because of how saturated the city is with short-term residents, it’s rare to find cheaper mortgages in Melbourne. Altogether, the city is best for young professionals building a career.
However, that doesn’t mean it’s impossible. With the right resources and enough funds to spend, there are a lot of benefits and opportunities to enjoy when you buy a home in Melbourne.
