There’s a lot to love about flying the nest. It’s the freedom to turn the beats up loud or stay in bed till midday. And bonus: no more tracking down the latest hiding spot for the chocolate biscuits.
Yep. You’re outta there. But before you start planning the big housewarming party, take a deep breath. Living out of home means paying for a roof over your head, and you need to think about whether you want to pay rent to a landlord or pay for a place you own.
Renting can have upsides
If you’re not sure where you want to live long term and you’d like to check out a few different locations, renting offers the flexibility to move around relatively easily.
Renting isn’t cheap but by banding together with a few flatmates, or by moving a few blocks away from the hustle bustle, you can trim the cost. Choose your flatmates with care though; shared living can call for a fair dose of tolerance.
If your flatmate’s habit of playing Slipknot at 2am or finding yourself third in line to the shower each morning is going to be a problem, renting a place solo may be a more suitable (though more expensive) option.
One of the big pluses of renting is you don’t have to worry about maintenance or repairs. If the hot water heater breaks down, it’s the landlord’s problem. If the roof leaks during a storm, it’s the landlord’s job to fix it. But if your best mate spills red wine on the carpet it’s very much your problem. One way or another you’ll be slugged for the cleaning bill (that’s what the bond is for).
But along with the pluses, the big downside of renting is the irrefutable fact that you don’t own the place. You are paying your hard earned dollars into someone else’s pocket. No matter how much you may form a connection to the property, at any time the landlord can opt to sell up or raise the rent beyond your budget. It can mean having to relocate – even if you don’t want to – bringing a whole raft of moving expenses.
Buy a home – be your own landlord
If you can save a first-home deposit, buying a home offers considerable pluses. Yes, it’s a major responsibility, but by paying off a home you are building your wealth – not the landlord’s.
You also have the freedom to decorate or renovate the place to your liking. And depending on where you buy, the loan repayments may not be too different from market rents. However, as a homeowner, you’re going to face costs like home building insurance, repairs and maintenance, and council rates.
Before moving out, do the maths to be sure you can comfortably make your monthly rental or mortgage payments. Setting a budget before you pack your bags means you won’t be forced to live off instant noodles (or go back to mum and dad’s every night for a free dinner).
Renting whilst saving a deposit of your own can also be an option. But sticking to a budget that includes saving as well as paying rent and to be able to live a little, too is a must.
Like to know more about the pros and cons of moving out? Check out ME Bank's fast, fun and free online finance education hub.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.