We started looking at places to buy as soon as the ink on our own home’s contracts were dry. We’d just sold and we were fired up and excited to buy our next home. But everything changed last week when the coronavirus crisis took hold.
In our mid-30s, my partner and I have lived in more than our fair share of rentals. So when we finally managed to save up a deposit and buy a home, we couldn’t have been happier.
Three years on, and we are ready to buy our next place. But the global health pandemic has thrown our plans into disarray.
Here’s why we have decided to rent our next home for now.
1. Job security is a factor
We’ve been extremely lucky so far, we both still have jobs for the foreseeable future unlike many other Australians.
Having a steady income is no longer something we take for granted; and unemployment is likely to increase as the crisis continues to unfold.
I already know scores of people around my age, some with children and mortgages, that no longer have jobs or have had their hours drastically cut back.
While my partner and I both count ourselves as lucky, we don’t know what the future holds – no one does – even from one month to the next.
With that in mind, it’s difficult to imagine committing to a 30-year relationship with the bank right now, despite some offering mortgage holidays.
The only decision that feels responsible is to hold off on any big decisions and wait to see how it all turns out.
2. Our deposit could be at risk
Did you know that, technically, a bank can withdraw funding if your financial circumstances change during the selling/purchasing settlement period? Which means, if – in the time between when you sign the contracts, pay the deposit and wait for the settlement period to elapse – you lose your job, you could risk never seeing that money again.
If you cannot pay the remaining funds owing at settlement, i.e. if the bank refuses to lend you the money for the new mortgage, then the vendor gets to not only keep the deposit you put down when you signed the contract, but potentially sue you for any money they lose when re-listing the home.
Add to that the risk of something happening with the settlement of our current home and funding fails, then we’d also be in dire straights.
After years of working, saving, not taking any overseas holidays and avoiding too many smashed avocado breakfasts, our deposit feels like a priceless treasure and definitely not worth risking at a time of unprecedented financial chaos.
3. The mortgage isn’t the only cost
I believe that owning a home is a great thing to do, if you can do it.
Lessons from my own mother’s lack of formal superannuation taught me that saving for your future is one of the most important things you can do for yourself, and owning a home is one path to financial security in old age.
Experts concur, saying that owning a home is the single most important investment you can make if you get the chance.
But right now, owning a home, and all that comes with it, feels like it could be a weight around our necks.
Any homeowner will tell you, the mortgage payment isn’t the only cash you’ll be forking out. Add to that the interest fees, council rates, water bills and maintenance that comes with owning a house.
When you’re facing financial uncertainty, these are not costs we’re particularly excited about.
4. The stress and anxiety around COVID-19 is real
One of the side-effects of this crisis, which hasn’t yet been widely discussed, is the mental health effects.
The trauma of this stressful time is hitting people hard now, and will continue to be felt for years to come.
At the end of the day, I feel relieved waking up knowing I haven’t created more stress for myself by committing to something that wasn’t a necessity.
So, while we can’t wait to purchase our next home, our gut feeling is that renting is the right move for us – with fewer commitments and responsibilities compared to buying.