• Scheduled savings: When you own a home, your monthly mortgage (loan) repayments are a type of savings plan. Over time you may accumulate equity (increase your ownership) in your house. People renting their home continually pay rent to a lessor without an opportunity to own the home.
• Stable housing costs: Inflation causes most things, including rents, to increase over the years. In contrast, your mortgage repayments will remain (subject to changes in interest rates) around the level originally agreed. This allows you some certainty in budgeting for the future. It also means as the cost of living increases over the years, your mortgage repayments will remain stable and not increase with inflation (subject to changes in interest rates) and in time may become ‘cheaper’ as other costs increase.
• Equity build-up: Homeownership may increase your personal net worth over a period of time. As you make repayments and build up equity (actual ownership), you could use your home as security to borrow more money for other things such as home improvements or investments. When you pay off the full amount of your mortgage, you will be able to enjoy life free of rent or mortgage repayments. Your home may also increase in value and be worth more than you paid for it.

DISADVANTAGES OF OWNING A HOME

Owning your home takes a big investment in time, energy and money. Repaying a home loan is a long-term commitment. Being prepared for owning a home means understanding the risks and responsibilities of buying property. It is important not to over-extend yourself (borrow too much or commit to too high repayments) to ensure you have money left for everyday living expenses as well as emergencies. You should think about how things such as interest rate rises or a loss of income
would affect your homeownership goals. 

Some possible disadvantages of homeownership are:

• High costs: You can usually expect to pay more in mortgage repayments as a home owner than you did as a renter, especially in the first few years. There are also extra ongoing expenses such as council rates, insurance and maintenance. Initial investment costs can be particularly expensive and may include a deposit, application fees, legal (conveyancing) fees, stamp duty, insurance, and moving costs. This increased financial commitment of homeownership can change your lifestyle as there may be less money available for holidays, eating out and entertainment.
• Decreased mobility: Home owners cannot move as easily as renters. The costs of buying a new home and subsequently selling the property would make moving expensive. If you plan to move to a new location within the next year or two, now may not be the time to buy a house. 
• Repairs and maintenance: When you rent a property, the landlord is responsible for repairs and maintenance. When you purchase a property, you are responsible for taking care of repairs. The costs of repairs and maintenance on an older home are usually more than on a newer home. As a home owner, you will need to put aside regular savings for unexpected repairs and general maintenance.
• Possibility of repossession: Failing to keep up your repayments is called defaulting. A lender may repossess and sell a property, and sue for the balance of the loan should a borrower default. Mortgage insurance covers a lender in the event that the sale of a property is unable to cover any outstanding loan amount. While mortgage insurance premiums are usually paid by the borrower, this protects the lender not the borrower. A mortgage insurer is subsequently able to pursue you for the outstanding debt.
• Sale of property: You may not be able to sell your home quickly if you need or want to move to a new location. The sale would depend on market conditions, such as demand for properties in the area and the current economic climate.
• Property value: Properties can increase or decrease in value over time, in response to economic and market conditions. This is one of the financial risks of homeownership. In fact, should you buy your home during a period of high demand, as demand for homes slows or decreases, you could find that your home decreases in value and leaves you owing more under the mortgage than your home is worth.
  Your home value may also decrease because of changes in your neighbourhood or community. In some urban and regional areas of the State, there is no active resale market and it may be difficult to sell your house in the future for what you paid for it. A decreased value of your property means you may still owe money, even though the property has been sold. It may even prevent you from selling the house, as you may be unable to repay the outstanding mortgage.

ADVANTAGES OF RENTING

Renting is usually cheaper, more flexible and less complicated than owning a home. Apart from your lease obligations, if something goes wrong the owner pays to fix it, not you. Renting is also about lifestyle – often you can afford to rent a nicer place than if you bought one, or choose a more expensive area. For some families, renting is the best option.

• Costs: Renters have lower initial costs and lower ongoing costs. Usually renters pay one month’s rent in advance and a security deposit (bond).
• Financial risk: As a renter, your only chance of financial loss of investment is your rental bond, and the commitment of paying rent for the period of the lease. As an owner, your chance of financial loss can be quite high.
• Regular living costs: Your monthly living costs are easy to predict, as the rent is generally fixed for the term of the lease.
• Mobility: You can move house relatively easily as your needs and income change. Renting is often also easier if you travel a lot and can be a good way to learn about different areas before you buy a home.
• Alternative investments: As a renter with a regular savings plan, you may be better off investing in other areas, such as shares. Instead of a home being your only investment, this could allow you to vary your investments and minimise your risk.

DISADVANTAGES OF RENTING

• No equity gains: Through monthly mortgage repayments, a home owner can gradually build up an asset. As a renter, you do not gain any equity (that is, any ownership interest) in the property you are renting.
• No ability to renovate: You do not have the freedom to renovate, redecorate or change your home to suit your needs.
• Less security: If you rent, you face the possibility of your lease not being renewed, rent increases, and of being evicted if problems arise. Each time you have to relocate there will be expenses involved.

Reference: Queensland government website (a PDF document)

Other similar articles: Victoria's Youth Central, eChoice, and SMH's article on the renting advantages.