Securing your own home is a sure sign that you are self-governing and self-determining individual. To others, this is a dream come true but is it really? This is the right time to consider a house since the real estate sector here in Singapore is growing incessantly. However, buying is not always an option for Singaporeans. Many people here simply consider renting their homes.
So, what would you consider? Should you buy a home or simply rent it? This article can help you arrive at a decision. You only need to be open minded. The first concept that you have to learn is opportunity cost. To easily understand the concept, think of the benefits you would give up if you pick one option over the other.
Here are the things that you should consider when deciding whether to buy or rent your home:
- On price: Price is important when you consider a house. You have to buy a house if the property costs not more than thrice your salary so you can keep up with the payment and the taxes. You have to rent if the monthly rate is expected to stay long for a long time.
- On budget: With regards to your budget, you have to buy a house if your current income come cover at least 20% of the mortgage down payment. However, if the cost wipes all your money, renting is the best alternative.
- On net worth: You have to buy if you have healthy investment portfolio to supplement your home purchase but if you have lesser opportunities (with your day job), consider renting first.
- On ownership fees: Aside from the mortgage, you need to consider ownership fees like property tax, transaction fees and of course, new furnishings. If you have more than enough for these ownership fees, it is time that you buy a house but rent if you rather give the costs to a manager for upkeep costs.
- On length of stay: Naturally, if you do not plan to stay long in that specific area, there is no point in buying a house. You should prefer renting but if you plan to settle there and build a family, buying a house is the best option.
These factors will surely help you decide. It is not easy to live on your own but you will thrive if you think closely in terms of making financial decisions. Having your own home (whether renting or buying it) is one step closer to your dream.