SHOULD I BUY OR RENT HOUSE FOR OWN STAY

One of the key question faced by the younger generation relating to the property buying for own stay is whether to buy or rent properties. Here is a look at the current trend at how youngsters decide on whether to buy or rent, as well as further analysis why they should start considering buying instead of renting.

The Trend Of Renting A House

It is highly unlikely for an individual to get a decent unit only after a few years of working, without spending their parents’ EPF or savings. This is the reason why so many choose to rent instead of buying. The first reason is of course, affordability. Obviously you can’t really purchase a property if you can’t afford it, no matter how much you want to. Secondly, when you compare the furnishings, location, security, and overall condition of the property, there is likely a big difference and renting can most likely provide a better living environment while having lower monthly overheads. With an improved quality of life, saving for that future property might seem a little bit easier.

On the practical side of things, renting provides several other benefits that are particularly attractive to the Millennials. Number one, renting provides flexibility to the lessee, meaning you never feel encumbered and can move to another place easily if you choose not to extend the contracts. Apart from that, paying a few months’ deposit is a whole lot easier than having to pay that hefty down payment sum. We know that renting is a preferred option for many Malaysians, but when is buying a better option? Should I even buy a property?

Why Should You Start Consider Buying Instead Of Renting

There are several benefits of buying instead of renting. For starters, you would have full control of the property you purchased and the monthly payment will no longer feel like paying for nothing. The property purchased is likely to experience capital value appreciation as time goes by and you would no longer feel like wasting money on rent!

Due to the stable value appreciation of properties within the Malaysia real estate market, the property can be used as a hedge against inflation and you will no longer have to worry about your cash decreasing in value. Similarly, owning a property means that you can rent it out once you are no longer staying in it and pay part or all of your mortgage using the rent, and better yet, earn extra income through it.

Apart from financial and investment perks, buying also means you have more freedom when it comes to the decoration, design and structure of the building, you can remodel and make improvements as you see fit. You will also have less restrictions on your lifestyle as you can now make your own house rules. Another benefit that is less obvious is the fact that you will be forced to budget your expenses so that you can make mortgage payments monthly, and when you pay on time, it improves your credit rating.

Just as paying on time improves credit rating, constantly missing payments equals a bad credit rating, which hinders future loan applications, so it is important to keep this in mind so it doesn’t affect you negatively. Similarly, the value of the property will always be a risk as property prices fluctuates due to unforeseen and uncontrollable circumstances. Excluding that, purchasing a property also means increased spending, including taxes, insurance, maintenance, and repairs, so be sure to take these into consideration or you could be financially stressed. When you own a house, there is more than a financial obligation as you will have to be staying in that property for quite some time. There is less flexibility for choosing a job especially out-of-town jobs.

Conclusion

To summarize the above, it is important to evaluate yourself financially before deciding to buy or rent. Even if you can afford to purchase a house, you should still consider the lifestyle you prefer and decide if the purchase is viable. The two most important factors when deciding to buy a house are the length of stay in the new house as well as the appreciation amount for the house from the owner.