Choosing between buying a home or renting is something that most people would have to deal with at any point of their life. Depending on your lifestyle, job and finances, the most important thing to remember is not to keep up with the Joneses and potentially bankrupt yourself!
There are a myriad of things to consider when it comes to making a decision about your chosen home. In addition to whether or not you’d be able to afford a home, there are also other factors such as:
- Would you like to start a family?
- Does your job require you to do a lot of travelling?
- Are you comfortable with staying in one spot for a long time?
- Do you want to shoulder the responsibility of maintaining the property?
- Do you earn a stable income?
For a lot of people, buying a home is a way to establish their ‘roots’ in an area and provide a home for their family. Others see buying property as a way to generate rental income. On the other hand those who lead the nomadic life, due to their jobs or just their personal preference, would usually choose to rent as it’s low commitment and doesn’t require an eye-watering amount of money upfront.
There are advantages and disadvantages to buying a home and the same goes to renting a home. Here are a few guidelines for those who might need a little help with this conundrum.
MAIN BENEFITS
The main benefits of buying a home is that you have the peace of mind of having a place to live in until after you retire. A home is also a good investment asset especially if it’s in a burgeoning neighbourhood. Your home can become a second stream of income from rent collection and also as collateral when it comes to taking out other kinds of loans but this isn’t advisable especially if you’re uninformed about the ins and outs of remortgage. Another pro to buying a home is that you’re free to decorate, remodel and furnish your home according to your needs or tastes.
Renting allows you to have more disposable income to spend, save or invest in anything you want. It is a little bit more flexible in that there are short term contracts that allows you to terminate your lease if you decide to move elsewhere or encounter any financial issues. Maintenance fees are borne by your landlord as well so if anything breaks in the home, you (usually) won’t have to pay for repairs.
Quote: All in all, there are a myriad of reasons to buy a home versus renting but at the end of the day, you are the one who needs to have a good think before making a decision.
MONEY MATTERS
Here’s the kicker when it comes to buying a home; the cost. The minimum down payment for homes usually starts from 10 percent. This means that if you’d like to purchase a home that costs RM 500,000, you’ll have to pay RM 50,000 as a down payment first. There are also very few banks that would offer a 100 percent loan for first time home buyers and take note that the more you borrow, the higher the interest you pay!
In addition to the 10 percent for the down payment, there are other costs that need to be paid up front and this includes Sales & Purchase Agreement (SPA) fees, legal fees, stamp duties and also your agent’s fees and GST (Goods & Service Tax). There’s also Quit Rent and Assessment Tax (Cukai Pintu) which is due twice a year for all types of homeowners. For non-landed properties, homeowners will also have to pay the sinking fund and monthly maintenance fees.
There’s also the matter of maintaining your own property and bearing the full costs of any and all repairs in your home. Buying a home is also a major type of commitment because of the mortgage which is a maximum of 35 years!
For those who rent instead, the upfront deposit is usually a month’s to three months’ worth of rent as security deposit plus one month’s worth of utilities. Another thing to think about is that some places have a minimum tenancy period so do check with the landlord. If there is one, you’re obliged to stay and pay rent at that particular place until your contract is up.
All in all, there are a myriad of reasons to buy a home versus renting but at the end of the day, you are the one who needs to have a good think before making a decision. The most important thing is to do as much research as you can and equip yourself with all the knowledge you need before taking the plunge!
TIPS!
We highly recommend using these online resources to learn more about housing, costs, taxes and bank loans.
- com.my has plenty of resources when it comes to homes and properties across Malaysia in addition to news on new property launches and has rental listings too.
- com.my educates visitors on loans, credit cards, insurance and more.
- my teaches its readers on money management, investment, insurance, cards and more with a lot of articles on property.
References: imoney.my; Loanstreet.com.my.
