When you have decided to have a place of your own, one question could confuse you. Should you rent or buy a property? Let’s take a look at the advantages and disadvantages of both to help you make a good decision.
Renting a Property
A Cheaper Alternative to Buying
Renting a home is a cheaper alternative when compared to buying a property. A decent property in Malaysia is priced over RM300,000. If you are planning to take a home loan to finance your purchase, you will end up spending more. Apart from arranging the down payment, you also pay legal fees, homeowners insurance, property taxes, and other property-related costs when you buy a new home.
On the other hand, if you decide to rent a home in Malaysia, you will find homes for RM1,000 per month and above. If you plan to stay in the same house for a longer tenure you will still pay only a lesser amount than what you pay for a property purchase.
Consider you are renting a home worth RM300,000 in Malaysia. You pay the landlord rent worth RM1,200 for the first two years, and the rent increases by RM200 every 2 years. If you plan to stay in the same property for the next 10 years, the total amount you have spent on rent will be approximately RM192,000. This figure is much lower than the cost of the property. Which means, you have saved a lot of money.
You Can Move Out Whenever You Want
Renting gives you the flexibility to move to a new home when the need arises. Imagine you have rented a place in a city. After living there for a few years, you get a lucrative opportunity in another city. If it was your own home, you would be confused whether you need to take up the new job or not.
With a rental property, you don’t have to think too much. You can just pack your bags and move to another city and find another place on rent. Even if you decide to take up the offer, commuting to a new city on a daily basis can take up a lot of your time and money.
You Can Stay at Homes with Special Facilities
Today, you find many homes, usually apartment complexes, with excellent amenities, which you might not get when you buy a house. There are homes with gymnasiums, swimming pools, playgrounds, and play areas for children. The cost of these amenities will be included in the rent, so as a tenant you don’t have to pay the landlord anything extra. Of course, homeowners can also have access to these facilities in their localities, but they will have to spend an extra amount. Also these might not be in close proximity to their respective residences.
Property Value Can Fluctuate
Though real estate is a very good investment, with market fluctuations and changes in the global economy, the value of a property can decrease. If you buy a home for a higher value and in a years’ time if the economy is down, the value of your home decreases drastically.
You Don’t Have to Worry About Monthly Payments
Life is much easier when you don’t have any debts. In Malaysia, mortgage loans are secured, long-term loans. You can get loans for up to 35 years. Paying the monthly instalment for the next 35 years can be a little daunting.
When you stay on rent, you don’t have to bother about monthly instalments. Instead of spending on loans for years, you can utilize the money for any other financial requirements. Also, applying for a long-term loan is a big obligation you make. For the next 30 to 35 years, you must ensure you have a permanent job to pay off the loan.
Buying a Property
Your House is an Asset
When you maintain your home regularly, the value of your property increases. In case you want to sell your property in future, you could get a good price for the house. Since your home is a tangible investment, you build equity and credit when you sell it.
If you are finding it difficult to make mortgage payments, you can also rent a part of your home. The rental money can be help you repay your mortgages or take care of your other finances.
You are not Bound by any Rules
When you stay in a house on rent, you are supposed to follow certain rules and regulations set by the landlord. Some landlords might not allow their tenants to keep pets. Some might not give their tenants permission to drill holes in the wall to hang artwork. As a tenant you need to abide by the rules strictly, else the contract could even be terminated.
You Won’t be Asked to Move
Sometimes when you stay on rent, the owner could decide to sell the property. They could ask you to move after the contract ends. There is no guarantee that the rental agreement will be renewed. If you request the landlord to renew the rental agreement, he would increase the rental rate.
When you have your own home, you can stay at the locality whenever you want to. If you decide to move to another place, you can buy another property in the new city and sell this one or give it on rent.
You Don’t Have to Deal with Landlords
Many landlords visit their tenant’s home to see how they have been keeping the property. Most of these visits are unannounced. When you have your own home, you don’t have to deal with intrusive landlords.
A Sense of Belonging
Most of us dream of having a place of our own someday. Living in your house gives you that sense of belonging and satisfaction that you have achieved a long-term goal. There’s nothing like coming home after a hard day’s work. Moreover, you feel safer and more secure in your home than when you stay in a rental apartment.
Both renting and buying a property have their own advantages and disadvantages. If you are looking to invest in something that will help you in future, buying a property will be a good idea. In Malaysia, there are many banks that offer mortgage loans at good rates. The government has also introduced schemes for low and middle-income earners to help them buy their first home.
On the other hand, if you have other finances to take care of, you can rent a home. Renting is also a good option for those who travel frequently or have plans to go abroad.