For some, acquiring real estate is a sign of financial stability, and for others, it is an excellent investment in the long run, thanks to the appreciation it accumulates over time.
However, there are factors that need to be taken into consideration before buying real estate that could make you change your mind.
Why You Shouldn’t Own Real Estate #1 : Appreciation is a Consequence of Inflation
Appreciation may be caused by inflation. This doesn’t mean that real estate never truly increases in value, but it’s important to differentiate between the increase in selling price that is due to added value, such as new amenities in the area, and the increase in price that merely reflects inflation.
Why You Shouldn’t Own Real Estate #2 : Consequences of Taking a Mortgage
Credit rating depends largely on the ability to pay in full and on time any and all debts that have been acquired with the financial institutions. If you accept a mortgage and you become unable to pay it, this will reflect on your credit rating, and may lead to difficulties in acquiring loans later.
When acquiring a home loan in Singapore, one can choose between a SIBOR and a SOR based loan. SIBOR stands for Singapore Interbank Offered Rate, while SOR stands for Swap Offer Rate. Both rates have advantages and disadvantages, and they must be considered before choosing one.
SIBOR is determined by the interest rates of banks in Singapore when they lend unsecured funds to each other. It is more stable than SOR as a result, since these rates don’t fluctuate much.
SOR, on the other hand, is determined by the current state of the US economy because it is determined by the interest rate if the same amount of money was borrowed in US dollars. Due to this, the SOR is much more volatile than the SIBOR.
In general, SOR is a better choice for those who expect rates to fall dramatically, but who are also aware that they could rise just as quickly. SIBOR, however, is a more stable alternative, but one which will allow for little to no savings on the home loan.
Why You Shouldn’t Own Real Estate #3 : Renting can be a Better Option
Some jobs require people to be constantly on the move; moving to other cities, other states, or even other countries on a regular basis. If you’re interested in these types of jobs, the benefits of owning real estate as opposed to merely rent an apartment are by far outweighed.
In Singapore, it is currently cheaper to rent than to buy a home. Square Foot Research has found that if prices stay the same or appreciate less than 2% in the following years, renting could prove to be a better option than buying residential property, at least when it comes to cost.
Why You Shouldn’t Own Real Estate #4 : Houses are Expensive to Maintain
Whether you’re buying the house for your personal use, or with the intention to rent it out, large sums of money must be invested in it. The prices of the house and the mortgage you will undertake aren’t the only costs that need to be taken into consideration. Repair and maintenance will be constant costs for as long as the property is yours. Furnishing and refurbishing every few years must also be taken care of.Recommend0 recommendationsPublished in