For some, acquiring real estate is a sign of financial stability. Others also consider it as an excellent investment, in the long run, thanks to the appreciation it accumulates over time. However, there are certain factors that you need to consider before buying real estate that could make you change your mind.
Why You Should Reconsider Buying A Real Estate
Reason #1: Appreciation is a Consequence of Inflation
Appreciation is caused by inflation. This doesn’t mean that the real estate never truly increases in value. However, 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.
Reason #2: Consequences of Taking a Mortgage
Credit rating depends largely on the ability to pay in full and on time any or all of the debts that have been acquired by the financial institutions. If you accept a mortgage and are unable to pay it back, this will reflect on your credit rating which may lead to difficulties in acquiring loans later in the future.
When acquiring a home loan in Singapore, you 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 the rates have advantages as well as disadvantages and they must be considered before choosing one.
SOR, on the other hand, is determined by the current state of the US economy as it’s 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.
Read: 5 Property Websites In Singapore To Buy, Rent & Sell Houses
Reason #3: Renting can be a Better Option
Some jobs require people to be constantly on the move 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 renting an apartment will blur out.
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.
Reason #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.
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