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Buying
Vs Renting |
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More than 90% of
households in Singapore own the homes they live in. In some other countries,
it is quite common for people to rent their homes, rather than buy.
In Singapore, rental is typically seen
as short-term accommodation. For example, a young couple may choose to rent
because they do not have cash for the down-payment for a property.
One likely reason why most people choose to buy
instead of rent is that they can use CPF savings to pay the housing loan,
instead of paying out-of-pocket cash for rentals. Also, while rental is an
expense, a housing loan instalment is a payment for an asset.
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Buying a home:
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Advantages
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Disadvantages
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If you have
bought prudently, your property value may increase over time
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A cash deposit
is needed (though this will reduce the mortgage amount)
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You may
renovate and decorate to suit your taste
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Risk of not
being able to meet mortgage payments due to unemployment or
changes in income level
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Easier to
develop a sense of permanence and belonging to the neighbourhood
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Interest cost
on a mortgage loan may be as much as the cost of the home itself
(depending on the mortgage details)!
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Renting a home:
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Advantages
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Disadvantages
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More
flexibility in changing your home if your financial situation
changes
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You may be
subject to rental increases
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When family
size grows or contracts, you can change your living environment
accordingly
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You won’t
benefit from any increase in the value of the property
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You know
exactly how much you have to spend each month on housing expenses.
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Some people
prefer to have “a place of my own” which carries a positive
emotional feeling
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