Planning to buy a new house as your primary residence? We have something for you.
Buying a house has long been considered a good investment. You must have often read and heard that purchasing a home is a smart move. Homes provide a lot of intangible benefits such as the pride of homeownership. Also, you are free to personalize your house as per your choice and will.
But if you have agreed to what people have been advising, and if you are all set to buy a house in Singapore, we request you to wait. Wait till we tell you why buying a single-family house or condo apartment in Singapore isn’t always a great idea and the best investment.
Impact on Quality of Living
When you save for a very long time and then buy a single-family house in Singapore, you utilise all your life savings and are hardly left with any extra cash at hand. Cutting down on additional and sometimes even a few necessary expenses result in heavy savings for buying a new house. In other words, purchasing a house has a serious impact on your lifestyle and quality of living. This kind of investment is not only about the upfront cost you pay while buying the house.
You have to bear countless other expenses in the future to ensure that your house is managed and maintained well. These additional costs will leave you with lesser cash for a good standard of living, leading to compromises in your way of living.
Costlier Extra Expenses
As we mentioned, buying a single-family house or apartment doesn’t only involve the one-time purchase cost. There are several other expenses that you that you have to bear till you own the house. When you own a house, you also own all the repair and maintenance costs related to the house, unlike the scenario when you rent a house. When you rent a house, you are free from the unpredictable costs of repairs, maintenance, home upgrades, tax fluctuations, etc. But when you buy and own a house, you are responsible for every repair, replacement, and upgrade work of your assets. In fact, it’s true that the rent amount could fluctuate from year to year. But it’s also true that mortgage, property taxes and home insurance rates also fluctuate. In short, purchasing a house will keep burning a hole in your pocket so long as you own it.
Better Investment Options
In case, you are considering the option for home buying just because you want to invest your money somewhere, you must know that there are several other, better investment alternatives. Bonds, stocks, Singapore Savings Bonds (SBBs), Central Provident Fund (CPF), fixed deposits, insurance policies are just a few of them. With these investment instruments, you have a lot more control as you can choose the duration of your investment, right asset allocation, diversification, and tax strategies. Therefore, you have complete control over most of such investing factors. But when you buy a single-family house or apartment, your entire capital is invested in one place. And if you wish to sell the house in order to gain profits, you primarily need to rely on a lot of factors outside your control, like market timing.
If you are a person who has to travel across borders too often due to work or family reasons, purchasing a home may not be a great investment option. A fixed home can limit your travelling and migrating opportunities. In case, you buy a single-family house or apartment, you will have to think about the maintenance and security of your property when you are away. No matter what measures you take, it will only add up to your yearly budget.
On the other hand, buying a new house in every city you travel to isn’t economical. Also, buying and selling homes frequently may not be the best solution if you move to different cities or countries. In such a case, purchasing a rental property is a better idea. Therefore, you must prefer liquid assets and flexible investment options because of the greater flexibility they provide.
Single-family Homes Are Pointless
The only benefit you have when you buy a single-family house is that you own a big space. Apart from that, you only have to bear all the expenses we mentioned above. On the other hand, if you buy a multi-family house, it can still be considered a better investment. Although buying a multi-family house is more expensive, it ensures that you have a regular income by converting a part of it into a rental property. Therefore, if you still wish to buy a new house as your primary residence option, we suggest you opt for a multi-family house so that it can give you fixed returns regularly.
So, is buying a house a good investment?
There is no right answer for everybody.
If you were planning to buy a new house soon, there are these legit reasons that will make you think twice. Buying a new house is a big decision, and you must evaluate the pros and cons before making your final decision. In case, the choice is between paying off the mortgage for your new house and investing your money in the stock market or a new investment property, we would suggest you do the latter.
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