Should You Rent or Own Your Home?
According to a survey initiated by Citibank in the year 2008, only 42% of Filipinos owned their homes either outright or paying mortgages, the lowest in the Asia- Pacific Region. This number is a far outcry from China’s 81% citizens who own their houses. Most families in the Philippines resort to renting in Urban Areas because in reality, people want to live there because it there is a notion that people living in Metro Manila and Metro Cebu earn a lot of money.
Most people would want to have their own homes. There is a feeling of security and pride in owning the house you are living in. The ongoing argument is that the house you keep paying rent for can never be yours while if you take out a mortgage and pay a little more than your rent amount, the house will eventually belong to you. Most people say owning a house is an investment.
You might think that owning your house is always better than renting. Like any other issues, there are some points to consider before you can pass a good judgment.
Convenience is a big factor in your decision especially if you’re single and all the time busy with work. If you work in Manila, would you consider buying a house in the suburbs of Metro Manila, somewhere north or south? You would probably think about the long commute, the price of gas, the toll fees and maintenance, if you have a car. They will become a part of your daily expenses plus the time you are going to spend on the road, and the inconvenience. It would probably do you good to rent a place near your work. You save on transportation and you reduce the time of your commute.
But if you are a young professional who is starting a family, then you may want to look into buying a house somewhere in the suburbs. Raising children in a cramped up apartment in the city is not always ideal. But before you build your dream house, try to get an in-depth feel of the area. Who knows, it could be a flood-prone area that’s why nobody’s taking it. An experienced realtor recommends that if you are relocating and not familiar with the Metro Manila area, it is ideal to rent first before you buy a home.
Income and Expenses
The issue of money can sway someone’s decision to rent or buy a house. The amount that is involved in buying a house can be overwhelming for most of us. You will have to put out a substantial amount of money. If you rent, the most that is required from you is three months advance and three months deposit.
If there is uncertainty in your career, if you think that a change of career is in your future and you have to leave the country, renting gives you the freedom to leave without worrying about the house or who will take care of it. Renting could be the best option if you have uncertainty in your income, too. A pay cut in the near future can affect your ability to pay mortgage.
On the other hand, owning your home can provide you with an asset that may be income-generating someday. When you want to leave the country, you might want to rent it out and earn from it.
When you are renting, you do not have to worry about maintenance and major repairs. Most landlords do them but you might be limited in decorating the home or apartment and you are subject to the landlord’s policies, such as not allowing pets. But the good thing is that renting does not get you stuck in your neighborhood. You hate your landlord, then move and find another place. Somebody said that he is glad he did not buy the house he lives in because his neighbor has started to become so annoying. The benefit of renting is that you’re not stuck with unpleasant neighbors.
When you own your home, no one can tell you what to do. You have creative control so go ahead and be your own interior decorator. Most of all, no one can kick you out just because you decided to get a monkey for a pet.
To give you a better picture, let’s discuss an example of the pros and cons of renting vs. owning a condominium in Makati City. Let’s say a 1-bedroom condominium is selling at Php 3.3M, with a Php 16,000 per month amortization (0% interest) for the first 5 years and Php 23,000 per month amortization for the next 20 years at 10% annual interest. And let’s say another unit with same size is offered for rent at Php 18,000 per month? Which do you think is a better choice – renting or owning?
Well there is no right or wrong answer. As mentioned above, it depends on your current situation. If you are thinking of building a career here in the country, then purchasing the condominium may be a better option – you’re already in Makati so travelling to and from work would not be a hassle. But if your job requires you to be stationed in various locations e.g. the provinces or out of the country, then it may be better to just rent for the meantime.
In addition, one vital factor you have to take into account are your future plans. If you plan to start your own family someday, then it might be best to invest in your own house or unit as early as possible. Keeping a portion of your salary to pay for amortizations is a good way to discipline yourself and instills a sense of responsibility in you.
To rent or own your home that is the question and the answer is: IT DEPENDS on your circumstances, on your priorities, and on the soundness of your financial position.