Posted by: venom

For most people, the single biggest commitment that one will make in his lifetime is to purchase a house or an apartment. However, with the continuous escalation in real estate prices in most countries, purchasing a house or real estate has become a problem to many people.

One of the considerations to make as an alternative to an outright purchase of a house or apartment is renting. This is certainly true even for people who can afford a purchase. In fact, in a lot of cases, it makes more sense to rent than to purchase.

What you need to do is to consider the following if you’re considering a purchase:
1. How much downpayment you need to make the purchase?
2. How much is the monthly instalment?
3. Compute the ‘interest’ paid - sum up [1] the amount you could have earned from the downpayment and [2] the monthly payments

Compare the above information with:
1. How much does it cost to rent a similar piece of property?

It could very well work out that after 5 years of renting, the amount paid for renting is much lower than the ‘interest’ paid in purchasing a house or apartment. Note that the property price is irrelevant.

However, having said that, one also has to consider 2 other things:
1. The utlity gained from owning your own home. Owning your own home gives you pride and joy that is difficult to measure from a monetary perspective. This utility could very well make a purchase worth the while.
2. The price of the property may appreciate or depreciate over the period of calculation.

As such, if you are a person who only counts the beans, do think about it - is it more worthwhile to rent, or to buy? Good luck.