I was a homeowner right out of university. Back then, I didn’t even know how to manage my credit card, let alone a massive six-figure house loan.
But my Chinese parents being the quintessential Chinese parents believed that it was very important for me to get property ASAP, so they encouraged (or rather, strongly motivated) me to get one as quickly as I could.
In many ways I’m thankful that I got on the property ladder at such a young age. I am so grateful for the leg up that my parents gave me. But I wouldn’t advise anyone to make big financial decisions when they didn’t understand the whole picture.
I spent many years in a fog of worry after buying my apartment. I wondered how to pay off that juggernaut of a loan or how to handle my finances if I was ever laid off.
Fortunately, after much gnashing of teeth, I’ve paid off my housing loan. And now I’m doing what many people in Malaysia would consider weird: I rented out my apartment. And I’m renting another to live in.
So, I’m both a houseowner and a renter. And I can tell you which side of the buy vs rent debate I’m on: Renting.
Why? Read on:
I’m a great believer of moving closer to work. And I mean “walking distance” close. I’ve written about why this is a good idea: Not only does it save you time, it relieves you of the stress of a tough commute. It may even save you money if you do it right. Renting gives me the option to do this. When you plonk moolah on a pice of property, you often feel obligated to live in it. But then again, you could be a radical like me by renting out your property and rent something closer to work.
2. Lower expenses
Most folks will say that renting is “throwing money away” or “helping someone pay their mortgage while you lose out”. I disagree. As a homeowner I have to pay for the monthly management fees at my condo (about RM220 and rising every year, sigh), taxes/cukai tanah, and repair any damage or broken appliances.
And if you have a bank loan, you spend the first few years of your “tenure” paying hefty loan interests and watch in dismay as your principal barely goes down. Also, if you factor in the interests, you may end up paying a lot more than the amount you took out. Then there’s the “hidden” costs such as the cost of your work commute. How much petrol are you paying for the “benefit” of staying where you are?
If you’re an interior decorating/architecture lover like me, the opportunity to stay at different homes and locations is thrilling. I used to fulfil this need by renting out AirBnb apartments. But now that I live in an apartment that fulfil my aesthetic desires to a T, I don’t have the need any more. (I consider my studio not just a place to sleep but a writing studio to write my novels.) And although I may not get the pleasure of ownership, I am happy to be able to live in this place without having to fork out a hefty deposit and by taking a housing loan.
4. Flexibility to adjust to my financial needs
I love the fact that I can stay in a swanky apartment if i choose or “downsize” to simpler accommodations when my financial situation calls for it. I wouldn’t have much of an option if I lived in my own home and had to pay off a bank loan if I lost my job. Sure, I could sell off the home, but homes are pretty difficult to sell and then you may not get the amount you’d like. With this flexibility, you can have the option to take risks, such as change careers.
5. No sleepless nights because you’re worrying about that bank loan
I don’t know about you, but I really hated having a massive debt hanging over my head. It limited my options; a lot of my decisions had to be made in light of the debt.
Wanna change jobs? Well, it better be one that pays more than your current one because you gotta pay off that housing loan. Want to move to a different state? Well, we have to make sure we can pay for that loan AND rent a new home at the new location too. Oh, sell it? Well, the market is depressed so we’re not getting many takers, and those who are interested are low balling us. Get the picture?
For me, my No.1 worry when I had the loan was how to make the monthly repayments if I don’t have a job. That fear was very real for me when I moved to Australia without a job in hand.
A lot of my friends laugh at this, saying that a loan is there to help us buy homes, so why not use them? To be honest, I can’t relate to that mindset at all.
To me, debt is a barrier to freedom. Debt was a mean master, eager to crack his whip when I don’t do what it wants.
Now that I don’t have a housing loan over my head, I can breathe easier. News of layoffs and a bad economy still rattles me, but not as much. Now I realise that it won’t be the end of the world if I lose my job because I no longer have a Mean Master who is unsympathetic to my situation. Now I have Options.
Still, I don't think renting is for everyone. Families may want the "security" of owning a home. (Though to be real: you don't own it; the bank does until you pay off the loan. So effectively, you're "renting" from a bank.)
I believe that home ownership is important and valuable. However, with house prices being at an all-time high, the economy being shaky and with job stability a thing of the past, buying a home is a risky, risky thing to do these days.
Most people buy too much house and get in over their heads when they can’t meet the monthly repayments.
Which do you prefer? To rent or buy? Let me know in the comments section below!