Choosing to buy or rent depends on your financial affordability and lifestyle preferences. You don’t have to rush to buy a home because your family and friends tell you so.
Below is a breakdown of the key benefits and costs of buying and renting a home. This is a good guide to find out which option is better for your current situation based on your affordability and preferences:
Buy
Rent
Key Benefits
Security of Having a Permanent Home
You and your family will always have a place to live in well beyond your retirement
As An Investment Asset
You can rent out your house as a second income source and leverage as collateral to take out other type of loans
Freedom Over Property
Renovate and redecorate your house in any way you like
Monthly Rent is Cheaper
This means you will have more disposable income to spend, save, or invest in other areas
Short-Term Contracts & Lower Risk
Have the flexibility to terminate your stay should you decide to live elsewhere or if your financial situation changes unexpectedly
No Burden To Maintain Property
Your landlord is responsible for handling all repairs and paying for them, not you
What It Will Cost
Upfront Down Payment
Minimum down payments start from 10%, which can be a huge sum to save up
The average repayment period in Malaysia is around 30-35 years
Most housing loans in Malaysia work on ‘variable’ interest rates - when interest rates increase, so do your monthly repayments
Consider more affordable mortgages on properties at the lower end of your budget – you can save more and upgrade later to a better house
Additional Entry Costs
Other costs payable upfront include Sales & Purchase Agreement (SPA) fees, legal fees, stamp duties, and agent’s fee – plus GST, these can come up to several thousand ringgit
If the entry costs are too much to pay all at once, ask your bank if they have a “Zero Entry Cost” (ZEC) loan available – similar to a zero down payment loan, higher interest rates will apply in return for a ZEC
Assessment Tax is due twice a year for all types of homeowners
Quit Rent
Maintaining Property
It’s all on you to pay and manage all repairs and required maintenance for your home
Upfront Deposit
The standard requirement includes 1-3 months’ rent as a security deposit, plus 1 month’s utility deposit
Personal Cost of Living
Assess your monthly budget if you can afford the rental or if it’s beyond your means
Every ringgit and cent counts – utilities, Astro, phone, and internet bills, groceries, eating out, petrol, LRT fare, etc.
Maintenance Fees
This would apply if you’re renting in a condo or apartmen
Minimum Tenancy Period
Find out what is the minimum length of your tenancy agreement and what is the notice period for termination - if your tenancy length is one year, you are obliged to stay and pay rent throughout that period
It is important to always look at your finances in the bigger picture and weigh your decision to buy or rent against it. Be smart, and consider all options to save and invest - even if you’re renting right now, owning a property still pays off in the long term. Look for a cheaper property in other locations with more affordable mortgages that you can leverage as an investment asset.
Don’t worry about what everyone else is doing – it’s your home, your money, your choice.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
