FINANCIAL SNACKS
BY CHEONG WAI QUAN

AMY (name has been changed for this article), who was burdened by her mortgage repayments, felt liberated when sale of her SOHO unit was finalised. She moved into a rented bungalow, started her vegetable and herbs garden, and set up the rest of the big house to run her private dining.

Mimi (also not her real name), who experienced an unfortunate confrontation with some unsavoury people at her front gate, promptly moved into a condo for added security. Recently, she moved her family into a large house within a gated residential area.

Both were able to move into different home options when their fancies caught on as they were not laden with mortgages.

Liberation on different fronts

Renting, depending on how one looks at it, can be liberating. Let’s have a look why it is so.

Off the top of the list is lower cost. Amy, who moved into the large rented bungalow, said she gets more space per ringgit spent compared to cramping in her less than 1,000 sq ft SOHO home.

Others may argue paying rent is wasteful as it is a cost and rent paid to owner of the house is helping him pay off his home loan. Yes and no. Loan repayments cover both amount borrowed and interest; thus payments are part investment for amount borrowed and cost for interests. If rent is a waste, so is interest.

Renting makes moving house straightforward. While condo living affords her added security, Mimi found it lacks space for her growing brood and business. A year on, she moved out to a larger abode.

Renting offers her flexibility to “test out” a neighbourhood before setting roots. For home buyers with a kid or two, renting is a good way to find out if there is good school nearby, childcare help and friendly neighbours.

Rushing to buy a house may result in buying into less desirable areas. Renting allows one the time needed to scout around for a house in an ideal location and also save money fitting out the house with furniture and white goods, taxes, maintenance and insurance costs.

The renting may be temporary so it is prudent to invest any savings gained to build a “home fund.” Use it to pay for a permanent abode when the dream home is found!

The writer can be contacted at info@successconcepts.biz

>> Cheong Wai Quan is vice-president of Success Concepts Life Planners