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Is there anybody who is thinking about having a house? Have you decided what to choose yet between buying a house and renting a house? Some might say that buying a house is better but some may say buying a house uses a lot of money and has a big burden of house loan, so they think renting a house is better. Which one is better for you to choose? Today, ACU PAY will take you to know which one is better for you between buying a house and renting a house.
Renting a house is suitable for people who are still not stable in their work, often move their house, and do not have that much money to buy a house. Buying a house is suitable for people who have stable work, rarely move their house, always stay at the same place, and have a fair enough income.
Knowing your own liabilities will help you figure out the maximum of our capacity to repay debt. If you would like to know your liabilities burden of income, use the formula that is called Debt Service Ratio (DSR). According to the Financial Health Check standard, it is recommended to pay an installment that is not more than 40 – 45% of monthly income. If the number of installments goes beyond this, financial health begins to deteriorate. For anyone who wants to buy a house, the amount to be paid in installments shouldn’t be much more than this.
Formula
Debt that you have to pay monthly/ monthly income * 100 = % of debt
Example
Mr.Dang has a monthly income of 30,000 baht. The debt he has to pay in each month is
Total debt is 6,500 baht
The formula = 6,500 / 30,000 * 100 = 21%
This indicate that Mr. Dang has good financial health. He can buy a house if he wants to because his % of debt does not exceed 40%. If his debt percentage is more than 40%, it is better to rent a house.
Although buying a house may use a lot of money in the first place, the advantage of buying a house is that we can use tax breaks. The law stipulates that homebuyers can reduce their personal income tax by up to 100,000 baht per year. However, rentals are not subject to tax allowance.
The advantage of renting a house is that we don’t have to bear huge debt costs in the long run, but there are disadvantages to renting a house such as tenants will not have the right to live in such a way as resale for profit, which some might view as a waste of money.
On the other hand, the advantages of buying a house is that the house will be your property that you can renovate or modify as you prefer. Also, The house is a property with an increasing price every year, where we can make speculative investments in the future and benefit us more than renting a house. When you want to sell it at a higher price than the purchase price, it can be done immediately, or you may keep it as an inheritance for your children.
You can see that there are advantages and disadvantages to both buying a house and renting a house. Let’s consider what kind of house we are best suited for.
