Buying a house... An Asset or a liablity ?

By Zap
@zap_81 (1024)
May 23, 2016 2:01am CST
From the part of World where I come from, owning a house is one of the best things that you can do with your life. I somehow am confused with this theory. On one hand I see the benefits of owning a house but on the other hand the liability of interest scares me. With under construction where the prices are a little less , you are never certain if the project would see the light of the day and with a ready to move apartment the fact that you will be discharging the principal and interest over a period of 2 decades is making yourself liable for the next 20 years. So what is it. An Asset or a liability?
6 people like this
6 responses
@topffer (34091)
• France
23 May 16
The interest rates for a loan to buy a house have never been so low than actually in Europe : less than 2%. With such rate one can pay back approximately the same than to rent the house. This said, everyone decides what he wants to do, and I know that some persons prefer to rent their apartment/house during all their life than to buy it. At the end, they will have paid a lot more, but they feel more secure and can move more easily. There are strong supporters of renting or buying, and each side has good reasons.
1 person likes this
@zap_81 (1024)
23 May 16
The interest rate on housing loan in India is 9.50%. However that said the interest rate on bank deposits are far higher than that in Europe. But the fact that you can more around by staying in a rented house tempts me as I can always live in a place which I can afford. I mean if i can afford a higiher rent why not stay in a place with higher rent and vice verca. I still feel that there should be a plan to buy a house i.e. saving a particular amount for a particular period rather than taking the liablity.
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@topffer (34091)
• France
23 May 16
@zap_81 We cannot obtain a loan for a house without bringing at least 20%, but there is no law forbidding to save money and buy a house without any loan. There is a specific plan offered to buy a house where you deposit an amount monthly. The money is blocked and serves a small interest until you decide to use it to buy a house or do interior work in a house.
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@zap_81 (1024)
23 May 16
@topffer The law is the same here as well. Minimum of 20% the flat purchaser has to bring in and the rest will be brought by the bank and you pay interest. I feel if you have a 5 yr plan where you can invest regularly in Government deposits then I feel you are safe. After accumulation one can think of buying a house and take a small loan if need be.
1 person likes this
@nomus24g (22868)
• India
23 May 16
Generally...the construction projects are never timely handed over, I dont know which country/city you belong to...and how the builder/developer community is or rather how are government authorities & approvals are...so while everybody thinks in a plain vanila term that, instead of paying rent one can own a house and pay interest...the flipside is, on rental..you can always go to a far off area and seek lower rental place, incase of financial crisis (world is uncertain place, one can be laid off or may lose job anytime)..while paying interest that is not possible. Moreover, you make your calculations based on the completion period, which when stretched is a double expenditure for few more years/months...
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@zap_81 (1024)
23 May 16
As pointed out by you in your first para, the dilemma is whether to stay in a rented apartment or buy a house with the interest liability. I am from India and I have not come across any project that has been completed on time in last 4 to 5 years. Lastly I did not get your intended meaning in the second para so would be nice if you clarify.
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@nomus24g (22868)
• India
23 May 16
@zap_81 so...if your construction period is stretched beyond the stipulated time, you still have to stay on rent....right!!! So, your rental amount paying period gets stretched as a burden to your ongoing EMI amount...thats what I meant... which city are you talking about...I mean which city are you from?
@zap_81 (1024)
23 May 16
@nomus24g I am from Mumbai. So if i have understood you correct the problem of buying a house in under construction is more bad as you will be saddled with EMI and outgoing rent. That is also a point to be considered. But the benefit or the "supposed benefit" is that the price are not as expensive as they are in ready to move houses.
@sabashekh (1235)
• Bhopal, India
23 May 16
Its an asset for sure
@zap_81 (1024)
23 May 16
I would say it is "considered" as an asset. You are merely stating without giving any reason.
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@sabashekh (1235)
• Bhopal, India
23 May 16
@zap_81 you are later gonna have a property ... It is what you will possess .. It can be rented or sold later
@zap_81 (1024)
23 May 16
@sabashekh That is the mindset of most of the people. Life is uncertain. If you have the liability of paying off the EMI and if something happens to you then you would be passing a liability to your generation. The real estate market is already at a high in our country and therefore I do not see as a good return on a house investment.
1 person likes this
• Austin, Texas
24 May 16
In any part of the world if you own a property, it's a good thing. Even if it's a war-torn country. Look at the definition of "ownership". Owning something is for sure an asset.
www.businessdictionary.com/definition/ownership.html
@zap_81 (1024)
24 May 16
@cmoneyspinner. Thanks for the uncalled definition of ownership. The question was not the definition of ownership. The question is if it is worth the liability of the EMI's. Lastly if you buy a house subject to a mortgage then you are not the absolute owner but your ownership is subject to the charge. I think you are smart and will therefore endorse by view with with common sense as opposed to a dictionary.
1 person likes this
• Austin, Texas
24 May 16
@zap_81 - If you an opportunity to work toward owing a property, do it. To me that's common sense. Sure! People have lost their homes through foreclosure. But they knew the risks. Bet if you asked them if they would ever try to work toward owning their home again they would probably say "Yes! I'll do it again!"
@zap_81 (1024)
25 May 16
@cmoneyspinner I do not knwo if they will say that , hence my post. The prices are high and because of that the properties have become expensive. It is in this scenario that I am seeking response . I have my doubts if taking a loan is a good option.
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@cacay1 (32861)
• Cagayan De Oro, Philippines
23 May 16
That is a liability anything that comes out from your pocket is a liability. A mutual fund is an asset money that works for us is an asset.
@zap_81 (1024)
23 May 16
If we go strictly by your principal then a person will never have his/her own house.
@zarlamain (24525)
• United States
26 May 16
It's a liability until you pay off your house. Then, it becomes an asset.