Have you ever thought whether you should buy any property using cash or mortgage? What if you pay less as down payment and what if you pay a huge amount as your down payment? I think you must think of all these things so that you can have knowledge of what is best for you? Don’t worry read the article further to know the pros and cons of buying a property using cash and mortgage. Now let us imagine that you have a got enough money for the down payment of any property, the main question is whether you should pay the entire money for the down payment of that property or not. All these questions depend on many basic things. Let us discuss all the things that will play an important role in making the decision.
So, let us suppose, you have found your dream house, you have also planned to buy it. Now buying a home using only cash seems like a dream for the majority of the population until and unless you have a lot of savings or you are any millionaire. But surprisingly, the rate of people buying property using case has increased from 26% in 2010 to 32% in 2011. To know the reason of this increase, we need to discuss the advantages and disadvantages of buying a property using both the sources. Let us discuss them in detail:
Property bought at Cash: Let us discuss the scenario of cash first. Though only a few people can afford to buy any property using cash, but it is having its own advantages and we can’t ignore them.
1) No mortgage payments: Wow, the income of whole month can be easily spent and you don’t have to think before spending every month. So you have more financial freedom and you have more money to spend on your daily expenses.
2) Save money on interest: It is obvious that if you buy property using mortgage, you will have to pay a lot of interest and the cost of the property becomes almost double in 30 years. It is the biggest advantage of buying a property using cash that you don’t have to pay interest at all and hence saving a lot of money.
3) Less Market Fluctuation Concerns: If you buy your house using cash, you don’t have to think so much about the market fluctuations. So even if you want to resell of rent your house, it is much easier as there are not much money constraints to think about.
4) The Sense of Security and Ownership: If in case, there is any financial crisis, or in case you cannot afford installments, at least your house is safe if you have paid through cash.
Property bought at mortgage: Majority of the population, especially in India can’t afford to buy any property using cash. So for them, Mortgage is like a dream come true for making their dream come true.
1) Tax advantage: This is a plus point for all those who want to save their tax. No doubt. For most of the buyers, tax saving is one of the most important concerns and hence they prefer buying a property using the mortgage.
2) Flexibility: Various banks today are offering very flexible installment options and everybody can decide according to the financial status. You can repay the amount in 2 years and even in 50 years. All this depends on you. So you don’t have to cut down your expenses so much, you can decide wisely.
3) Lower interest rates:
Conclusion: The interest rates have even fallen due to the very tough competition in the market. Still, the more common trend in the market is paying using cash. However, it demands a very strong financial background and good savings. It all depends on the financial condition of the individual. Both are having their own advantages and disadvantages. If you don’t have enough money and need to get a loan for buying the property, then in that case you need to be very careful and make sure that you can easily pay the installments along with the interest rate. Apart from this, the most important thing is that, you must always have some money left for in case of emergency. Who knows, what is going to come your way?