Should I Buy or Rent a Condominium Near Workplace?

Condominiums nearby mass transits are usually aspired by those who live a far distance from their workplaces. By having a retreat close to public transit, they can avoid traffic congestion on the road, economise commute expenses, and have more time spared in the morning.

Still, one needs to consider whether to live there by rent or buy it for a permanent stay. If this happens to be an undecidable problem for you, the following tips would simplify it to be much clearer.

If you are certain to stay working at your current workplace for a long period of time or moving to a new place with a mass transit that’s still located in its vicinity, then buying would be the right choice. On the other hand, if you are not sure how long would you stay at your current workplace, and your new workplace in the future might not be located close to mass transit, then renting is preferable.

The advantage of buying is that you will have a value-appreciating asset, meaning you can sell it later with a higher price or lease it for monthly income when you no longer live there.

However, the downside is that it could take some time to find a buyer or a tenant, which is not favourable for those who urgently need the money. In contrast, renting costs substantially less money but it comes with the price of having no asset in your hand.

The next thing to consider is whether you have a sum of money for down payment or not. In general, down payment requires 10-20% of the condominium’s price; you need to pay this amount to the developer before applying for a mortgage as banks cannot lend you a full-credit mortgage.

If you could afford the down payment easily, then buying would be trouble-free. On the contrary, if your savings are still inadequate, renting would be favourable; and in the meantime of renting, you could put your money in low-risk investments such as bank deposit, money market fund, and government bond, until you have that sum amount of money for the down payment.

Assume you prefer to buy instead of rent and ready to apply for a mortgage after paying out the down payment. Firstly, banks would assess your financial performance to see whether you can afford the loan or not. Normally banks would allow debt-to-income ratio between 40-60%, but 30% is recommended for a lower risk.

Typically, the more salary you earn, the higher the loan size you could borrow; however, the more debts you owed, the more chance banks would reject your application. If you have a high level of debt, renting might be preferable, but you also need to make sure that those rents won’t turn out to be another incurring debt.

Whether you have decided to rent or buy the condominium, the most important thing to prepare is your financial ability. With a healthy balance sheet and financial record, you could easily borrow a mortgage from banks. But if you are still struggling to pay debts, you might want to live by rent first, and in the meantime save more money, until you are ready to own a property with confidence.