Consider this situation. Lissa, the sole breadwinner of the family, works for an automotive manufacturing company in the South Metro Manila. Their home, which is under a 20-year bank mortgage, is conveniently situated less than 5 kilometers from her office. Every day she wakes up at 5 in the morning to cook breakfast for the family and prepare the kids’ baon (snacks). 6 am to 7 am is spent on personal hygiene, having breakfast, and all other preparations needed before they leave for work.
Since Lissa’s workplace is just near, she can afford to drop off the kids to school before she heads to the office in time for the 8 am to 5 pm regular work hours. And in the afternoon, she’d be home by half-past 5 with enough time to prepare dinner and help kids with their school assignments.
Everything seemed to be in place until one day, management had to cut down costs and decided to transfer facilities to a business park in Batangas. The company will benefit from the move given the tax incentives of operating in a PEZA accredited site plus the significant reduction in logistics cost as many of its parts suppliers are located in the same techno hub.
Now, Lissa is baffled about whether to rent a space near the new office or bear the daily travel of at least 100 kilometers (one-way is about 50 kilometers). She thought, “It would have been easy if we are only renting our place.”
Whenever an organization decides to relocate away from the metro and move to a business park in the province, employees are often put into a predicament between renting accommodations or enduring the long commute. Not to mention other expenses on gas, toll fees, and maintenance costs.
For some reasons, it has been a common belief for many Filipinos that owning a home is better than renting one.
Why would that be the case?
Some say that it’s best to pay a monthly amortization for a property that they will own someday instead of spending monthly rent for ‘nothing.’
I understand that this mentality comes from having the need to feel secure, that during the not so good times (losing a job, sickness, and so on) or when one gets old, he’d have a roof on top of his head to call home regardless if he has something to eat or none.
On another perspective, renting may also be considered beneficial in a number of ways.
Anton Kreil, of the Institute of Trading and Portfolio Management, recommends avoiding getting a loan from the bank to buy a property. According to him, it is best to purchase it in cash simply to keep away from the huge interests that banks would charge you. His advice: Rent and save money for the property.
Think about it. If you look closely into that amortization schedule, a big chunk of interest is usually charged during the early payment schedules. Pretty wise, right? It easily secures the profit for the institution at the onset.
Some might also fail to consider other related costs when owning a home. Tax, maintenance, and monthly dues (if you live in a subdivision or condominium) are just some of these. And in the words of Robert Kiyosaki, “liabilities take money off your pocket.”
Mobility is also something that one can enjoy when renting a home. Just like in the case of Lissa. She could have been in a better situation if she had no obligation to pay that monthly amortization.
There will always be pros and cons in buying or renting a home. So whether owning or renting is better will also depend on your situation.