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Q&A: Is it better to buy or rent a home for my retirement? | MyProperty.ph
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Q&A: Is it better to buy or rent a home for my retirement?

by MyProperty.phPublished: March 6, 2017Updated: March 24, 2017

Your priorities upon retiring will play a great part in your decision to buy or rent a home.

Is it better to buy or rent a home for my retirement MyProperty Philippines

Q: Is it better to buy or rent a home for my retirement?

A: In a traditional Filipino household, people in their retirement age either move in with their children or have their children move in with them, particularly if the elder family member has health issues or, for some reason, needs assistance in carrying out daily tasks. But if you are in generally good physical health and are determined to keep living independently or solely with your spouse, you need to make a choice between owning a home and renting one.

More often than not, money is the main factor affecting one’s decision to buy or rent. Things will not be much different in your retirement years; aside from considering how much you have managed to put away in your retirement fund, you have to keep in mind that as you age, you will have more costs to mull over, particularly in terms of your deteriorating health. But as financing is only one part of the equation, here are a few questions that may put things in better perspective and help you make a decision.

 

Do you have heirs to leave an inheritance to?

If your answer is yes, then buying would be a wise decision. To anyone raising a family, providing stability is one of the things that we strive for, which is something you can achieve by owning a home. Being able to give your family a home assures you that they will be able to take better care of your grandchildren as they would no longer have to worry about making payments for a home.

 

How important is home equity to you?

When you buy a home, building equity is one of the factors you want to consider if you have plans of passing it down to your successors or selling it later on. Home equity is the market value of your property minus the loans you availed to pay for it in the first place. As the value of your home increases, so does your equity, and one thing that almost ensures that your home’s value will increase over time is an attractive neighborhood. However, as is common knowledge, homes in sought-after locations cost more. For instance, this two bedroom, one bathroom home in Quezon City with a lot area of 34 sqm costs a little over Php1.9 million. On the other hand, a similar home in Imus, Cavite—two bedroom, one bathroom, 36 sqm lot area—costs just above Php1.1 million.

 

Can you afford to pay more—and are you willing to—to ensure that your home is worth more as time passes? If not, or if it is simply not relevant to you, renting would be a more sensible option.

 

Are you planning to stick around in your neighborhood?

Some people who retire find themselves wanting to travel more, either within their home country or around the world. If your plan is to spend most of your retirement on the road rather than at home, it would make sense to rent rather than buy. Renting also gives you the flexibility of moving almost as soon as possible should something influence you to do so in the future, such as an illness that would require you to move closer to the hospital or your loved ones.

Still, if you feel that the neighborhood you are living in has everything you need and you have no problems staying put for a long time, then you should consider buying a home. If the home you happen to own has multiple rooms and all of your children have moved out, you could hang onto the property and rent out those rooms for additional income that can go to your retirement fund.

 

Would you like to take it easy?

If you’ve been working for most of your life, it is very likely you would like to put your feet up and relax when you retire, something you can look forward to if you live in a rental home. Landlords are usually the ones who take care of fixing things in their properties, so not only are you saving money on hiring repair men, you also get to sit back and have someone do the work for you. This will also come in handy when you reach the point where you have difficulty performing certain chores around your home.

Having said that, when the home you are living in is your own, it would be easy for you to modify it according to what your health issues require. You would not need a landlord’s permission to place handrails all over the home for balance. You can also freely widen doorways and add ramps to accommodate a wheelchair.

Every person is in a different place in their life, financially or otherwise, so there is no single cut-and-dried response to whether to buy or rent in retirement. Aside from assessing your current situation, it would also help to discuss your options with professionals, such as a financial advisor, who can analyze your monetary standing; or a real estate broker, who has a good idea of the present conditions of local real estate markets.

Also, keep in mind that unless you are planning to pay outright in cash for a home when you reach your retirement age, you need to start making plans for buying a home way before that. Lending institutions like banks have certain home loan requirements related to an applicant’s age and a loan’s maturity. In many cases, an applicant should not be more than 65 years old by the time the loan matures, so unless you choose a short loan term, you need to consider your home buying options early.

 

Main photo via Shutterstock

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