Whata's Better Option to Buy a Home? Cash or Instalment?
The idea of having a debt-free life is exciting; especially when you know that you buy everything on 100% cash and do not owe a single penny to others. This is what most of the financial experts suggest that always try to pay 100% cash – no matter, how big the transaction is. The rule should also be implemented when it comes to buying a home – pay all cash up front and not in instalments.
However, if you are confused and want to reach a conclusion, read on the following blog to make a well-informed decision.
Advantages of Paying in Cash for the Property
There are a lot of advantages associated with this kind of transaction, especially in Pakistan. First of all, all the sellers out there prefer buyers who can pay all cash, because in Pakistan, most of the sellers directly put up their property for sale on the market. They hardly want to see any delay, mostly because they either want to invest ahead or they urgently need money for a certain purpose.
Secondly, when a bank is not involved and you are buying the property on full cash, it will be convenient for you too, as a buyer. Faster processing will enable you to get immediate ownership of the property and eventually, you can either shift into the property or rent it out ahead on immediate basis, after getting the ownership.
Moreover, if you are cash buyer, you can ask for a little bit discount on the full payment. Individual sellers may hesitate but professional developers offer certain discount to the buyers willing to pay upfront cash.
Why to Consider Instalment Plan
Now let’s see the other side of picture that why people want to buy a property but are reluctant to pay full cash and want to make payment in instalments. One of the primary reasons is that majority of these buyers are young investors who do not have enough cash in their bank account to support their investment plan. They look for convenient payment options, which will also be easy on their pocket.
Another advantage of buying a home on instalment is that developer or seller may allow you to use the property after paying the certain percentage of the total amount. It means that you can say goodbye to your rental property soon and live in your own home, while paying the total amount in smaller chunks.
Another reason that keeps buyers investing all the money in buying a home or a plot is that they are cautious buyers and do not want to invest all in one property. They want to add another asset in their profile but do not want to pay all for one property.
Unless you have your parents who can pay all on your behalf, majority of people have certain budget to run home and to save. They want to invest in a property but do have other expenses to meet at the same time. Therefore, monthly or quarterly instalment is a convenient option for them, which is definitely preferred than investing all in a single property.