Three Real Estate Myths Busted

Myth Number One: Property prices always rises

The folks always say "Invest in properties". Some actually claim that the rate at which the human population is growing, land is fast becoming a scarce resource, therefore anyone who has properties, wins. Property prices, just like stocks, derivatives, bonds and etc, go through price cycles. There are times when they can appreciate during a bull market and falls like an anchor during the bear market. When property prices fall, it is no joke. This is because they can take years to appreciate back to the initial value at which you have bought it for. Of course, home prices do indeed recover themselves but those who are forced to sell in the bear market can really suffer badly.

Myth Number Two: Buying your house is definitely better than renting

You might think that instead of wasting your money on rent; why not pay those cash for real equities in your own property? Buying a house is not for everybody. It requires you to make a highly informed decision. What happens if you really dislike your neighbors or really dislike your living environment after you have moved in? Are you able to find a buyer that quickly? Will the bank penalize you for making a full redemption at too early a period? You may not be able to move your house as you wished, after reviewing the points. Renting a property is an entirely different story. You can choose to move out immediately if you do not fancy the place. Maybe you are the type who invests in where you stay. If this is the case, you can opt to rent a place while waiting for a property to buy over. Buying a house also requires you maintain prompt monthly payments. On the other hand, if you happened to be slow in sales or business, you can negotiate with the homeowner to defer your payments. Buying a house is not for everyone and ultimately the decision lies with your own personal profile.

Myth Number Three: Refinancing always helps to save money

If your outstanding housing loan amount is pretty small and you have been with a bank for quite a long time. There is a high probability that you are paying more of your principle than your interest. If you decide to refinance at this stage, even if the interest is much lower, you will restructure the monthly payment in such a way that it will tilt towards paying more of interest again. By small, I am saying if your outstanding is less than $100,000.

Zeng Han Jun is the Business Financial Manager of Chan & Partners Consulting Group. He actively contributes articles about business and finance on a weekly basis, so as to share his knowledge with the financial consumers. He specializes in mortgage advisory and business brokering services in Singapore. He has been directly involved and plays a crucial role in marketing and sales of businesses in Singapore. He also provides advice on various kinds of mortgages and construction financing for private individuals.

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