Buying a property requires a large financial investment. So it is common for people to ask themselves the following question: finance or pay cash?
Some people choose to take all of their money to invest in the purchase. In this case, they dispose of some assets (cars, land, applications, etc.) to satisfy this purpose. In this situation, it is common to note the fear they have regarding real estate financing.
Others decide to finance, as there is no time (or equity to be liquidated) to be able to add capital for the purchase of a property.
But which of these postures is the smartest when it comes to buying a house or apartment? Read on and find out the answer!
How are your finances?
This is the first issue that needs to be understood. Note that in this article we are comparing two ways to buy a property: cash vs. financed.
These two options are valid, but depend a lot on how they impact the investor’s financial life.
Let’s take an example: João has just been fired. Adding his savings in savings to his indemnity and FGTS, he has R $ 500 thousand available. João lives in a rented property that costs him R $ 2 thousand a month.
At first, we can think that the most obvious solution would be to use all the capital to buy a property and get rid of the rent. But what if John takes a long time to find a new job?
Realize that while a financial decision seems extremely logical (buy in cash) it can be a risk, since it ignores possible setbacks.
Therefore, the investor needs to analyze his finances and how the decision to buy a property will impact his future.
So, is it never worth buying in cash?
Buying a property in cash can be very advantageous if the investor is facing a good business opportunity. This is what happens, for example, when heirs decide to sell a property at a price much lower than that practiced by the market.
This type of situation can happen, after all, emotional factors also influence the act of buying and selling things. Faced with a good business opportunity, capable of bringing a satisfactory profit margin, it is certainly better to buy in cash.
Is it worth it to exchange rent for financing?
Most of the time, yes. Depending on the amount you spend on rent, it is likely to correspond to an amount similar to that of a portion of a mortgage loan. The difference is that when paying rent you do not have a return on that amount, since you are not investing money, but paying for a service.
Now funding is different. The amount paid monthly is an investment that brings immediate and future gains. Future earnings refer to the fact that the property may be sold, converting it into capital. The immediate gain is that the investor will be able to enjoy the house while paying the financing.
In addition, a person cannot use his FGTS balance to pay a rent late, for example, but this is possible with a loan. An investor can use his balance to repay the debt or pay installments of the overdue financing.
Therefore, it will not be worthwhile to exchange rent for financing if the person is not sure if he / she wants to live in that place (neighborhood, city, etc.).
Finance or pay cash: does the Selic rate influence?
When the interest rate in the country and the income paid for fixed income investments are higher than the Total Effective Cost of real estate credit, this is an excellent opportunity for those who have sufficient resources to invest in real estate. In addition, the current scenario also favors purchasing, due to falling prices, increased supply and low demand.
Therefore, the best thing to do at the moment is to keep the money invested and finance part of the property. If, by any chance, the market situation changes and rates increase, the part that was applied can be used to settle the financing. See the examples below.
“I want to acquire a property worth 1 million and I have this money for payment in cash”
The suggestion is that this money be used in the most profitable way possible. The payment in cash leaves you free of a “debt”, but it also decapitalizes the one who chooses to use the entire resource.
“How do I, then, for my money to pay off in the acquisition of the property in the amount of R $ 500 thousand?”
Currently, the Total Effective Cost of a loan is around 12.0% per year and a financial investment can yield up to 13.26% per year. With this information, we already have a great conclusion.
The income from an application can pay a portion of real estate financing and still yield a monthly amount. Study all the possibilities before buying. Often, people rush or act impulsively and end up not realizing the possibility of making an investment while paying for a property.
As we saw in this article, paying in cash is usually only advantageous if the investor is faced with a good opportunity to obtain discounts. Otherwise, real estate financing represents a smarter way to use your money when purchasing a property.
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