Owning a home is one of the most expensive investments anyone can assume, yet one also needs money to cater for other general needs. In case you cannot afford to put up a home using your savings, it is advisable to secure a mortgage from your bank. Otherwise, you may have to keep renting until you raise enough money. But this is a tricky.Do you think getting a loan is a better than renting?Most people have an irrational fear about loan acquisition, especially for mortgage purposes as they consider the investment and presume to have any returns on investment.On the contrary, a mortgage is surprising the best alternative in comparison with renting.Let’s put it into perspective Let us presume you pay a monthly rental fee of Rwf200,000 for the house you live in. When you calculate the figures involved after a period of ten years, ultimately, you will have spent a total Rwf24,000,000 assuming the cost remains constant.Another scenarioLet’s envisage another scenario. Suppose you acquire a loan of Rwf24,000,000 payable in 10 years to construct a house with an interest rate of less than 20 per cent based on the current market rates. This means that the amount of money that you pay each month in form of interest is more or less equivalent to what you would spend on rent. Thus, from the two scenarios, which do you suppose is the better bet?From the first scenario, renting looks a bit favourable because as you may not be indebted. However, in the long term, you may never have your own home, yet you have spent a fortune on rent in the long run. And since you can never influence the rental fee due to free market place dynamics, the monthly rent of Rwf200,000 may skyrocket to Rwf500,000 in just two years.More often than not, a mortgage facility remains the singlemost easiest way to own your dream house.
