Is It True That Contracting Is Always Cheaper Than Home Installments?

Bumi Srijaya Baru Housing Complex in Tambun Bekasi (Wardhany Tsa Tsia / VOI)

JAKARTA - Meeting the needs of boards is not an easy matter in line with skyrocketing property prices. There are at least two solutions: leasing or paying in installments. Recently, the two methods have been debated. So where is it better to rent or pay by installments?

Not long ago the tweet of the account owner named inge_august went viral. He argued that renting a place to live would always be cheaper than buying a house on your own. "The concept of 'monthly rent can be converted into monthly installments, can house again' is quite misleading," he wrote.

He also revealed several reasons. For example, about other costs that need to be paid when buying a house, such as paying for letters and housing loans (KPR), which reaches 10 percent of the price of the house. And one more question "having to struggle with bank interest every month which makes you nervous."

Inge_august gave an example for a house worth 500 million, which is now considered cheap, at least you have to have 100 million to pay the down payment and the cost of making papers. "For me who can still hang out in Senopati, that kind of money is still confused about how to collect it."

Not to mention according to him the challenge of facing bank interest. The house of 500 million in installments with a period of 10 years in total, it could reach 700 million.

What often makes you anxious, according to inge_august, is when you want to pay installments. This is because bank interest rates can rise quickly. He explained how in the past the installments could increase significantly in less than a year. "From 2.7 million to 3.5 million try. How not to panic."

Even so, inge_august said the thread was not made to frighten people who want to pay mortgage installments. He said that both by installments and renting the house had good and bad sides.

"I just said the rent was cheaper and told me exactly what the KPR was. Because when the mortgage was rented it was the bank's money, with a monthly payment it was not clear how much it was," he wrote.

Actually, renting a place to stay will always be cheaper than buying your own house. The concept of 'the monthly rent can be made into monthly installments, get the house again' is quite misleading.

- Inge (@inge_august) April 11, 2021

Debate

Inge_august is not the only one who argues that renting a house is always cheaper than KPR. The owner of the hengla_ Twitter account, for example, said that mortgage interest could be almost as big as the cost of renting a house.

"Instead of just giving money to the bank, it's better to rent a house, you can enjoy rental house facilities. The win is buying a house because property prices have risen," he wrote.

Apart from hengla_, a similar opinion also came from the owner of the Bang_os Twitter account. He told how his experience of renting a house for 8 years. And during that time he also paid in installments to build a house.

"When I have money, I buy land first. Then I get the money up slowly from the foundation until now it's finished. Contracting is indeed the right choice while building a house in installments," he said.

I contracted until 4thn with my wife, before boarding for 8 years because I was single, I had money I bought land dl, then there was money I built slowly from the foundation until now it's finished ... contracting mmg is the right choice while in installments to build a house

- Ossama (@bang_os) April 12, 2021

However, this argument does not stand alone. Many people actually prefer mortgages to renting a house.

The owner of a cyanberries account, for example, said that he prefers to pay home installments. According to him, if the rent is too late, pity the children. He worries, if his age is not there "so do not have any savings / place to live, hanging around the streets."

The debate then raises the question, which is better to pay in installments or rent a house? To answer that we interviewed a Senior Financial Planner, Aidil Akbar Madjid.

Contract or KPR?

According to Aidil, if he is urged to choose between repaying the house through a bank or a contract, then he will take the first option. The reason is that by repaying the house, the monthly contributions will become an asset.

"If you are asked whether you want to pay for your house or to rent, then you better pay for the house. If you do a contract, you don't have to pay anything, so it's just a fee," Aidil said when contacted by VOI.

It's just that, said Aidil, not everyone knows how the strategy for mortgage installments is. For example, the basic rule regarding the maximum allocation of the budget that may be issued from the total revenue is 30 percent.

Aidil said, why would anyone feel that the mortgage installments were more expensive, because the income was not right. "What often happens is, the enthusiasm is to pay the house installments but the income is not enough." Then what is the ideal KPR calculation simulation?

In simple terms like this, for example, if we want to buy a house or apartment for Rp. 500 million, the minimum income that must be obtained is around Rp. 10 million. Here's the guesswork.

If we pay a down payment of 30 percent, that means we pay Rp150 million. The remaining 350 million installments are left to be paid each month. Assuming the tenor we take is 15 years, the installments that must be paid are around Rp. 2.8 to Rp. 3 million per month.

"So it's actually not a matter of installments or not. But we have to calculate our income whether we can afford it or not with an estimate of 30 percent for the allocation of home installment payments," he concluded.

BERNAS Others