The property market has been adjusted for more than three years. If you go to buy a house now, it is obviously at least 30% off compared to the peak period in the past.
For example, a house that used to be 1 million yuan can be purchased for 700,000 yuan.
The question is, I have saved up most of my life, and now Is it better to buy the full amount or a loan for 30 years? Recently, many home buyers are considering this issue. Which option is more cost-effective?
This is not a small matter. It is recommended that you calculate this account clearly. As long as you calculate it correctly, you can at least avoid ten years of detours. If you choose the wrong one, you may have worked hard for many years. This is a big difference.
Let's calculate for you at a minimum mortgage rate of 3%. Which way to buy a house is more cost-effective?
.01
What are the benefits of buying a house in full?
The first big advantage is that it is debt-free and light!
As long as you choose to buy a house with full payment, you don’t have to take a mortgage, you don’t have to “work” to the bank for a long time, you don’t have to worry about repayment days every month, you don’t have to worry about future interest rates, policy changes, or suddenly unemployment, you can’t pay for your monthly payment.
At the same time, buying a house with full payment can save a lot of interest.
Suppose you have a loan of 2 million yuan, 30 years, an interest rate of 3%, and choose to repay the principal and interest equally, the total interest will be about 1.15 million yuan - equivalent to buying this house for 1.57 times the price. If the full payment is made, all the 1.15 million interest will be saved.
And whether you are buying a new or a second-hand house, the full payment is usually easier to bargain. Generally speaking, if you buy a house with full payment, you may save tens of thousands of yuan by buying a new house. If you encounter a landlord who is urgently selling a second-hand house, you may be able to increase by 80,000 to 100,000 yuan.
There is an intermediary statistics that for the same house, the bargaining space for full purchase is 2%-5% more than the loan.
.02
Why do experts recommend "buying a house with a loan"
Because loans also have real benefits:
First, buying a house with a loan can leverage greater returns with low interest rates.
It is no exaggeration to say that 3% of mortgages are almost the cheapest large amount of money that ordinary people can borrow. It is equivalent to using bank money to leverage assets, and the cash you leave behind can also be used for investments - such as funds, stocks, or small businesses. As long as the rate of return exceeds 3%, you will make money by borrowing this money.
For example:
A house with a total of 1 million yuan will be paid 200,000 yuan and a loan of 800,000 yuan. If the house price rises by 10% and the total price becomes 1.1 million, you make a net profit of 100,000 after paying off the loan - equivalent to 50% of the principal of 200,000.
If you buy the full amount, the principal of 1 million will also increase by 100,000, with a yield of only 10%.
This is the magic of leverage, which uses less principal to leverage greater returns.
There are real examples around you:
In 2015, a down payment of 400,000 yuan was bought for a house worth 1.17 million yuan, and the price increased to 3.8 million yuan in 2021, with a net profit of 2.63 million yuan, and the principal increased by more than 6 times. If you buy the full amount that year, the profit ratio will obviously be much lower.
So, for ordinary home buyers, after splitting the full amount, there are both real estate and working capital, this is the smarter choice in the eyes of experts.
Second, you can accumulate credit records.
If you have never borrowed money, in the eyes of the bank, you are a "white account", and it may be more difficult and more expensive to borrow money in the future.
For example, two people take out loans at the same time: one has a good repayment record of 5 years, with an interest rate of 3.3%; the other has no credit record, with an interest rate of 5%-30 years, and the latter may pay an additional interest of 700,000 to 800,000 yuan.
So, save credit, and it is easier to get low interest rates after taking out loans to buy a car, starting a business, and retirement.
Third, enjoy policy benefits
For example, some places can enjoy personal income tax exemptions, deed tax subsidies, etc. for first-home loans. These benefits cannot be enjoyed by buying a house in full.
.03
How to choose a full payment and a loan more cost-effective?
What is the specific way to choose? There is no standard answer to this, the key is to depend on your actual situation.
But we give you a few suggestions:
First, if you have sufficient funds but have no investment management novice, or do not have a more reliable investment channel, it is recommended to buy a house with full payment more stable and worry-free.
Second, the fund budget is not high, and the loan is more appropriate. It is no exaggeration to say that the current 3% interest rate is already a historical low, so for families with insufficient budgets, buying a house with a loan is indeed a good opportunity.
The current interest rate of 3% is more than half lower than in previous years. With a loan of 2 million yuan for 30 years, it can save more than 400,000 yuan of interest compared to 2019.
And keep some money on hand, which can be both emergency response and financial management. Maybe the investment income can also cover the monthly payment.
Third, the most important thing is: What do you think of housing price trends?
If you judge that house prices will rise, low interest rates + loan leverage is an opportunity. For example, if you buy a house with a down payment of 500,000 yuan, you can earn an extra 150,000 yuan with a 10% increase, which is more cost-effective than the full payment.
But if you think the house price may still fall, the full payment is safer. Otherwise, if house prices fall and loans are more valuable than houses, it will really become a "negative asset".
So, let me tell you the truth now: leverage can amplify returns and also magnify risks. Never just listen to others saying "the longer you lend, the more you make money", you have to know whether you can withstand the fluctuations.
Finally, let's do some calculations:
Full payment: 2 million yuan, get the house, no subsequent expenses.
Loan: down payment of 600,000 (30%), loan of 1.4 million, interest rate of 3.%, 30 years. The total repayment was about 2.55 million yuan, of which the interest was 1.15 million yuan.
Is this 1.15 million interest really "lose"?
Not necessarily - if you invest the remaining 1.4 million after paying the down payment of 600,000 yuan, the annual income is stable by more than 3%, which is actually more cost-effective than the full payment. Not to mention that if house prices rise in thirty years, the returns may be much higher than interest.
But if you don't know how to invest, you will only place Yu'ebao, or you will only deposit it in the bank for regular...
Then don't hesitate, just pay the full amount!
