Compare the Benefits of Buying a House with Cash and with a Mortgage

Homeownership is the dream of many people, but price hikes make it difficult for most to buy outright. According to Cushman & Wakefield MarketBeat Reports Q2, the majority of Indonesians prefer to buy homes through Mortgage (KPR) rather than cash payments.

Home sales in the first half of 2023 showed a stable increase in market confidence, with the Middle segment being the most sought after, comprising about 26% of total demand.

Buying a home can be done either with cash or through a mortgage, depending on individual financial capabilities. However, each method has its own advantages and disadvantages.

Benefits of Buying a House with Cash:

1. Cheaper price as there are no interest payments like with a mortgage.
2. Easier process as transactions are direct with the seller without involving a bank.
3. No administrative fees typically charged by banks.
4. Freedom from developer rules, providing flexibility to renovate or resell the house.
5. The house becomes an asset that can be sold for profit after several years.

However, buying outright requires a large upfront investment and carries the risk of developer issues.

Benefits of Buying a House with a Mortgage:

1. No need for a large upfront investment, only a down payment is required.
2. Affordable monthly installments if the down payment is substantial.
3. Enables obtaining credit from the bank under suitable conditions.
4. The purchasing process is legal with valid certificates.
5. However, mortgage installments tend to be more expensive in the long run due to fluctuating interest rates and penalties for early repayment.

Additionally, in a mortgage scheme, the house remains collateral until the loan is fully repaid, and the buyer does not immediately possess the house’s valuable documents.