Filipinos are known for their closely-knit family ties. It is not uncommon for children to live with their parents long after they finish college or even when they get married and have kids. As parents go past their retirement age, children and other members of the extended family stay with them especially if they have health issues that require assistance on a regular basis.
But if you are generally in good physical health, and prefer to live independently with your spouse, would you rather rent your home or own it as you live your retirement years?
For many Filipinos, money is an obvious factor in deciding whether to own or rent a house. While you’re no longer earning from salary, retirement funds and monthly pensions are now at your own disposal. An important consideration is the expected deterioration of your health and the possible rising cost of medication, so saving up remains a pressing consideration. But since financing is just a factor to consider before making a decision, here are a few questions that put things in better perspective and help arrive at a more calculated decision.
Do you have heirs to leave an inheritance to?
Having children or other heirs is likely going to prompt you to lean towards buying and owning the house so you can leave them this piece of property. Owning a house is a source of pride and a symbol of stability among Filipino families. Leaving them your home helps assure your heirs they don’t have to worry about acquiring the house and spend money instead on other expenses.
Does the house possess more equity later?
Not all homes are valued equally, one may have more potential to raise its market value in the future than the other. If you are particular about this, you may wish to consider your community’s development. Is it currently barren or within the vicinity of farmlands that can be converted to residential blocks, or a future site for a shopping mall, school or market? Home equity is the market value of your property minus the loan value you paid to acquire it. If you are particular about this, do simple research on what the area might look like in the future. Otherwise, if your home is located close to the riverbank and often flooded during the rainy season, the situation could go worse based on climate change trends. Your house might lose its equity and lower its market value in the future.
Do you like your neighborhood?
One of the main reasons besides cost of living in a neighborhood is how it impacts your quality of life. Is it secure, close to your relatives and accessible to market or church? Or is it within the defined quake fault line, close to polluting factories and accident prone area? Such factors influence how you’ll decide to stay or to go in the future. Owning a house in a stable neighborhood can be a good idea as you can convert rooms vacated by children who have moved out into rental property for students or young family. On the other hand, renting a house gives you flexibility to move elsewhere such as close to medical facilities or your children and grand children without long term commitment to a house.
Do you wish to relax more?
Renting the house might give you moment to relax and take it easy as landlords often take care of fixing things within the property. As you age, you’d better off exercise a hands-off approach on doing extra work and focus on doing what you like to do: taking a leisure walk, reading books, cooking your favorite dish or playing with your grandchildren.
However, if you own the house, you have a free-hand on what you’d like to do. You can modify the closet and dispose unwanted furniture so you’ll have more spacious breathing space. A landlord may not agree on addition of hand rails or ramp so you can easily move around in a wheelchair or replace slippery floor tiles to minimize accidents at home.
Retirement age is a major phase in a person’s life where he or she deserves to reap the fruits of hard work for many years. Deciding on owning or renting a house may have been decided long time ago but as a new chapter in life unfolds, those decisions may require a review. You can assess your own situation depending on your financial power, surrounding family members and health condition. But such decisions can also be influenced by advise from other professionals such as your insurance agent, tax adviser or real estate broker who will give sound advise on which option is better based on your lifestyle preference.
Buying a home during your retirement age is almost always in cash terms as lending institutions count the number of years of payment to borrower’s age upon loan maturity or time you fully paid your loan and claim full ownership of the house. An applicant should not be more than 65 years old by the time the loan matures, so unless you choose a short loan term, you need to consider your home buying options early.