Leave the money earning in any application or pay the full amount at once, with the possibility of a discount? If you are planning to buy a house or apartment, you have certainly wondered if it is more worthwhile to buy property in cash or finance, isn’t it?
The answer to this question is very relative, as it depends on several factors. First, whoever wants to pay the cash, must have the availability of a (normally high) amount to pay off the property. And putting all the money together can take a considerable amount of time, making you have to postpone your dream.
In addition, the way in which the property will be used, the interest rates charged and the income from financial investments must also be weighed before the decision. Continue reading to understand better!
When is it better to buy cash or finance?
As already explained, several points must be analyzed carefully so that the decision is as advantageous as possible. Want an example? Suppose you need to save money for a while to guarantee a good cash discount, but in the meantime you are paying rent in Blue world City. Is it worth it? In order to resolve, some details need to be analyzed.
In Brazil, interest rates are still quite high and weigh in the pockets of those who opt for financing. Thus, when opting for debt installment payment, it is necessary to do the accounts with great caution.
Usually, when financing a property, the buyer needs to make a down payment, which can exceed 15% of the value. The rest of the debt will be paid to the developer until the keys are handed over and then to the contracted financial institution, according to the term chosen for the installment plan.
These installments bear the contracted interest, in addition to the readjustment, which is calculated according to the National Civil Construction Index (INCC). Thus, it is important to do the calculations carefully, because, depending on the financing contracted, the property will be much more expensive and the installments may compromise your income in the future.
In addition, it is important to remember that the buyer will need to have credit approved by the financial institution, which takes into account the monthly income of the interested party before approving the financing. However, one of the advantages is the possibility of using the Guarantee Fund for Length of Service (FGTS) to repay the debt (provided that the property meets the rules).
Many buyers choose to buy in cash not only to get rid of interest, but also with the intention of bargaining for a good discount. However, some points deserve caution before making this decision:
- do you already have the value available or do you intend to add it over a period of time? It is worth remembering that the price of real estate fluctuates a lot, according to market conditions, and what today would be an opportunity (and its objective) may be totally different in the future, which makes planning difficult;
- it takes discipline to collect the necessary amount;
- if you have the full amount in hand, what discount is offered? Depending on the percentage, it may be more interesting to invest the money in a fund with greater profitability and opt for installment payments;
- even supposing that you have the property value, observe if there will be any money left, as you will have to bear the costs of documentation , renovation and decoration .
If you already have a house or apartment that can be used as a down payment, cash payment is simpler. But, if you are buying your first property, you need to consider some factors, such as:
- if you pay rent, buying a property ready to live will be a way to get rid of it, even if you need to resort to financing;
- however, if you are going to buy a property in the plant and pay both the rent and the installments, you have to consider that this can weigh in the budget. Thus, in this situation, it may be interesting to save to pay in cash or, at least, to be able to make a larger contribution, reducing the amount of benefits.
Property for investment
Buying a property with the intention of turning it into an investment, renting it to third parties, is only worthwhile if the price really represents a good opportunity.
Despite the real estate appreciation, residential rents do not show good performance. In addition, there is a risk of becoming unoccupied and bringing new costs to the owner, such as condominium fees and Property and Land Tax (IPTU). Either way, it is a safe investment, as there will always be demand.
What are the pros and cons of buying property in cash or financing?
Still in doubt? Then, briefly see the advantages and disadvantages of each payment method.
- not having to deal with unforeseen events that may put the payment of the outstanding balance at risk;
- get a bigger discount on the purchase;
- pay the real value of the property, without corrections and interest that can compromise your income while the financing lasts.
- need discipline to save for a long period;
- stop investing your resources in other funds or applications that can bring greater profitability;
- bet all your capital on a single investment;
- impossibility of using the FGTS as part of the payment.
- it is possible to negotiate a parcel that fits in the pocket;
- those who have capital saved can diversify investments and invest in funds with greater profitability;
- FGTS can be used to pay part of the debt;
- the Casa Verde e Amarela Program offers financing with a lower interest rate;
- you can use the yield from your applications to prepay installments and thereby reduce interest and financing terms.
- interest and corrections will make your property more expensive;
- uncertainty in the face of the economic scenario, which may cause difficulties in the settlement of installments in the future.
How to make the best choice?
As you can see, both options have pros and cons that should be weighed carefully, considering the individual profile of each buyer. In addition to analyzing all the details, it is essential to put everything on the tip of the pencil and make the calculations.
In many cases, the ideal is to opt for the middle ground, that is, to make a larger contribution and have a smaller residual value to finance. A specialist consultant can help you identify the best options for the investment to be made safely.
At Trisul, a construction company that has been operating in the sector for more than 30 years, with high-end developments in São Paulo, you will be able to count on all the guidance and evaluate the opportunities to invest your capital, which will allow you to choose wisely the best alternative between buy property in cash or finance.
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