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View Full Version : buying outright vs financing.


NZStreetBaller
11-28-2014, 08:05 AM
curios as to what you guys prefer...

I have a friend who has a good paying job 180k a year and has saved up 120000 and wants to buy a house but absolutely despises the thought of paying interest to a bank. hes looking at houses around the 600k mark in the NT. but he cant decide what he wants to do.

Obviously he wants to buy the house outright but is having second thoughts because its going to take him a long ass time to save the money and he fears house prices will go up and itll just take him longer so he is kind of humming and harring about taking up some finance. the guy has never financed anything in his life.

hes one of those tin ass people who spares himself like 100 month so he can save more and will never accept a free lunch from someone or any kind of offering even if you say he doesnt have to pay you back (im assuming because he fears anyone believing that he owes them)


now for me I look at debt an entirely different way...

im 26 and Im on my fourth house and have never saved for a single deposit on a house ever. but man ive seen some debt. I like to consider myself rich minded (wether or not that is actually true or not is yet to be seen)

my first house was bought utilizing my super fund in NZ we are allowed to use our super as a deposit on our first home as long as we live in it for atleast 6 months. I have never really been cash rich. anyways long story short by studying property cycles and communicating constantly with my bank ive bought 4 properties and sold 3 within 4 years.

Theres alot more detail to it but yeah. starting with virtually nothing I made a total of 40k profit and now own 50% of a 400k property in NZ without ever really saving a buck. moved to aus to start again.

So i believe in financing as long as you continue to increase your knowledge of the financial game and really understand what your financing into rather then outright simply because outright buying things makes your an unknown to the banks making it difficult to finance in future.

But for the bigger picture saving just takes too long and is a grueling boring process that requires long tiresome willpower.

But thats just me.
DwnShft2Xcelr8
11-28-2014, 09:23 AM
What is a super fund, OP?

A lot of ppl in the USA try to give a "one-advice-fits-all" tip that everyone should avoid financing. I've heard people say things like, "If you can't afford a house/car outright in cash, don't buy it. Never get financing. Buy everything in cash."
This is stupid advice that (mostly) only applies to rich folks.
embersyc
11-28-2014, 09:34 AM
I would say normal people have no other option but finance when it comes to home buying.

If your friend wants to buy outright, perhaps he should start smaller.

Or just buy the house he wants and use the money he was saving to make extra payments.

I plan to have my own house paid off 10 years from purchase date, assuming I don't sell sooner. That will save me something like $35k in interest over the life of the loan.

If he makes that much money he could set a goal of 5 or 6 years to have it paid off, then he will pay drastically less interest than if he went a full 15 or (the bank owns your life) 30. With the price of the house your friend is looking at he could easily save himself $200k+ in interest doing it this way.
BigBoss
11-28-2014, 10:21 AM
180 k income
120 k in the bank


Comes to ISH for financial advice lol
bigkingsfan
11-28-2014, 10:31 AM
Finance and pay it off earlier, inflation will hurt him in the long run.
n00bie
11-28-2014, 11:34 AM
Wow, people in the U.S. have some cheap @ss houses.

Come to Toronto and you'll be lucky to find a house for under a mill.

If I came across a house for 600k in Toronto, I'd jump on that without any hesitation. :coleman:
NZStreetBaller
11-28-2014, 11:29 PM
What is a super fund, OP?

A lot of ppl in the USA try to give a "one-advice-fits-all" tip that everyone should avoid financing. I've heard people say things like, "If you can't afford a house/car outright in cash, don't buy it. Never get financing. Buy everything in cash."
This is stupid advice that (mostly) only applies to rich folks.

Its like a savings bond where you put money into a company say 3% of your yearly earnings and the company you work for matches it then they invest the money for you and your entitled to it for a first home after 5 years of contribution or when you turn 65 as a retirement fund.

In nz its compulsary I dont know what you call it in the us. But you guys do have it. 401 fund or something im not sure.
NZStreetBaller
11-28-2014, 11:30 PM
180 k income
120 k in the bank


Comes to ISH for financial advice lol

Thats my friends money and im not asking for advice im simply curios to see what people prefer.
KyrieTheFuture
11-29-2014, 12:05 AM
Wow, people in the U.S. have some cheap @ss houses.

Come to Toronto and you'll be lucky to find a house for under a mill.

If I came across a house for 600k in Toronto, I'd jump on that without any hesitation. :coleman:
Depends where, cities have expensive houses but you can get a house in Oklahoma or Kansas for like 100,000
KevinNYC
11-29-2014, 12:13 AM
Wow, people in the U.S. have some cheap @ss houses.

Come to Toronto and you'll be lucky to find a house for under a mill.

If I came across a house for 600k in Toronto, I'd jump on that without any hesitation. :coleman:

Because houses all across Canada cost exactly what they would cost in Toronto.

You also seemed to have missed all the references to NZ.
BigBoss
11-29-2014, 12:30 AM
Thats my friends money and im not asking for advice im simply curios to see what people prefer.

cool story fakkit
wakencdukest
11-29-2014, 12:35 AM
If you have the money to buy outright, it's better than paying a huge amount of interest over 20 years. There is no downside to paying cash.
NZStreetBaller
11-29-2014, 02:33 AM
cool story fakkit

lol dont get mad..... your the clown making assumptions homo
DCL
11-29-2014, 12:59 PM
if you want to see your net worth explode, you have to finance. If you are happy with seeing your net worth grow at a turtle rate, buy outright.
GimmeThat
11-29-2014, 03:58 PM
I don't know if you can buy outright those things in which you truly value/values the most

and you are certainly in trouble if you consistently finance purchases that ends up being that of no value to you
DwnShft2Xcelr8
11-30-2014, 02:45 AM
if you want to see your net worth explode, you have to finance. If you are happy with seeing your net worth grow at a turtle rate, buy outright.

Explain
GimmeThat
12-01-2014, 08:26 AM
Explain


for the salary people, its whatever happens between their position now and their next promotion


for those who make their living off of tips.

it's the picture that guides us, not necessarily the pieces of puzzle.
in the case we aren't too busy focusing on how to match those pieces together without even knowing what that actual piece plays into the picture.


edit - of course, you risk the loss of net worth through financing, just as much as being demoted or losing your job.