“Cheapest” means the lowest interest charged.
Banker are willing to loan us money for buying houses because that is the most secured collateral. Why bother to settle the loan fast? The interest rate is only BLR + margin = 7~8% at this moment.
I bought adequate life insurance to cover my liability ( including mortgage). Thus, I never bother to settle the house loan. When I got extra money, or saving, I always invest it and make sure that they generate more than 8% return per annum.
That means NOW we got the house, plus extra investment. When I die, my wife will also get the house, my investment, and the extra life insurance proceed. If I die young and fail to achieve my financial goal, at least my wife can achieve her financial freedom instantly!
LOKE March 8, 2009 at 9:24 pm
I think fixed rate home loan is a better choice if we don’t plan to settle the loan fast. If we are able to settle the loan in around 6 to 10 years, flexible rate home loan will be better.
rob June 12, 2009 at 7:52 pm
cheap debt, costly debt- its still a debt.
you need to service the mortgage EVERY single month. If you have monthly rental returns, fine. Otherwise it just adds to your liability. Am I right??
KCLau June 19, 2009 at 2:02 pm
@rob,
debt is still debt.
The difference is whether it is a good debt or a bad debt.
subashini sugumaran August 21, 2009 at 4:29 pm
mostly ppl are being into debt to purchase asset. But in the real thing thats not their asset if they bought for their own accomodation. Its still consider as liability. Actually there are mortgage planner who will know more about the bank interest charges and on.
You really can save allot form their advise.
rob August 21, 2009 at 6:32 pm
I am currently looking at an apartment I wish to buy for own stay. Its within my budget but still a liability. What to do? i have fallen in love with the place.