Refer to my previous post about the cheapest consumer debt: Mortgage – The Cheapest Debt , it is wise to keep the mortgage as our only debt.
Most people hesitate whether to buy a new car first or a house? Let’s see the pro and con:
|Maintenance, petrol, servicing cost about RM300-500/month||Maintenance, electricity, water bill, assessment cost about|
|Most likely Depreciate in value||Most likely Appreciate in Value|
|Loan: Hire Purchase Agreement|
Only a little bit discount if we want to pay advanced installment
Higher interest charge
Advanced payment will settle on the principle loan
Lower interest charge
You should buy the house first, then serve the installment for a few years. After you build up more equity in the mortgage, you can refinance the house to higher loan amount. The extra cash you get at that time can be used to buy your dream car.
That way, you kill two birds with one stone. First, you save on the interest because mortgage debt usually have the lowest interest. Second, you delay the car purchase which will be a long term liability anyway. At a later time, you would most probably get a better models with the same amount of money.