Business Vs. A Home Which To Take Out Loans For First

Business Vs. A Home: Which To Take Out Loans For First?

Singaporeans are ambitious – it’s true, and it’s not a bad thing at all. That’s why choosing between business or house first is a struggle for many of them. 

One moment you’re itching to be your own boss, the next you’re dreaming about never paying rent again. And both probably need a loan, especially if your bank account isn’t pretty full. So, which one makes more sense?

The “business or home” debate is a classic, and the answer really depends on your situation – there’s no absolute answer to this! However, these are factors you need to consider before heading to the nearest legalised money lender in Singapore:

1. Your Financial Fitness

As much as we want it to happen, lenders are not out there to hand out cash merely just for fun. They will scrutinize your finances regardless if you want a business loan or a mortgage, and that’s just understandable.

If you’re going for a home loan, you generally need a hefty down payment (think 20% minimum) and a good credit score to qualify for a decent mortgage. Now, for business loans, lenders want to see a solid business plan and some proof that your venture can turn a profit. Having a track record helps!

Think of it like applying for a competitive job –  you need to show them you’re capable of handling the responsibility.

2. How Much Risk Can You Stomach?

Let’s be honest, both houses and businesses carry a degree of risk, so your risk tolerance plays a big part in whether you’re more of a “safe and steady” home buyer or a “go big or go home” entrepreneur.

For homes, property prices can fluctuate, sure, but over time the Singaporean property market has generally trended upwards. It’s seen as a relatively safe long-term investment.

Meanwhile, new businesses have a sadly high failure rate. Even with brilliant ideas, things can go wrong. Are you comfortable with the risk of your investment not panning out?

3. Where Are You In Life?

If you’re young, still renting, and have few debts, starting a business might be easier. You have the flexibility to take chances and the time to recover if things don’t initially take off.

But later in life, when you have family responsibilities or crave stability, owning a home might feel like the smarter move. So, you see, your age and stage in life can influence your priorities. 

So…Which Is It?

To be honest, there’s no one-size-fits-all answer! Here’s what you need to do: be brutally honest about your finances (Can you realistically handle the repayments?), assess your risk appetite (Are you a calculated risk-taker or do you prefer the safer route?), and consider your goals and timeline (Where do you want to be in 5 or 10 years?). With these questions, you can somehow get an idea of how to approach this wisely. 


But don’t forget: you can do both – eventually. Many successful entrepreneurs in Singapore proudly own their homes, and plenty of homeowners have thriving businesses on the side.  Sometimes, it’s just a matter of timing. 
If you’re truly torn, get professional advice from Prosper Credit and other financial advisors, as they can help you understand the numbers and make a plan that suits your unique circumstances. Hope this helps!

Leave a Reply