@unbelievable Well some of the reasons some one may take a loan is
1 they can't gather that amount of excess funds over there rent or in totality like you can.
2 Instead of renting house for the 5 years while you save they could use that rental toward there own bond Or want stability.
3 property price increases .
So if you going for a good area hopefully properties will escalate in value over time .
Example my grand father bought his first house 40 -45 years ago for 14 000 we sold it recently for 2 million for just house after sub dividing .
So over time price for place will escalate in good areas but bond payment will be for purchase price.
4 gearing or leverage (property investments)
Use bank money to finance
Rent and generate a growing income that helps pay of property costs, in 5-9years you cash flow positive in 20 years have asset that generates income and paid of that escalates in value .
If had capital for 1 property could finance 3-4 when take rental income into account.
- Buy when buyer's market or bottom prices like when interest rates are high . As they drop will become more affordable and can accelerate paying back and pay over fewer years .
My first house I had with access bond put every extra cent in bond was settled by 8 years .
You only get charged interest on outstanding Ballance so if you can pay off faster you pay less interest.
- Tax
When you have large amounts like 1 million earning interest you will be taxed on any interest over R23 800(interest exclusion) at your marginal tax rate . Meaning if you get 10% interest minus 40% (marginal tax rate estimate ) will only grow at 6% per year or inline with inflation .
But debt interest is not taxed . Can even be a before tax expense with rental properties.
- Impatience
You want to have house now not in 5-7 years time .