Home Finance - Home Financing Tips

Pros and Cons of a SOHO


Home Finance - Small Office Home Office


PROS

Low capital outlay
Lower capital outlay is required compared to having a house and an office. Not only will you need less cash for renting or buying two places, the set-up (e.g. furnishings) and recurring (e.g. phone, utility) costs are greatly reduced as well.

No need for speed
The savings, in terms of both money and time, for not having to travel to and from work can be significant. Even for meals, there is no need for you to travel if you do not want to.

Family time
An important benefit to parents of young children is the ability to spend more time with the family. This can be a double edged sword if not handled properly however. Consider coming up with a system to let your family know when you are busy at work.

CONS

CPF usage
CPF cannot be used towards the purchase of a Soho unlike normal residential properties. Having to come out 20% of the purchase price or more in cash to purchase a Soho, can be crippling to some.

Loan Packages
Commercial loans, which interest rates are higher than residential property loans, apply to Soho purchases. Currently commercial loan interest rates are more than 1% higher than residential property loans. Another noteworthy point is that the loan to value of a Soho cannot generally be higher than 80%, 10% less than that of a residential property.

Time Management
Discipline is required to separate work from play and vice-versa. Watching 15 minutes, then 30 minutes of television can be tempting.