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Interested in buying a house in Indonesia? The comparison between buying a house with a mortgage vs cash is essential. Both payment methods offer their own advantages and disadvantages, with trends in society fluctuating.
This article will discuss the comparison between KPR and Cash home purchases, current trends, and factors that influence people's preferences. Which is more popular? Let's discuss.
What is Buying a House with a Mortgage (KPR) vs Cash?
Buying a house cash means the buyer pays the full price of the house up front without installments. There are two common cash schemes in Indonesia: direct cash and installment cash. Direct cash means payment in full in one transaction, while installment cash is done in several stages, usually 6 to 24 months, according to the agreement with the developer..
Meanwhile, Home Ownership Loan (KPR) is a home ownership credit facility provided by banks to customers to buy or build a house. This purchase process requires a down payment and monthly mortgage installment payments for a certain period of time (usually 5–20 years).
Mortgage as The Top Choice
Although the mortgage market share is decreasing, mortgages remain the main choice in big cities. According to data from Goodstats.id shows, 36.08% of people who buy houses use KPR, but this figure is much higher in urban areas (41.30%) compared to rural areas (3.44%). This is because house prices in big cities are much higher, so people prefer installments rather than paying cash.
However, applying for a mortgage to a bank also has its challenges. One of them is the interest rate which tends to fluctuate, especially for mortgages with a floating rate scheme. Many consumers are shocked when interest rates rise drastically after the fixed rate period ends, so they are more careful in taking a house with a mortgage..
Mortgage vs Cash
The following is a comparison table between cash home purchases and mortgages:
| Aspect | Mortgage | Cash |
| Ownership Process | It requires a long bank process | Fast, paid in full |
| Initial capital | No need for large funds at the start | Large, must be paid in full |
| Installment Expenses | Flexible Monthly Installments | No installments |
| Developer Risk | It is safer if the bank has approved the developer | Higher risk if developer has problems |
Some Factors That Benefit from Buying a Mortgage Home
Small Initial Capital
You only need to pay a relatively small down payment compared to the overall price of the house. The rest can be paid in installments through affordable monthly payments..
The Ease of Owning a Home
Buy a house with a mortgage, you don't have to wait years to collect cash. You can immediately own and occupy your dream home..
Guaranteed House Legality
The bank will check the certificate requirements and legality of the property before approving the mortgage system, so that the risk of fraud or property disputes can be minimized..
Flexible Term
You can choose the installment tenor (period) according to your financial capabilities, starting from several years to tens of years..
Equipped with insurance
Mortgages are usually equipped with life insurance and fire insurance, providing additional protection for the debtor and heirs.
More Controlled Finances
Kamu tetap bisa mengelola keuangan untuk kebutuhan lain, karena tidak perlu mengeluarkan dana besar sekaligus.
Access to Home Ownership is Getting Easier
KPR opens up opportunities for home ownership for people who do not yet have sufficient funds to buy in cash, especially in big cities with high property prices.
Easy and Fast Process
Many banks offer a fast and easy mortgage application process, and some banks even offer down payment promotions starting from 0% and a simple administration process.
Joint Income and KPR Take Over
Buying a house with a mortgage can be applied for on a joint income basis (combined income of husband and wife) and can also be used for takeovers from other banks, making it easier for people to own a house..
Want to know more about KPR Take Over? Read more here “Understanding KPR Take Over, Benefits and Requirements for Applying for KPR Transfer in 2025”
Long Term Investment
Property tends to experience price increases from year to year, so mortgages can be a profitable investment tip for the community.
Which Will Be More Popular in 2025?
The latest data from Kompas shows that KPR still dominates around 70% of national residential home purchases in the first quarter of 2025, although this figure is lower than the previous period..
Home mortgages remain a popular choice because they provide easier access to home ownership, payment flexibility, and are supported by various government and banking incentives, such as subsidies, promotions, and attractive offers for simple homes..
Thus, KPR is still considered the most relevant and popular solution for people who want to own a home in limited financial conditions.
Apply for a Mortgage with Lets Move Group!
Our professional consultants at Lets Move Group are ready to help you secure a mortgage (KPR) plan with the best interest rates and repayment terms suited to your needs. Get connect with our consultants now!!
