What pays off more? Rent or buy? The decision to rent or become the owner of a property often depends on personal circumstances.
For one, the flexibility, not being tied to a place, is decisive to live in rent. For some others, a purchase is the only option from the outset, since one's life path already seems to be mapped out and one wants to settle in one place.
Beware of hidden additional costs
Another point that has to be considered are the additional costs. With a purchase you must count on about ten to fifteen percent of the purchase price. Included are:
- Land transfer tax
- Real estate agent commission
- Legal or notary fees
- Registration of a mortgage
- Land register fee
A tenant has to reckon with one-time costs, for example, for the broker, the preparation of the contract and the deposit. However, money spent on rent is gone for good. There is no permanent value.
How do I finance the dream of home ownership?
There are various ways to finance the dream of owning a home. One of the most important considerations is the interest rate. Whether you choose a fixed or variable interest rate depends largely on your risk tolerance.
The optimal financing is exactly tailored to your needs and requirements.
To compare credit offers with each other, the debit interest rate alone is not enough. Account maintenance and other fees must also be considered. Only when all ancillary costs are included does a complete picture emerge.
Another factor is the term of the loan: long loan terms mean a lower monthly burden, because the repayment rate is lower. With a short term, the monthly installments are higher, the total loan comes in the end for it cheaper.
This is why a purchase pays off in the end
By renting real estate, you retain your flexibility and are comparatively cheaper than buying property – but only in the first few years. Although a purchase is initially more expensive, it pays off in the end. Because once the loan is paid off, the fixed costs for living decrease enormously.
In addition, one's own property is a lasting investment in value and at the same time serves as an ideal pension provision – instead of paying rising rental costs, there is significantly more money available due to living in one's own paid-off home.
Also to be noted: The longer the purchased property is lived in, the greater the financial advantage of buying compared to renting. For example, after fifty years, the owner of an average condominium will have accumulated over 100.000 euros compared to a tenant.
Conclusion
If you decide to buy property, you can realize your individual ideas of living and at the same time invest your money in lasting values that are stable in value and inflation-proof – which will also be preserved for future generations.