Saturday, 26 September, 2020

How to Buy on loan or rent?


Well, it turns out that both are almost identical! This speaks very strongly for buying an apartment because then part of the money transferred to the bank as loan repayment will be largely allocated to the “construction” of your property (apartment). On the other hand, in the case of renting, all the money paid monthly will be irrevocably lost to the owner of the flat you rent (they will build it, not your capital).

Not only financial matters are important here

Not only financial matters are important here

Answering the question “buy on loan or rent?” you should also consider other circumstances. As in almost every case, there are pros and cons here. Buying an apartment is not only your own corner now but also an investment for the future because when you pay it off completely you will live in it for free (not including current charges for electricity, heating, water, etc.).

After paying off the flat bought on credit, it will become your exclusive property, which you will be able to freely dispose of: sell, rent, or take a loan from your bank. Will also be subject to inheritance.

The flat bought can be a source of extra money for old age thanks to the so-called “reverse mortgage” (see chapter “Reverse mortgage” on page 85).  A loan taken out in a bank for an apartment is the cheapest loan on the market.

Paying monthly installments for an apartment will force you to manage your income more rationally and carefully. It is a kind of saving and investing.

Nobody will throw you out of the flat you bought (provided that you pay the loan installments on time). When renting you are not so sure, because the owner has the right to terminate your lease at any time. As an owner of an apartment, you ensure confidence and stability.

You can arrange the apartment you want as you like

You can arrange the apartment you want as you like

For a rented flat, the owner will also have a say in this matter. Anyway, it is not profitable to invest in a rented apartment (for example, in the renovation, replacement of windows), because it is not yours and you do not know how long you will live in it.

However, also renting an apartment has its advantages (compared to buying it):

Rental is a more flexible solution: it is easier and cheaper to move if the need arises (if you don’t God, you will lose your job or your earnings will decrease significantly) or it will be more convenient (you change jobs, school). Selling an apartment and buying a new one is a labor-intensive, expensive operation (with various fees) and taking much longer than moving from one rented apartment to another.

Choosing an apartment to buy is a serious and therefore difficult decision

Choosing an apartment to buy is a serious and therefore difficult decision

Choosing an apartment for rent is much easier, requires less thought, takes less time, is less stressful. All this is because from a rented apartment (if you don’t like it) you can easily and cheaply move to another.

If you fall into more serious debts, you will still be able to live peacefully in a rented flat, while a flat bought (no matter whether paid or not) may be taken by a bailiff.

When buying an apartment, you must pay a tax on civil law transactions of 2% of the value of the apartment. However, the conclusion of the lease does not burden you in any way (tax must be paid by the owner of the apartment, but this is not your business).

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