We are faced with two clichés in the real estate market, which we all face at some point in our lives. That renting is a waste of money and that buying a home ties you down for life. Therefore, in this article we will go deeper into what is better, buying or renting a home.
The choice is not simple and depends on each case. We must take into account our personal situation and our priorities in life to assess which expenses we should face. The most important aspects to consider are:
- Time horizon: Before deciding whether to buy or rent, we must consider the time horizon we are talking about. It is not the same to look for a house for the next 20 years, as for work reasons or causes that affect your residence in the short term. Buying a house implies a large down payment and a commitment that will mark our economy for many years to come.
- Savings: to buy a house you need to save 30% of the value of the house. In order to apply for a mortgage, you must have saved approximately 32%. Normally, mortgages only cover 80% of the value of the home, and we should not forget that 12% of our savings are used for mortgage and purchase costs. Therefore, even if you get a 100% mortgage (which is only granted to people with a high level of purchasing power), you should still have that 12% saved for expenses.
- The price of the house: is a basic point to inform us about the price and its evolution. This way we can know if it is a good moment to buy a house or if it is better to wait and rent while we do it. These data can be consulted in the INE.
Advantages of Buying
Among the advantages of buying a house, we find:
- A property gives you security for the future. Once you've paid for the house, you no longer have to worry about that monthly fee. In fact, you can rent out the property and get an income from it if you have several properties.
- Revaluation of housing: in theory, over the years housing is revalued. Although we should not rely on these because, as we know, economic cycles affect them.
- Freedom to modify your house: you can make works and reforms, without anyone limiting you.
Disadvantages of Buying
- The ahorros previosalready mentioned.
- The housing expenses that as a tenant you don't have to worry. Like the payment of taxes and municipal taxes (like the IBI and the rubbish tax), community fees, building insurance, life insurance, or possible repairs.
- The monthly mortgage payment, varies according to the Euribor and strong increases may occur, we must be prepared financially to face them.
Advantages of renting
- Less savings are needed menos ahorros previos: the mattress needed is much smaller as we are talking about a much smaller initial outlay. In principle, only the amount of the deposit would be necessary, which according to the law of urban rentals, should be equivalent to a monthly payment, although the owner and the tenant can agree that it is higher. Other expenses, such as furniture or property management costs, can be added if the rental is not directly with a private individual.
- The The monthly fee:The price of a product is only increased if the CPI (prices) increases. Therefore, if prices rise, so will the amount paid to the owner, but if they fall, the fee must fall.
- More flexibilityRenting gives you the freedom, for whatever reason (bad economic situation, change of job, personal situation...) to leave the house and move to another one. Always within the agreements you have reached with the owner.
- Tax advantages fiscales: By living on a rental basis you have certain benefits for the tax authorities. It should be borne in mind that these vary in each Autonomous Community and are usually linked to age or income.
Disadvantages of Renting
- You don´t get a property. So in the future you wouldn't have a house and you would still have to pay rent.
- Dealing with the owner: it is important to maintain a cordial relationship, for any problems in the house or in the community that might arise.
In recent years, the demand for rentals has grown and, as a consequence, so have the prices. For this reason, and due to the economic situation we are living in, this can be a good period to buy a property or even take the middle way, renting with an option to buy.
If you have more related doubts or you want us to study your house in particular, you can send us a message or call us at Grupo IPG, your real estate agency in Estepona, Tarifa and Algeciras