Buying versus renting: Which is cheaper, and where?
Monday, November 29, 2021 @ 2:21 PM
WHICH is more economically viable in the short to medium term – buying a home with a mortgage, or renting?
Wherever you are in the world, the decision will always be a personal one and depend entirely on your own criteria. Many consider renting a permanent home is 'dead money' and that, unless there's a substantial difference which puts mortgage repayments out of their reach, prefer to spend their housing cash every month on something that will eventually become their own, will probably increase in value (whether that takes a couple of years or a lifetime), and which they may be able to release funds from farther down the line for anything from major renovations to elderly care costs. Others, especially if they are not sure they will want to be living in the same area forever, particularly if they are willing to relocate for the right job if this turns up, who are a bit nervous that homes may become incredibly difficult to sell at a later date and force them to stay put, or who feel there may be little or no demand among would-be tenants for the type of home they want to live in for now - making moving out of the area whilst renting their house to others until it sells could be nearly impossible - might prefer the relative ease of being able to simply pack up their worldly goods, hand back the keys, and collect another set in their preferred location.
For first-time buyers, the situation may be entirely financial: Unless they have a secure, permanent job or regular income, or are in the type of profession where they could pick up a new one practically the next week once their temporary contract expires, they may not be accepted for a mortgage; or perhaps they would, but know they would never be able to save up for the deposit and fees.
Very few banks will lend more than 80% of either the market price or the actual value, whichever is the lowest, on a main residence (typically 60% for a second or subsequent property), and future owners then have to factor in around 12.5% on top of the buying price for fees and taxes – slightly less when purchasing outright, as mortgage set-up costs are not involved.
Read more at thinkSPAIN.com