This is the question that many ask when they intend to move house. Either because they need a residence closer to their new job, or because they are at the age of emancipation, or because the wedding date is approaching and whoever wants a home!
The answer is not the same for everyone. It is clear that if we analyze only from a financial point of view, comparing the installment to be paid to the bank versus the amount of rent to be paid to the landlord, the conclusion may point to the purchase of the house, to the detriment of the lease option.
Advantages and disadvantages between buying or renting a house
The decision to buy a house or look for an alternative in the rental market is not an exclusively financial issue. There are advantages and disadvantages to both options.
Below is a summary of the pros and cons of each modality. The decision will always be the result of a delicate balance between financial issues and the personal life of each one.
On the advantages side we have for each of the options:
Advantages of Buying a House: It is a very significant investment that can represent the promise of future gains, in case the property appreciates. On the other hand, independence from a landlord is an unquestionable advantage, since it can make improvements to your liking without depending on the good or bad will of the owner. Not to mention the stability factor as it does not depend on a fixed-term lease. There may also be some tax advantages if you take out a loan.
Questions you must answer before committing to a home loan
But there are factors to consider before committing to buying a home, such as:
- Are you sure that the house you are going to buy represents a good investment for your future , should you decide to sell it later? Issues such as the location, state and age of the property, surrounding demographic dynamics, municipal planning plan (taking into account the forecast of construction in the vicinity of large volumetries or roads), etc.
- Do you have enough capital to enter at least 20% of the property value?
- What is the effort rate if you have to take out a home loan? Between 40 and 60% is a reasonable ratio that allows you to cope with possible increases in the amount of the monthly installment.
- What is your employment relationship? Term or without term? Will the mortgage be paid by just one or two people? Do both members of the couple have income from work?Security in terms of your monthly income is crucial to risk 30 or 40 years of fixed commitments with a bank, If something goes wrong the bank has the legitimacy to execute and pledge the property.
Buying a home using a home loan
We live in times of unusually low interest rates on home loans. But as history teaches us, the portion of the installment to be paid to the bank in relation to interest is a variable and not a costly one. With interest rates indexed to Euribor, there is a guarantee of some stability in the short / medium term, but this does not mean that interest rates cannot rise and will rise.
What we have at the moment is a reality of interest subsidization, thanks to the ECB. If we add unusually low spread rates for banking, it is explained why the installment to be paid to the Bank for the loan for the purchase of a house, is cheaper than if you choose the lease. On the one hand, we have a subsidized reality with tax advantages, on the other, a reality highly penalized by an unfavorable fiscal framework.
When hiring a mortgage loan, there are some tax advantages that you can consult here: ana-macao-kw.pt/comprar-casa-impostos-beneficios-fiscal