To rent or to buy - which is better?
Updated: Nov 18, 2021
If you ask yourself which is better: to rent a house or to buy your own, then continue reading.
Investment or money down the drain?
The most important difference between renting and buying on a mortgage is who you pay to. When you pay rent, all the money goes into the landlord's pocket. When you pay the mortgage, a part of the payment goes into your pocket, because you are purchasing a property. A mortgage can be compared to putting the money in a savings account. Moreover, if you consider that real estate prices usually rise, then this is rather an investment and not just savings. As we all heard, an investment in real estate is one of the most stable and profitable instruments.
How much do I want to pay for property maintenance?
When renting, you do not need to worry about repairs: expenses over 1000 CZK are according to the Czech law covered by the landlord. In your own property, any malfunction will hit your pocket. Some of these, such as replacing a boiler, can be quite expensive.
We are talking not only about one-time problems. In case of an apartment we should consider as well monthly payments to the “repair fund of the house”. These payments can reach several thousand crowns per month.
Am I ready for the limits?
A huge plus in favor of the purchase option is your freedom to do what you like in the property: when it’s yours no one will forbid you to repaint the walls red or get a huge shaggy dog. Instead landlords often set conditions, for example, someone may not want to rent to families with small children. I had a case when a landlord was so afraid for his property that he did not want to rent it even to young couples: what if they get toddlered soon after moving in?!
How long will I stay in this place?
Renting will be the best solution for people who often move or are not sure how long they will stay in one place.
Can I buy a home where I want to live?
Renting will also be an option for those who prefer to live where they cannot afford to buy housing due to high prices or lack of offers.
Am I eligible for a mortgage?
There are those who, despite the low rates, cannot take a mortgage, because they do not meet the conditions of a bank or they do not have enough of their own money for the down payment. In this case, the solution for them would be rent.
How stable is my current life situation?
When you rent an apartment, you can more easily change the area or size of housing depending on your need and desires than if you’d live in the bought place.
Each option has its pros and cons. Which one to choose?
If you rather think about buying, then the first step is to assess your financial capabilities.
Read my article How to calculate whether you can afford to buy a home in the Czech Republic?where you can check the questions you need to ask yourself in order to calculate whether you can afford buying.
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