Mortgage or rent an apartment? Pros and cons

Every independent person, thinking about the future, at least once in his life has wondered what is more profitable - to rent an apartment or take out a mortgage. On the one hand, you will constantly have to move from place to place and depend on the mood of the owner of the apartment. On the other hand, for a long time to deny yourself many things, just to pay the monthly mortgage payment in full and on time. However, in the second case, you are already paying for your own apartment, which is undoubtedly pleasant.

You've probably already guessed that each option has its pros and cons. It is them that we will consider right now.

"For" mortgages.

Let's start by listing the benefits of a mortgage:

1. Unlike a rented apartment, which will never be yours, with a mortgage you do pay for your future home. Another question is how much it will cost you, and when it will finally be yours.
2. From a legal point of view, a mortgage is a better option, because you live in your own apartment, and no one can kick you out as long as you fulfill your obligations to the bank.
3. Even in the unfortunate event of a mortgage the apartment can be sold, closing the balance owed to the bank, while remaining with a good amount of money in the plus.
4. A mortgage gives you room to maneuver. You can both live in the apartment and make a living from it, by renting it out to other people and move in with your relatives. If you have such relatives, of course.
5. Unlike the owner of the rented apartment, banks are not entitled to change the terms of the contract unilaterally. In addition, if you suddenly lose your job and have nothing to pay for housing, the landlord will ask you to move out, while the bank can always make concessions to the borrower by offering an option with debt restructuring.

"Against" mortgages

1. Huge overpayments. Even under the most favorable conditions for the 20-30 years that you will pay the mortgage, you will have to pay a lot of money to the bank. We are talking about 300% or more for 10-15 years. And the down payment on the mortgage will be much higher than the payment for the rent of the apartment, even a few months in advance.
2. Additional expenseswhich are absent in the case of rental housing. These are costs associated with compulsory insurance of the collateral, borrower's insurance, notary's fees, etc.
3. If the borrower loses the ability to pay the monthly mortgage payments, he or she risks being left without an apartment.
4. Since it will be your place, you will have to incur additional costs to buy furniture, appliances, etc. When you rent an apartment, you get to use all of this at once.

The benefits of renting a home

1. Flexibility. You can easily change your place of residence if you are tired of noisy neighbors or if you have to go to work on the other side of town.
2. By renting a home, you can gradually save to buy your own apartment. With a mortgage, most of the money usually goes to pay the monthly payments, and there is nothing left to save.
3. You won't have to pay such huge amounts every month, according to Fortrader.org experts.
4. You do not need to have a large initial capital to rent a home.

The disadvantages of renting

1. Lost your job? You will have to move out, in most cases it will not be possible to agree with the owner of the apartment.
2. The amount of monthly mortgage payments are fixed in the contract and do not change, while landlords often without the consent of the tenant revise the rent upwards.
3. All important points the tenant must agree on with the owner of the apartment. Whether to invite friends and have a party in the apartment, whether to have pets, etc.
4. Do you want to do major repairs? But it won't work, because the apartment isn't yours! Or rather, it will, but is it worth it to start in someone else's apartment? The question is rhetorical.

Of course, in each individual situation people choose what is more profitable and comfortable for them - rent or mortgage. Some people want the peace of mind of their own homes, while others want the opportunity to "use and leave. As we can see, there are pros and cons in both cases.

But in any case, whether you want to rent or buy a home, it is important to Plan your budget. Find out how to do it.

Read the latest news about financial markets on our Telegram channel and in Facebook feed!

See also

Debts and loans. Where do they come from?

• What should you know about your money? 4 questions
• How to set the right goal in life? 10 effective recommendations