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HomeFINANCEBuy or rent a house? That is the question.

Buy or rent a house? That is the question.

Buying a home should be an informed and conscious decision, especially if you need to take out a home loan. This can be an even more complicated decision to take due to the current economic scenario, with the corresponding increase in interest rates.

On the other hand, we have housing rents that are also rising and whose amounts are, as a rule, higher than a monthly installment of a housing loan.

In short, there is no right or wrong answer to this question. THE answer to this question is related to your goals, your financial, professional and family situation.

buy vs. rent

Buy a house is a big investment, but this too will be an asset that you can manage as you see fit. The main disadvantages are: the possible increase in interest rates (if you opt for a variable rate) and the initial expenses.

As far as expenses are concerned, you must be prepared for all to initial fees and commissions that you must pay to the bank (in case of a loan) and to the State. Must add to this value, the installment you will have to pay monthly.

Renting implies less costs both in an initial and maintenance phase. However, your monthly rents may be higher when buying a house using a home loan and you are paying for an asset that will not be yours. The “good” news is that the increase in the value of housing rents next year will be 2%, below the expected rise of 5%.

Still referring to rents in the lease, and contrary to what happens with credit installments, these can be deducted up to 15% for IRS purposes.

let’s go to accounts

Let’s say you’re going to buy a T1 (50m2) in Lisbon, which costs around 150 thousand euros. In this example, you take out a 30-year loan, with a spread of 1% and a down payment of 10% (€15,000). Yes, there are banks with spreads around 1%. And, since banks do not lend 100% of the value of the house, you will have to have at least 15 thousand euros.

In addition to this input value, should consider the following initial costs:

  • Opening of the process (amount that varies depending on the bank): €550
  • Municipal Tax on Onerous Property Transfers (IMT) (variable depending on the value of the property): €1,860
  • Stamp Duty (0.8% of the property value): €1,200
  • Deed (variable depending on the value of the property): €751

TOTAL: €4,361

In addition to these initial values, must also take into account the following fixed costs:

  • Installment: €296 / month
  • Life insurance for couple: 100€ / month
  • Condo: 45€ / month (inquire before buying the house about the exact amount of this monthly charge)
  • Multi-risk Insurance: €90 / year
  • IMI: €400/year

TOTAL: €5,782/year, around €482/month.

Adding it all up (entry fee + initial costs + fixed after purchase): you will pay, after 30 years, around €207,821, which gives an average of €577/month.

But attention, before proceeding with the credit, must consult several banks and compare offers.

Let’s analyze the same example, but for the lease:

to lease a T1 (50m2) in Lisbonmust be ready to pay 800€ monthly. You must pay an initial deposit, thus doubling the amount in the first month.
At the end of one year, you will have paid €9,600, from which €502 can be deducted (maximum amount of income tax deduction from the value of rents – calculated at 15%). Accounts made: in the lease of this T1 in the capital, I would spend €9,098 per yearwhich per month means an expense of €758.

Although it is a higher monthly cost compared to buying a house, when renting you don’t have to worry with maintenance works, payment of taxes about real estate, condominiums or other expenses (except for income updates).

Each case is different and Doctor Finance can help you with your

At this point, an experienced and certified credit intermediary can help you find the best solution. At Doctor Finance We have a team of doctors focused on analyzing case by case and obtaining the best solutions on the market. At no cost to you.

Fill out the form below and you will be contacted shortly by one of our specialists, who will evaluate your case and proceed with the negotiations.

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