Buying instead of renting – when it’s worth buying an apartment in an old building
Buying instead of renting – when it’s worth buying an apartment in an old building
For many people, fulfilling the dream of owning their own home is a central goal in life. There are many reasons for buying a condominium – whether it is to provide security in old age or to escape rising rents in the long term. Find out here what other advantages there are to buying your own home and what you should look out for to make sure it pays off.
The advantages are manifold
In addition to the opportunity to reduce their financial burden in the long term, for many people it is the creative freedom that makes buying a home so desirable. One advantage of the design freedom is that owners do not have to ask a landlord for permission if they want to remodel something in their home. And in the case of properties that are still under development, it is often even possible to freely adapt the floor plan and thus the future rooms, which is why buying a shell apartment is particularly attractive for many people. As the owner, there is also no risk of having to leave the rented apartment if you register your own requirements. In order to be able to reliably assess whether the purchase is financially worthwhile, the development of future rental and purchase prices in the respective location is crucial. However, as these cannot be predicted, it is advisable to examine various factors such as the micro-location in detail in advance to the best of your knowledge. If you buy a suitable property at a reasonable price, taking into account the relevant criteria, it is likely that the decision in favor of home ownership and against a rental apartment will pay off. As an owner-occupier, the return is made up of the rental savings, the increase in value, the tax advantage and the subsidies.
Staying power pays off
Owners pay no rent. The savings flow into their own property via the debt service, while the assets grow steadily as the remaining debt decreases. If the trend of rising rents continues as in the past 15 years, during which rents have risen by just under one percent each year, owners benefit from the growing rental savings. If the property has been purchased at a reasonable price and is in a good location, a long-term increase in value of around one percent per year can be assumed in most cases. The tax advantage of condominiums is that the aforementioned tenant savings and the possible increase in value are tax-free. In addition, the state promotes the purchase or modernization of residential property with subsidies, allowances and favorable loans. The amount of the subsidy depends on the respective property or construction project and can amount to several tens of thousands of euros. It takes time before the purchase of a condominium actually pays off financially. How much patience you need to bring to the table depends not only on the amount of the costs, but also on the equity you put in and how quickly you repay the corresponding loan. Regardless of this, future owners will benefit in any case from the current low interest rates, which is why now is a good time to invest. Despite the higher initial outlay, which is made up of the loan installments, additional costs for the notary, land transfer tax, land registry and estate agent as well as the costs for property management and maintenance, in most cases you can assume that the purchase will pay for itself sooner or later.