First flat – rent or loan? This question is being faced by young people who decided to look for their first apartment. There are many factors determining the choice between renting an apartment and buying it. Therefore, we will try to bring the most important issues related to the search for a suitable apartment, as well as the pros and cons of both renting the apartment and buying it on credit. We invite you to read the article.
Time for a serious decision – how to finance the first apartment?
Do you want to decide to buy an apartment? Or maybe you are thinking about renting? Whatever decision you make, it will have serious consequences. The Financial Market crew knows that a decision regarding the financing of an apartment is a serious matter. That is why we help to consider all pros and cons.
Loan for the purchase of an apartment
The purchase of an apartment will require a lot of money. Most people use a mortgage in this situation. To obtain a loan for the purchase of an apartment, we must have a sufficiently high salary, reliable work, i.e. mandate and work contracts are not an option, especially when we talk about a loan amount of PLN 100, 200, 300 thousand. We will also be subject to internal credit scoring used by the bank. In addition, important credit information for the bank will be our credit history, which is worth taking care of before. How can we take care of our credit history?
Many people mistakenly believe that they will be positively assessed by the lending bank because they have no debts and have never even taken a loan. They are wrong because in such a situation we are simply unbelievable financially for the bank. Why? The bank cannot check whether we are responsible payers when we borrow money, that is, if we repay all debts on time. It is enough that we used to buy an installment item, which is tantamount to taking out a loan at a given bank. If we pay all installments on time, the bank can check that our credit history is clean.
We also recommend that you read the article “Questions to Ask Before Getting a Loan” .
Disadvantages of buying an apartment on credit
As you could see above, buying an apartment on credit is not an easy thing. Not everyone can afford this type of expense. Although we already have a certain amount of money accumulated, the purchase of an apartment usually depends on receiving a mortgage. Unfortunately, we can’t always get it. One of the major disadvantages of buying an apartment for a loan is the long time to get a loan , the many conversations with a bank adviser and completing a number of documents. What’s more, if we buy a new apartment on loan, which is just being built by the developer, there is a risk that the contractor will not meet the deadlines.
Unfortunately, there are also various types of embezzlement on the investors’ side. I often affect these unpleasant situations all my life. Therefore, before choosing a development company and an apartment, you should carefully check it in the debtors’ registers and take care to protect yourself against the described situations. Another disadvantage of buying an apartment on credit is the fact that we often have a contract for many, many years. The awareness that, for example, we have to pay a high installment every month until retirement, can be a bit crippling. The fear of losing your job or being unable to pay your installments on time can cost us a lot of mental health. It is also worth considering this aspect before we decide on a loan for an apartment.
Disadvantages of renting an apartment
The basic disadvantage of renting an apartment are the fees that we must pay as a tenant. Typically, the owner of the apartment, wanting to rent it, signs a contract, which includes a provision on the due deposit. The deposit usually has a monthly fee and is returned to the tenant upon termination. Often, however, the owner of the apartment sets the amount of the deposit as higher, and also introduces into the contract a point saying that the deposit is irreversible. Renting an apartment costs the monthly fee, plus utilities, electricity, water, gas. The downside to renting an apartment is that we can’t arrange it our own way, and if the owner changes plans and wants to sell an apartment, for example, we’ll have to move out in accordance with the contract.
Advantages of renting an apartment
Renting an apartment has the basic advantage that we are not bound by long-term loan agreements. At any time, we can give up the apartment and move to a different place. It is more difficult to make such a decision having a flat and own loan. Renting an apartment is a good solution for people who are not sure of their professional situation and know that they will change their place of residence in the near future.
Advantages of housing on credit
The main advantage of housing on credit is the acquisition of property. It is true that until we repay the loan, the property will not fully belong to us, but the feeling that we have our own housing brings a lot of satisfaction. The real estate market is very flexible and even selling an apartment with an open loan will not cause much difficulty.