Mortgage – Is It Worth It?
It is a dilemma that accompanies us in the most important moment of our lives. Obviously, the greater the dilemma, the greater the reliance of the banks on the purchase of a home.
There is no doubt that the state of the economy influences decision making, because if until very recently buying with the use of credit housing was not so advantageous the truth is that in the days that run and despite the spreads practiced, buy housing using the housing credit can be more advantageous.
Should We Choose to Buy a Home?
Each case is a case and it is not enough to make the calculations taking into account historical inflation data (in the case of rents) or euribor (in the case of recourse to credit) because the uncertainty in the markets exists as we witness daily. The rental market is also experiencing moments of euphoria, with landlords living on the best days to rent, that is, the demand is immense (since rates of the best term deposits are close to zero) and incomes rise almost exponentially taking advantage of the lack of supply, especially in urban areas.
It seems clear to us that whenever rent is higher than housing, it is preferable to opt for housing purchase, but there are also reasons to opt for renting, such as uncertainty about the crisis. Buying, mathematically, is more advantageous than renting, when the benefit is lower than the rent and because in the future there may be potential for capital gains, but it may not be the case if the market responds negatively.
Is It Worth It to Make a Mortgage?
It is the most difficult decisions to make, especially for young people who decide to take a course in their lives. The price of the houses despite having been recovering still has room to recover low and housing credit is now a new breath with banks re-opening the faucet (to see what your spread would suggest we use a housing credit simulator ). But we should not restrict ourselves to these scenarios, we must clearly analyze each item of our personal, family and professional lives and the environment in which we enter, such as:
- Economic Financial Situation in which we live;
- Personal, Family and Professional Situation that we have;
- Crisis and uncertainty;
- Banks and their management model
- Financial Situation in which We Live
Instability is bound to remain, for at least the next two years, pushing for a restructuring of the market and governance models. The euribor has already given signs that will increase in the coming times and the spreads practiced by the banks raise worrisome values for the maintenance of the family budget. It is clear this economic climate and only does not see it who does not intend to assume that even more difficult times are about to arrive.
Buying a home today using 30-year credit for the amount of 125,000 euros has a monthly installment of around 600 euros which, when checking the euribor increase by 2 percentage points, pushes this value to more than 700 euros per month, insurance premiums and any charges.
You will be prepared to withstand such an increase
How did you prepare for hard times? Did you make an emergency fund? Have you created an effective Family Budget? If you are not prepared then the use of the lease is the best solution because you will not have concerns about the development of the market and the only changes you will feel will be updating the rent on an annual basis and the possibility of eviction of the landlord at any time.
Another advantage is still in case of unwanted event you can always look for a lease more into account and organize your personal finances to the new reality.