"Buy house or pay rent - what is cheaper?"
Surely you have often read such calculation examples: A family who pays 1000 euros per month for a flat will transfer in 30 years - with an assumed rent increase of 3% per year - 690 000 euros to the landlord.
"ChroniquesDuVasteMonde" And then, of course, follows the advice: Pay the rent in your own pocket.
"Helma Sick" For the money that you transfer to a landlord in 30 years, you can buy a house with a garden, and in old age, you are debt-free, so have no more burden! Sounds obvious, right? So: Let's go to the real estate !? Yes, if all that was so easy! The correct thing about this example calculation is that the family will transfer about 690,000 euros to the landlord in 30 years. However, the conclusion is not correct that it would be reasonable and feasible to buy a house with a garden, even if you have no equity.
"ChroniquesDuVasteMonde" How to convert the rental payments to a home purchase?
"Helma Sick" For our example - 690 000 Euro rent in 30 years - you would now have to find a house or apartment for 355 000 euros and finance this without equity. Then, with an average interest rate of 5.5% and 1% repayment in 30 years, you also paid around € 690,000. But: The initial monthly interest and repayment installment is not 1000 Euros (the sum you would pay as rent), but around 1900 Euros! And after 30 years, there is still a residual debt of around € 84,000. Only after another four years, ie after a total of 34 years, would the house or apartment really be paid off! Tenants therefore have a lower burden on this bill for years than homeowners. You can save, invest your money well and thus make wealth. Property owners are debt-free after 34 years at the latest. They are forced to "save" - after all, their fortune is their own home.
"ChroniquesDuVasteMonde" What costs do you have to consider when buying a property?
"Helma Sick" What is regularly "forgotten" in these beautiful calculators, are the significant additional costs of a real estate purchase, which - without brokerage fees! - amount to about 5% of the purchase price. That would be with a purchase price of 355 000 euros in our calculation example 17 750 euros. And where do such calculations leave the costs of repair and renovation of the house or apartment, which the owners themselves have to bear and for which, depending on the state of the house, substantial reserves sometimes have to be formed? Moreover: not only rents can rise. Lending rates can also move up over the years, increasing the monthly burden.
"ChroniquesDuVasteMonde" Is it possible to buy a house if you have no equity?
"Helma Sick" It would not be easy to find a bank that would award a loan of this amount without equity at market rates. This would only be possible if a crisis-proof workplace and a good income are available. But: The quietest way to sleep is when you buy a property, when 20 to 30% of the purchase price (plus utilities) are available. Nevertheless, you should not be discouraged! The dream of the house does not have to be buried if you have no money now. Your dream can become reality: save, make equity, conclude a home savings contract to secure the currently low interest rates. Talk to your parents or wealthy relatives about whether there could not be a premature donation or at least an interest-free loan. Maybe the parents also have a property on which a mortgage could be registered - for the safety of the bank. This increases your chance of getting a loan on favorable terms. Then, but only then, do you eventually pay the rent in your own pocket and be a lucky real estate owner. As you can see, I also want to recommend the motto of my latest book to you here: Dreaming is good, planning is better.
Independent financial expert Helma Sick has now reworked, expanded and updated her ChroniquesDuVasteMonde book (for example, on the topic withholding tax). "If I was rich once" - the financial adviser for women shows that it can be really fun to make your own decisions in monetary matters. Helma Sick uses many examples from her practice to explain what women should know for their independence and a secure future. 254 pages, 8.95 Euro, Diana-Verlag.
