The construction interest rates have been extremely low for a long time, but are slowly starting to rise again. It is high time, then, to consider the question of whether buying your own property makes sense or not.
LOW INTEREST RATES: RETHINK LIFE SITUATION
Many people, who want to see the interest rates for Germany in comparison and find out which bank could be the best financing partner for buying real estate, should rather ask themselves whether the purchase suits their living situation.
Because that’s what needs to be analyzed first. How safe is your own workplace and is it possible that you have to move to work? What about family planning: Do you want to raise your children in this city or do you prefer to live somewhere else?
A property is a long-term purchase, and even if the house can be sold again, this is sometimes problematic and especially lossy dar. Because one thing is certain: the money you need to build and put into the house, You rarely get the same amount back in a sale.
Also think about whether you always want to stay here and how the living situation in old age could be. The object you are looking at may be multi-storey, with no possibility of attaching a stairlift. How do you later get to the upper floor? Build yourself, you should consider such aspects directly!
WHEN IS BUYING BETTER?
The default response of a broker will in most cases be that buying is always better because you are creating ownership and making an asset. Sure, the broker wants to sell his objects! But what does it look like objectively?
You should think about buying a house if you know that you want to stay in this place for the long term and that you are also able to finance the object. Certainly, the conditions for financing without equity capital can currently exist because you have a secured income in sufficient amount, but can hardly fall back on reserves. But how does it look in a few years? Especially the elderly should reconsider the time remaining until retirement – a property is paid off in the best case before retirement.
You should also buy if you would like to be a homeowner and take care of the house or apartment on your own responsibility. This includes the care of the property and possible ancillary obligations!
Can you live with the fact that unexpected expenses can arise? Quick repairs to the house are necessary, the cost of which you would not have to bear as a renter or only proportionally. However, as a homeowner, in most cases you have the opportunity to determine the time of the repair and thus the due date.
THEN YOU BETTER STAY TENANTS
Those who want to remain flexible in their professional and private life should also be adaptable in terms of their living situation. A house would only be a hindrance in the case, unless you would make it available as a rental property in a move and thus use it as an investment.
You also stay better then tenants, if you do not get along well with debts; As a rule, you pay the loan for between ten and twenty years! Maybe you want to use the apartment as such and do not wish any other obligations. In that case, a rented apartment is the better choice. Then you can not expect any unexpected expenses and you can use the saved money for the holidays.
Not infrequently, a homeowner must plunder the holiday fund, because, for example, a storm has ensured that once again a tree has broken down and had to be disposed of. Or because the heating was suddenly defective, the heating oil tank must be replaced or the basement should be sealed due to the rising groundwater.
Tenants can invest their reserves profitably and invest for example in shares or equity funds. There is the possibility of diversification of the assets, which is usually tied to a homeowner in the one asset.
BUY WITHOUT EQUITY?
Given the low property prices and the still low interest rates, many people are choosing to buy their own home. Those who fulfill the dream of owning a house would, but should also bring the necessary equity. If certain conditions are met, the bank usually lets itself be talked about and offers a real estate loan even without the mandatory 30 percent equity.
For example, it is important that you:
- have an indefinite employment contract with a sufficiently high income
- have a fortune that is long-term, only currently not payable
- want to buy a property that is in an exposed location
- to be able to cover the ancillary costs for notary, land transfer tax and land registry from own resources.
If you meet these requirements, there is usually nothing in the way of full financing. It is important for the decision to buy without equity but also whether you want to inhabit the property itself or not. Because if you want to rent the property, the estimated rents, including ancillary costs should cover the cost of real estate acquisition or even exceed. Banks look very carefully to see if they have a chance to get back the borrowed money!
CORRECT COMPARISON IS IMPORTANT
Anyone who asks the question of whether buying a property makes sense for him or her is often based on his current rental payments. If the rent exceeds a possible loan installment, it is often rashly decided that the loan is much better. And at the end of the term, you have your own house and get something for your money, which is tangible. However, this comparison is too short. For one thing, interest rates are not as deep as they are right now. This in turn means that rates can rise over the years.
Although you can agree on a fixed interest rate, this usually amounts to a maximum of ten years. Thereafter, renegotiation and the interest rates will be significantly higher than now! In addition, you will have your own house after the end of the loan, but after 20 years, which we assume here as a notional repayment term, the first repairs are due. It may be necessary to repair the roof and chimney, the heater may need to be replaced. Even if it is not such a large repair and replacement work, so are renovations in the interior of the house.
Especially bathroom and kitchen are after 20 years of use mostly in need of renovation, especially if children have grown up in the house. If you were not able to save money in addition to the payment of the loan installments, a loan will now be due again, albeit at a lower level than the loan for the home purchase.
When you compare, plan all eventualities, consider rent changes as well as the changed amount of credit installments after a certain amount of time. In addition, a currently secure income can change. Many banks therefore only grant loans for real estate to couples if the income of a partner is insufficient to settle the loan.
RENTING IN DECLINE
In many places, the demand for properties is so large that rents are on the decline. They can not be raised anymore because people just buy a house when they move to work in the city. Since they know how real estate financing works , they can afford it even without many years of saving.
So many Mietswohnung is now empty and can be obtained at relatively low prices. This is especially true for the apartments in the countryside, because there is still a rural exodus in many regions. There, the purchase with the option to rent the object or with the idea of a later, profitable sale is not worthwhile. Anyone who is not personally rooted here, should therefore better use the low rental rates and take a purchase distance.
In the case of a planned decision for or against the purchase of real estate, the lower rents should therefore be taken into account, with a regional tendency being preferable to the general statement on rent reduction.