Re:Is it better to buy or rent?
by pkolaczk on Friday June 19, 2015 @09:20AM
(#9744469)
Maybe in US it is cheap to rent, but at least in Poland, if you can get a mortgage, your mortgage monthly payment is often much lower than the rent payment for the same property. Renting here is only good if you don't plan to stay for long or if you actually can't get a good mortgage, because your income is low. The more you earn, typically the better interest rate you can get with mortgage (mine is currently 1.8% total), and with decreasing rate you're paying less and less with every year, contrary to more and more when renting.
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It depends a lot on where you live in the US. In big cities, I'm sure it's definitely cheaper to rent. In more rural areas it's often less obvious which is the cheaper option and it really comes down to preference. And sometimes in rural areas it's cheaper to just own, depending on the cost of the houe.
In Berlin, Germany it's (at least at first) a lot cheaper to rent. The place we're renting for 500 euro/m would be about 200k euro if we wanted to buy it, which would mean something like 600-650 euro/m for 30 years (with maybe 40-50k euro down-payment).
Well, but after 30 years, when you retire the place is yours own and your monthly payment goes down. Even if you saved that 100-150 euro every month, you'd not afford buying it after 30 years, assuming it stayed at the same price-point.
On the other hand, it is hard to believe you can rent a 200k€ place for 500€/m. In Warsaw, a 2-room 40-50 m² apartment in the city center costs about 400-500€/m to rent, but if you wanted to buy it, offer prices start below 100k€.
On the other hand, it is hard to believe you can rent a
200k€ place for 500€/m. In Warsaw, a 2-room 40-50 m²
apartment in the city center costs about 400-500€/m to
rent, but if you wanted to buy it, offer prices start
below 100k€.
There are places that are unusual (like Mitte - the center of the city), but for ~90%+ of Berlin the pattern I described above more or less holds.
Even if you saved that 100-150 euro every month,
you'd not afford buying it after 30 years, assuming
it stayed at the same price-point.
If you're in a position where you have extra money and you can choose whether to invest it in the stock-market, buy a nice car, or put a down-payment+mortgage on a place to live it's a different consideration.
This is the point I was making: renting is the only choice if you can't get a safe mortgage with good terms. And getting a mortgage with monthly payment X, when you could hardly pay more than X would be a very risky option and even if some (crazy) bank agreed to it, they would set a very high interest rate for covering the risk. But getting a mortgage with a monthly payment X when you can really afford 4X is a totally different story.
While Berlin is a bit special case with its housing supply, renting is actually crazy expensive in Poland. You should compare the prices to e.g. Lithuania or Estonia, the difference in affordability is mindblowing.