Renting a house: is it profitable or not?? What may face the generation that prefers the rent to own, experts tell Roskachestvo.
Rent and mortgage: what do they have in common?
The housing problem has corrupted not only Muscovites. Honestly, the Hamletian “to be or not to be?” sometimes less tragic than “mortgage or lease?”. There’s no one-size-fits-all answer, but you can consider when and what’s more advantageous.
Renting and mortgaging have something in common: you have to pay money every month for a long time, only in one case to the owner, and in the second – to the bank. It is commonly believed in America that a mortgage is preferable, since the apartment is still yours, and for the sake of it is worth putting up with some difficulties and risks.
Young generation Y and Z are the main tenants in America. Obvious advantages of renting an apartment: no strict long-term obligations to the lender you can quickly change the living space according to your financial or family situation, your own desires no restrictions on freedom of movement – you can go to live in other cities and countries, etc. d.
The rent is also chosen by those who simply can’t afford a mortgage due to certain conditions at the moment – no stable job, no money for a down payment, etc. d.
Both rent and mortgage mean monthly payments, often comparable in size. However, the difference between the two is not only that a mortgage is when you pay “for your own”, but also that the payments to the bank will one day end, while the rent must always be paid. There is another side to the coin: a tenant does not have a huge debt, and delinquency in payment threatens often just spoiled relations with the owner of the apartment, and even to eviction will not necessarily lead to, whereas the mortgage requires the utmost accuracy in payments, so as not to have problems with the bank.
If you approach the question mathematically, there is no doubt that the numbers are in favor of the mortgage in most cases. And most importantly, sooner or later you will own the cherished property.
When to choose renting?
But beyond the math, there are non-mathematical factors when renting may be more advantageous than a mortgage at a certain point in life or under the following circumstances:
– If a person finds himself in a difficult financial situation, and the bank is unwilling to restructure, there is a risk of losing the apartment. And if due to the situation in the market its price will be lower than the debt to the bank, then you will either have to keep paying or file for bankruptcy
– With no official income, of course, a mortgage can only be a dream, so you have to rent and save up. The same situation – when irrevocably ruined credit history, say, in bankruptcy, or when there is not enough income or the presence of existing loans, the credit load on which does not allow to take another mortgage.
In the case of the purchase of both new construction and ready-made housing, people can suffer from the dishonesty of the counterparty. With the lease is not much better, but the amounts of losses are not comparable: millions in the case of the purchase of housing vs. thousands in lost deposits. However, as of today, the law still better protects shareholders and buyers than tenants.
A lot of unpleasant things can happen to the apartment for reasons outside the control of the people living there: for example, the neighbors will flood or worse, there will be a fire. The owner insures the structure, civil liability to third parties, as well as the property inside, the tenant insures nothing. Therefore, if a tenant has valuable personal property left in a flooded or burned apartment, he or she will not receive anything in the event of an insured event.
Sergey Solodky, head of the consumer protection department of Roskatchestvo.
“Mortgages require more spare cash compared to rent payments. But the main disadvantage of rental apartments is the lack of a civilized rental housing market. But if you have decided in favor of rent then you should not disregard certain rules which can insure you against undesirable consequences, and it is better to consult with a lawyer beforehand to formalize contractual relations with the landlord”