fredag 12 maj 2017

Renting or buying

If you need to ask, then rent.... Until you have saved enough money to buy.
In today's real estate market, with extremely low interest rates you might be tempted to buy directly. But make sure that you have the financial power to pay even when the interest rates raise. Check what the monthly cost would be if the interest rate would go to 6, 7, 8, 9 or 10%. Could you still pay? Would you be forced to sell?
Buying a house for 3 million SEK (around $300k, €300) on an ordinary salary is something I advice against. But that is what the asking price is for houses in a small town in Sweden today.

The thing is that renting is steadily getting more expensive as well. When we rented some years ago, it was an old apartment building with water included for around 4500 SEK. New developed apartments that are smaller and without water went for 9500 SEK. Like with everything else in life, it depends on what your goals are. For us it was a no brainer to chose the older appartment building and save up for a deposit on a house.

When we bought the house we live in today, we got lucky (or we haven't found the faults) and were able to buy a house for a small amount of money. Many of our friends did not even look at houses this far from the city (25 minutes by car, 1 hour cycling) and ended up spending 2 - 6 times more! So ask yourself, do you need to buy in a certain area or would you be willing to travel to work. We bought another car, but with the house price so low we still pay less then friends in town even if we include car payments and petrol costs into the calculation.

A friend once told me when he was house hunting that if the house is in any way attractive there will be a family with small children that are desperate that will keep bidding over their original budget (and yours). And when we started to look, that was the exact case on all houses we looked at besides the one that we ended up buying.

So, my advice is to Rent and Save and continue to hunt for a perfect house that goes for less then the market expects. Calculate in whatever renovations are needed and see if its in your budget. Make a deal that suites your budget, not the high risk budget of suburbian house owners.

These are just my thoughts. Your situation might be different so do your own research and make an informed decision. I am not an expert : )

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