Rent or mortgage: which is more profitable, comparative characteristics

Despite the fact that the mortgage is now developing very slowly, all the same, most of our citizens prefer to buy real estate on credit. But the rapid increase in apartments makes their purchase for many not real even on funds taken on credit.

Therefore, the purchase of real estate is often delayed for later, and housing is leased. First of all, this relate to young families whose income is not very large, and to purchase an apartment under the program “Available Housing for Young Families” they are not able to because of certain reasons regarding the requirements of this program. Then renting an apartment is the only possible way out for them.

Flat rent

Of course, to live in your own apartment or in a rented one – these are two big differences. When you rent real estate, you have to put up with the conditions that are set by your homeowners. The owner in essence, can at any time overestimate a fee or simply give a refusal to further use the rented housing. Then you will have to look for new housing again, to move and the like – such ordeals are familiar to many. From this point of view, removable housing is inferior in everything in its own, even if it is still in pledge by the bank.

Which is more profitable from the point of view of the financial side – a mortgage or rental?

The solution to this issue is not so complicated. Suppose you, taking advantage of mortgage lending, took on credit for ten years 150 thousand dollars to buy a one -room apartment. Then your monthly payment will be approximately $ 1700, and rent for the same apartment is less than $ 1,000 per month. Suppose that you decided to rent housing at the indicated prices, and deposit $ 700 every month to purchase your own apartment. At this pace in ten years you will get about 100 thousand. dollars, and this is clearly not enough to purchase the above housing. Moreover, every year the cost of this real estate increases with a rapid pace.

If you add up all payments on a mortgage in ten years, you will turn out about 200 thousand. dollars, and if you add monthly rental and accumulation payments, you also get about 200 thousand. dollars. But this is taking into account the fact that you also summarize the rental payments, and if you add up only monthly savings, then in ten years you will not be able to accumulate the required amount. It turns out that from this point of view, a mortgage is still more profitable.

But naturally this is a conditional calculation, since it is unknown:

How to change the rental rate for the specified period

How the prices for such an apartment will change

How the interest rates on deposits will change


There is another significant argument in favor of a mortgage – if real estate prices are beginning to grow, as it happens recently, then payments on a mortgage loan can fully compensate for the increase in prices. And in this case, the mortgage is more profitable.