Renting or Owning, What Is Better for You?
In a real estate market as emerging as Vienna's many have begun to examine the idea of buying a home over renting for life-long. But often, when investing, there is a dilemma: should you keep paying rent or should you lock in your housing cost and buy a home?
Let’s look at both scenarios and analyze the pros and cons of each:
With the traditions, general customs most residents in Vienna rent their home in all their life. In 2017 the number of households renting their home rose to 75% however the 2008 economic crash did not have significant effect on the Viennese real estate market.
Some choose to rent because it is more convenient for their lifestyle. Those whose job requires frequent moves need the flexibility that a 6-12 month lease agreement gives them so they can move to their next assignment!
Many renters believe that renting is cheaper because they do not have to pay for maintenance and repairs. (Not true! Landlords work those expenses into your rent and other fees). Another reason many rent is that they feel like they cannot afford the down payment and closing costs required to buy a proper apartment (not to mention house) in Vienna, due to their personal expenses or inability to save more.
Renting also brings some financial disadvantages. Homeowners could take advantage of tax deductions in various contries lately that let them claim their property taxes and mortgage interest and in many places all over Europe there is a risk that your rent will go up every time you renew your lease, as we know the median asking rent has been increased. But not in Vienna! There are strict rules and regulations that provide predictability and legal safety to not only home owners but lessors and tenants as well. Austria’s rental market is segmented via tenure, regulation and market forces into a hierarchy of low rents for municipal, other social tenants and long-term incumbents in the private sector, but higher free market rents for recent entrants into the private rental sector states Global Property Guide
One of the major challenges with renting is that you don’t have a space to call your own of what most long-term residents with foreign origins are not as used to as general Viennese people. No question, when you rent, you are paying your landlord’s mortgage, and therefore mostly they are the beneficiaries.
Let’s just focus on the one big difference between renting and owning for now: the ability to lock in your housing cost!
Assuming you will have a fixed-rate mortgage, your costs are predictable! You will know exactly what your mortgage payment will be for the next years. The homeownership rate in 2018 was 55.4%, and has been on the rise. Those households locked in their housing cost rather than wait for their landlord to raise their rent again!
What are the disadvantages of owning a home? Well, it is a long-term financial commitment! It is not easy to pack quickly and move. You will need time and good planning to do it in a short amount of time.
You need to save your money! Getting a mortgage requires a down payment, closing costs, and moving expenses which will require some savings and planning!
Later on expect that there will be additional maintenance expenses and this may range anywhere from regular landscaping to major repairs.
Like everything in life, there are pros and cons. What is better for you depends on your situation and personal aims! If you are interested in becoming a homeowner and want to discuss the pros and cons, let’s get together to help you review your current situation and answer any questions you may have!
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