REAL ESTATE – MARBELLA WOHNEN – What is better, buy or rent?

What is better, buy or rent?

The level of savings, income and expenses associated with housing are some of the factors to assess to decide if it is better to buy or rent.

Faced with the classic “buy or rent?”, there are no absolute truths, but there are a series of answers that can help resolve this dilemma. Analyzing the level of savings of the future owner or tenant, their economic solvency and knowing the expenses associated with the two operations is key.

What should my savings level be to buy or rent?

First of all, it is necessary to determine how much savings you have, since both the purchase and the rental are accompanied by an initial disbursement.

In the case of buying a home, keep in mind that banks grant, as a general rule, a maximum financing that covers 80% of the purchase or appraisal value of the property, so it is necessary to have saved 20 % remaining. In addition, there are other expenses associated with the purchase (taxes, notary, appraisal…), which are between 10% and 15% of the total value of the home.

As for rent, although at first the expenses that must be faced are minor, the landlord of the house can ask the tenant for a deposit, which can range from one month to six. If the operation is carried out through a real estate agency, its fees must also be paid, which are usually 10% of the annuity plus value added tax (VAT).

What percentage of salary should I allocate to housing?

The Bank of Spain recommends that the monthly amount of the mortgage does not exceed 30% of income, a percentage that can rise to 35% in the event that other loans are included in addition to the mortgage. The same goes for paying rent.

But in addition to paying the monthly mortgage payment or rent, a home entails recurring expenses that vary depending on whether it is owned or rented.

• Expenses faced by the owner of a home

In addition to the mortgage payment, other expenses must be taken into account:

• The real estate tax (IBI)
• The community receipt
• home insurance
• The community insurance that covers structural claims of the property
• The garbage rate (depending on each municipality)
• The costs of supplies: water, electricity, gas, etc.

• Expenses faced by the tenant of a dwelling

In this case, the expenses depend on the signed contract, but are usually:

• Expenses derived from the usual maintenance of the home, such as small repairs (expenses less than 150 euros for the daily use of the property, such as changing a light bulb)
• In case of having insurance, content insurance and civil liability to third parties
• Damage to the rented property (such as broken glass)
• The costs of supplies: water, electricity, gas, etc.

Case study: buy or rent?

With a practical case, Claudia and Antonio, from Marbella, are thinking of moving house and are hesitating between buying a home or continuing to rent. What differences are there?

• Buying a home: the average purchase price of a second-hand property in Marbella is around 240,900 euros for a home of 70 square meters, according to Idealista. If they opt for a fixed-rate subsidized mortgage, the monthly fee would be 711 euros; and if they choose a variable subsidized mortgage, the fee they would pay during the first year would be 618 euros per month.
• Rent: If this couple decides to rent a house with the same characteristics, the monthly rental price would be around 1,120 euros.

By directly debiting the payroll and taking out life, home and payment insurance. The result of this simulation is indicative, not commercial. 

In any case, when making this decision, it is advisable to have the professional advice of a manager, such as that of the bank or a real estate advisor, which helps the future owner to decide what is best for him.

In short, during the process of buying and selling a home, various elements must be taken into account, which helps both the property and the chosen financing adapt to the needs of the future owner. Having the advice of a professional such as that of the bank or a real estate advisor is key, since they will guide the buyer and resolve any questions that may arise during the operation.

Do you want a bank or real estate expert to advise you without any commitment?

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