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Rent or Purchase on Credit - Analyzing the Best Option

Rent or Purchase on Credit - Analyzing the Best Option

Rent or Purchase on Credit - Analyzing the Best Option

Is it better to live on rent or buy a home using a loan? This is a question that many of us ask at some point in their lives. There is no easy answer to this question and it depends on many aspects of our lives – financial situation, marital status, lifestyle, etc. This is a decision that will largely determine our plans for years to come.

Usually people perceive the purchase of a home as an investment in future, greater security and comfort, but when making such an important decision you should consider both pros and cons.

Owning a home provides stability and security, frees us from the need to comply with landlords, we know that investing money for the repair and improvement of the home, we do it for our future.

It should also be taken into account that the purchase of a property must be consistent with our lifestyle, financial status, employment stability.

In some cases, the cost to purchase a home using a bank loan may be higher than the financial affordability.

Some of these costs include: mortgage, taxes, maintenance and insurance. However, this does not mean that owning a home is not a good financial move, very often it turns out to be the best financial decision. In many cases, the monthly rent may be equivalent to the monthly mortgage payment. For most people, the decision to buy a home requires a lot of advice and financial assessment. When considering making such financial step, you first need to answer the following questions:

How secure is your income? and Is the purchase of a home a long-term investment?

For people with permanent employment, the amount of income has a significant role in the decision-making process. The reason is that it is not desirable to add additional pressure on the financial opportunities, especially in the event that the mortgage payment exceeds them.

If you are considering buying a home without having a steady income, you need to analyse your estimated annual revenues and expenses associated with the purchase of a property using a loan in order to determine whether this is an appropriate financial move.

Regional mobility is also a factor. The time you plan to spend in a particular location plays an important role in making a purchase decision. If you have a short-term employment in a particular location and after its end you plan to move to a different location, you cannot realize a return on your investment. In this case, renting is a more suitable option for you. It is important to understand that buying a property is not an investment that leads to quick return on investment.

As mentioned earlier, the question of selecting renting or purchasing on credit does not have clear and exactly fixed answers. Therefore, it is advisable to weigh the pros and cons, depending on the particular situation.

Owning a home has many benefits. Some of them are that the owner can build up a capital from the possession of a home, whereas the tenant cannot take advantage of it. Property ownership brings greater security, since in hiring there is always the risk of contract termination and forced release of the property. Furthermore, in Bulgaria there is an underlying view that everyone should live in their own home, this fact brings the owner pride and satisfaction.

On the other hand, owning a home comes with more costs in terms of maintenance, without forgetting the purchase price.

Owning a home also brings the risk that the property prices may drop with time. This is something that does not directly affect the tenant, or if it does, it may be in a positive aspect of reducing the rent.

When hiring a home, the disadvantage is that it is very difficult to find a place where furnishing and atmosphere can fully satisfy your demands, and often landlords are unwilling to make changes to the property. In addition, this home does not generate any financial gain for the tenant, but in fact it only brings monthly costs.

In general:

-          If you rent your home for a price lower than the average for the market, if you do not intend to rent the property for a long time and if you do not have secure employment income allowing you to maintain regular mortgage payments, the suitable option for you is to rent a home.

-          If you want to achieve greater security and comfort, if you intend to invest in future without dealing with landlords, if you have permanent employment and plan to stay in this location for a long time, the most suitable option for you is to purchase a home on credit.


But as we know, each case is individual, so we suggest you to contact the brokers of Valer OOD for advice. They will give you their opinion based on the parameters you have set, provide you with information about the levels of rental and selling prices for the properties you are interested in.