It is not easy to buy an apartment, unless, of course, you are an Arsenal football player. At least Tula. But there are always options: save up, take out a mortgage, or use additional opportunities if they rely on you, for example, subsidies or maternity capital. Consider how to use the possibilities of your budget to buy a home and what to do if you decide on a mortgage.
Save or take out a mortgage?
Table of Contents
Which is more profitable – to open a special account, save money and receive interest, or take a mortgage and pay interest to the bank? To answer this question, you need to evaluate all the factors: do you have a down payment and what, do you have a place to live, do you pay rent now, do you agree to invest in construction or are you considering only finished housing.
Let’s say it takes your family 12 years to set aside enough money to buy an apartment. If you decide to save, try to make the savings work for you – overtake inflation and generate income. Accumulating a large amount of money is also a certain technology.
Pluses of accumulation: you do not overpay interest, but, on the contrary, receive it and do not become a bank debtor for many years.
Cons of savings: a very long time to wait, and with economic shocks (for example, surges in inflation or rising property prices), your savings may depreciate.
Suppose another thing: you need to save up for an apartment for 12 years, but three years will be enough for you to save for a down payment and take a mortgage. Perhaps nine years of living in a new apartment is worth the loan overpayment.
Pros of a mortgage: you fix the price of the apartment and the cost of it for many years to come. Rising real estate prices will not affect you, and inflation will not reduce the savings that you have already made.
Cons of a mortgage: a significant overpayment to the bank and “life on loan” for several years. In case of unforeseen difficulties, you have the right to take a vacation and suspend payments for up to six months. But if during this time your financial situation does not improve and you never manage to return to the original payment schedule, you can lose your mortgage apartment. There is also a possibility that real estate prices will collapse and the amount of the loan with interest will become inadequate to the value of the apartment.