Buyingor rentingyour main residence is a long-standing dilemma. Even if a tenant never likes to “throw money down the drain”, this simple observation should not push him to buy. Each option has its advantages and disadvantages, which must be known and analysed according to your personal and financial situation, in the more or less long term and considering the economic context of your future place of residence.
Take Your Personal Situation into Account
Rentingis a relevant option for the so-called “nomads”, as the commitment is minimal. Indeed, the length of a leaseis relatively short and it is easy to terminate it before its term, moreover leasing means you do not need to block any part of your capital. Opting for easy change can be the result of a personal choice (desire to travel, to be able to change apartments, not to have real estate constraints…) or of a professional one (frequent moves, a career in the making without geographical stability…). In addition, the quickness of a rental processreflects this freedom of movement, as the administrative procedures are very simple. On the other hand, the purchase of a primary residence is often motivated by a search for financial security, particularly with the birth of a first child: buyers then seek an investment, both secure and solid, to guarantee the family’s future.
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The Financial Stakes of a Lease or a Purchase
As you rent, you just need to pay the monthly rent and bills(water, gas and electricity), all the rest remains the responsibility of the owner (taxes, condominium charges, works, upgrading to standards, etc.). Consequently, this option generates less risk than a purchase and sometimes makes it possible to build up a small capital, to plan and carry out other future projects. On the other hand,a purchase is considered a long-term investment: with a well-thought repayment period and monthly value, the cost of monthly instalments can be equivalent to the payment of rent. The only difference is that at the end of the credit, the subscriber becomes the owner of the property. It should be noted that several benefits and bonuses may help to financially support this acquisition project.
In a word, if you rent, you may have the feeling of “throwing money away”, even if paradoxically, it may also allow you to save money to serve other projects; while, if you buy, you are more financially committed and you have to cope with the uncertainty related to the evolution of the real estate market.
Place of Residence and Economic Context
To answer the question: “Should you rent or buy your home?”, it is critical to take into consideration the city in which you want to live, and profitability can guide your choice. Indeed, real estate prices in some areas can be so high that the profitability of a purchase can only be achieved after a few years, although in Luxembourg prices tend to increase everywhere and every year. Conversely, some cities are shortening this break-even point and may make a purchase a more attractive option. Feel free to visit the website of the Observatoire de l’habitatto find out about the latest trends in the Grand Duchy of Luxembourg.
If this dilemma is so common, it is also because there is no general rule for deciding the issue: beyond the geographical area and the favourable economic context, the criteria, both personal and financial, have a strong influence on the decision to rent or buy the property.