In these times of rising renters, many renters have only one desire: to finally be free. But not only rents but also housing prices continue to rise as demand is high and supply is tight. Many are currently wondering whether it still pays to buy property instead of continuing to pay rent. There is no blanket answer to this question. But the tendency – based on the averages of acquisition and construction financing costs – is optimistic: financing property is a good deal in most cases, despite a tight real estate market.
Buy property: the ideal time to start is in your 30s.
It is not uncommon today to find in the vast majority of metropolitan areas ca. 1500,- euro per month for rent, if you want to live with your family in a reasonable sized apartment. This means that within 20 years you will have to spend ca. 360.000 euros transferred to the landlord. With these 360.000 and a term of 20 years, the dream of owning your own home can be realized, especially if you also have your own funds.
Although the legislature has tightened the criteria with the introduction of the residential mortgage directive to get a construction financing, but
- Who start financing early enough (to have fully repaid the loan by retirement age),
- About an average household income (ca. 60.000,- euro) has,
- Ca. Bringing 20 percent of their own funds to the table
- And is also in a permanent, tenured position,
Should get financing despite residential real estate loan guideline. Therefore, if you meet these conditions, you should think early about buying a property. Who else ca. 30 or more years until retirement age available, can benefit especially from the currently offered mini-interest perfectly and purchase prices of 400.000,- euro or more. Because rental prices in major cities will continue to move upward. Rent control is also nearly ineffective. It has led above all to the fact that the rents were extremely raised shortly before introduction and new contracts became massively more expensive thereby. So if you are looking for an apartment today because you are expecting an addition to your family, for example, you would be well advised to look into purchasing a condominium or new construction now.
Buying property: affordability index more favorable than ever.
As surprising as it may sound, it is true: the so-called affordability index for the purchase of a property has fallen continuously in recent years. This is easy to explain: although purchase prices have risen sharply recently, these are more than made up for in the calculation of the affordability index by incomes, which have also risen sharply, and the particularly low interest rates. The burden of a construction loan on the monthly available budget plays a special role in this regard. Who ca. 30 per cent of the monthly income for interest and repayment must bring up, for it gives it actually only one advice: now the home of one's own buy.
But again, age matters : the younger you get in, the cheaper the monthly charge that has to be paid back to the bank. For example, a 25 year old with a financing amount of 200.000,- euro and an assumed interest rate of 13 percent you have to pay back a little bit more than 500,- euro per month; a 35 year old already has to reckon with more than 650,- euro. Couples, if they sign a construction financing together, pay at the age of approx. 30 years just under 600, – euro back; couples around the 40 years must against it nearly 800, – euro in the month for the same credit inkl. Repay repayment.
This is also a consequence of the residential mortgage directive, which more or less stipulates that the construction loan would have to be fully repaid by the time the child reaches retirement age. The differences are explained by the different initial repayment rates. But despite these differences: buying property is generally worthwhile for all those who start financing in middle age, due to the tight rental situation.
Buying property: who leaves himself too much time will have to pay more.
The purchase prices for real estate – both for condominiums, old properties and new buildings – moved sideways for a very long time in germany. During he financial crisis in 2008 they even gave way. But that's the end of it now. Since 2010 the real estate prices know only one way, namely upwards. The same applies to building land: if you paid lt. Federal statistical office in germany in 2009, an average of 67 euros was charged for a square meter, while 117 euros was charged for a square meter in 2015. This average value distorts besides; because in the announced metropolen such as munich can the square meter today also 1.500,- euro and more. Reason: building land is becoming scarce, especially in metropolitan areas.
Buy property: calculate now.
Advance research is the be-all and end-all:
- What monthly payment can you afford without having to cut back on standard of living?
- How much equity capital do you have available that you can bring into the financing with?
- Have the 15 to 20 percent liquid for sideline costs that you can't finance through the construction loan?
- What is the maximum purchase price of the property that you can then afford, taking into account factors 1-3?
- Have you included maintenance costs and ancillary housing costs (energy, garbage collection, etc.) in your monthly budget?.) included?
To get an initial overview, it is best to use online calculators. These are a good reference point to get an overview and to be able to find out the maximum purchase price of a property. A tip: don't gloss over the figures, but deliberately set the possible personal funds and monthly burdens low – but realistic. Once you have this overview, seek to speak with a real estate agent to verify these numbers. And last but not least: be quick in your search for the right property, because it won't get any cheaper in the foreseeable future.