Buying or renting a house is a question that many people have when choosing. This is a very important decision and one that must be carefully considered, due to the impact it has on the family budget. Leasing can be the solution for those who don't want a long-term commitment. Shopping is a choice for those looking for more stability. However, the option will always depend on how much you can or want to spend.
During the reflection process, there are some questions you should answer. And, be careful, keep in mind that in this situation there are no right or wrong answers. Each case is different and these answers will only serve to guide you in making a decision.
Do you want to increase the family? Do you like the area where you live? Do you have professional stability? Do you foresee any changes in your financial situation in the future? These are just some of the issues to be addressed.
Rent a house
Choosing to lease may be the best decision for those looking for a short or medium term solution. This option entails less costs at an initial stage compared to buying a home.
When considering the possibility of renting a house, be aware that, after a period of slowdown in the rise in rental values, marked by the covid-19 pandemic, rents for new contracts increased by 11.5% in the second quarter of the year, comparing with the homologous period. According to INE, in the second quarter, "the municipalities of Lisbon (11.00 €/m2 and -3.2%), Oeiras ( 9.88 €/m2 and -0.8% and Porto (8.77 €/m2 and -0.2%) In the opposite direction, with an increase in rent values, refer to Cascais (10.69 €) /m2 and +6.9%) and Almada (8.59 €/m2 and +11.3%). Amadora registered a zero rate"
Notwithstanding the variation in lease values, this can be the alternative, for example, for those who do not yet have a nest egg that will allow them to proceed with the purchase of a house. Still, keep in mind that most landlords require a month's rent and another month or two of surety bond. Apart from these initial expenses, those who rent a house do not have to worry about the occasional expenses of the condominium or the Municipal Property Tax (IMI). However, the payment of water and electricity bills is the responsibility of the tenants, as a general rule.
Another advantage of leasing is related to mobility. This option allows you to move house more easily due to the length of contracts. Currently, leases have a minimum term of one year and, on first renewal, they have to be kept for another three years, unless the landlord needs the house for himself or for the children.
Here you can have the opposite scenario: you can be forced to move, even if it is not in your plans, in case the landlord has no intention of renewing your contract.
Another feature of the lease is the fact that, despite paying a monthly rent to the landlord, the house will never be yours. And in that sense, you may feel that you are wasting money on something that will never be yours.
Buy a house
Unlike renting, to buy a house you have to have more money at an early stage. Assuming that you will use a mortgage loan, know that the bank will not finance the purchase in its entirety.
On average, families spend 138 thousand euros in the purchase of a house with recourse to credit. And the average value, according to a Comparajá.pt barometer, is 401 euros a month. Most only pay off the credit after retirement.
Currently, according to the rules implemented by Banco de Portugal, banks lend, at most, up to 90% of the property's value. Thus, the client is required to assume the remaining amount (which normally works as a down payment to reserve the property upon signing the promissory purchase and sale agreement). So, if you are thinking of buying a house, you need to have that amount available. For example, if it is a 150 thousand euros house, you will have to have at least 15 thousand euros just to give it down.
The upfront charges don't stop there. If you're thinking about buying a house, you need to be prepared to have other charges at this early stage. You will have to pay notarial and registration fees, municipal tax on onerous property transfers (IMT), stamp duty, and other initial fees.
And don't forget, whoever buys a house will have to have life and multi-risk insurance (required by banks for financing) and IMI. The amount of IMI payable will depend on the location and type of property.
This option can work for those looking for more stability. Another issue is that when you buy a house, you are also building assets.
Before proceeding with your decision, it is important that you understand how much you can spend so as not to compromise your financial situation. To do this, you must know what your effort rate is. The effort rate is the relationship between a household's net monthly income and its expenses. It is recommended that this is below 30%.
The truth is that this is a personal decision, which weighs several factors besides the financial one. You should assess your situation and understand which option best fits your lifestyle.
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