Rent or flat for a loan? See what pays you more

Many Poles are convinced of the absolute value of owning an apartment. This can be seen even in the latest Eurostat statistics for 2014: as many as 72% of us live in our own apartment and not burdened with any mortgage or loan. An additional 11% in an apartment bought on credit. Rental is much less popular – only 4% of us use this solution.

Interestingly, it is much more popular in Western Europe. In the Netherlands and Sweden, only 8 in 100 people live in their own apartment, in Denmark – 13, in Germany – every fourth.

But – beware! This does not mean that they do not have apartments. As many as 60% of the inhabitants of these countries have real estate and … successfully rent them. Why? Because mobility is important in the labor market, and an apartment is treated as an investment.

How to make a decision?


When considering the profitability of renting against the benefits of buying an apartment on credit, there are several factors to consider – both financial and non-financial.

In this matter, it is also impossible to make a decision once and for all – because everything depends on the situation on the real estate market at a given moment, the personal situation of the person concerned and the availability of financing. Here are the issues to look at to make the best decision for yourself.

Identify your needs

Before you decide what is more profitable for you – purchase or rent, it is worth determining in what situation you are, what are your plans for the future and what you need.

Are you young, have no family and want to stay mobile so that you can easily move to another city when needed? You already know that this place will connect your future because you have found the other half, you are planning a wedding and a child? You have a family, but for several years you can not decide to buy your own M? Are you looking for a way to manage your financial surplus?

The person for whom this is the first and only apartment will think differently about buying an apartment, and someone who is looking for real estate for investment purposes. If you want to buy a flat that can be rented, then you have to approach the location differently.

There are many cheaper flats on the market outskirts that are more within easy reach when it comes to buying but are difficult to rent. And vice versa: if you plan to start a family, it’s better to think now what the optimal area will be. A good understanding of your needs and motivation is a good start. Another important question you should ask yourself is: what can you afford?

Recalculate the costs

Recalculate the costs

Buying an apartment for a loan and rent are associated with various costs. To be able to accurately compare the cost-effectiveness of both options, they must be correctly identified and calculated.

Rental costs are monthly fees for the owner, rent for the cooperative (which includes the costs of water, sewage disposal, garbage collection, repair fund, etc.), electricity, gas, internet, television.

The rental has the advantage that in the event of a sudden deterioration of your financial situation, you can move to a cheaper apartment and thus reduce costs.

Buying an apartment on credit is not only the cost of loan installment. Additional fees appear already at the purchase stage. If you buy on the secondary market, you pay 2% tax on civil law transactions when signing a notary agreement. If you use the help of a real estate agent, you pay him a commission.

Each purchase requires signing contracts with a notary public, and this also involves fees. According to Home Broker estimates, transaction costs when buying a flat worth 350,000 USD from the secondary market amounts to approx. 35 thousand USD, from the primary market – approx. 10 thousand USD.

A flat from the secondary market usually needs renovation, a flat from the developer – finishing. This also needs to be taken into account when estimating the profitability of both solutions, because in a rented apartment the owner usually repairs. In addition, there are monthly fees: utility costs and the amount of rent to the cooperative.

In new buildings, we rarely have, for example, district heating, as a rule, buildings have their own boiler rooms, so the prices of such heating may differ from the prices of district heating. The rental rates per square meter vary widely among different developers. So if you are interested in a specific investment, be sure to ask the sales office about the amount of rent and heating!

Determine what you can do

Determine what you can do

Recalculating these costs will give you a real picture of the profitability of both solutions. But there is one more question that is worth answering if you tend to buy an apartment on credit: can you afford to make such a long-term commitment? Will your home budget bear this?

Before making your decision, realize your current expenses, take control of your household budget. When buying a flat for a loan, you must be ready for situations such as a sudden change in NBP interest rates, and thus an increase in the monthly installment. Before you make such a commitment, it’s worth doing a simulation that shows how the installment will change in the event of interest rates rising.

The person who prepares the loan application can check for you. Interest rates are currently at a record low, so they will change in the future. Their current and historical levels can be checked on the NBP website.

When planning your home budget in the context of credit, you should leave yourself a safety margin in the event of an installment trip. This is one of the reasons why every household should have an adequate financial cushion. We have already written about how to build it, we return to this text. Also think about raising money for your own contribution, which significantly reduces the cost of credit. Thanks to this kind of commitment you will feel safe.

Check if this is a good time to buy an apartment

House prices on both the secondary and primary markets are subject to cyclical fluctuations. It depends, among others on demand – that is, the number of people who are currently interested in buying their own M, and supply – that is, the number of flats that are currently for sale. It is known that it is best to buy when prices are lower than higher. Expert comments about the situation on the real estate market regularly appear in the media.