Mortgage or rent? Which is the best option?
In some cases, the decision can be made based on personal or family reasons, in others the difference is made exclusively by economic issues.
In fact, the choice depends on many variables and there is no one-size-fits-all answer.
However, there are historical periods in which, for various reasons (market trends, inflation, etc.), one option may be more convenient than the other.
Let’s do a brief analysis of the current situation in Italy together.
Finding your way around the current real estate market
According to some industry operators (iad-italia.it), the real estate market in 2024 is dynamic and influential. An increase in the number of sales is expected, with an average variation of around 10%. Prices will also increase slightly, with an average of 1.5%. This increase is due to the recovery in supply and demand, but is affected by high interest rates and the resulting caution of buyers. The greatest growth in prices is expected essentially in the high and good quality segments, in new, sustainable and technologically advanced properties and in large cities, areas that have always been more dynamic and attractive.
When looking for a house, it is good practice to keep in mind some fundamental aspects.
First of all, you need to be aware that to buy you need to have money available: you need a sum equal to at least 20% of the cost of the house, plus the expenses related to the costs of the purchase (notary, agency, etc.).
This is because obtaining a 100% mortgage (i.e. a sum equivalent to the entire price of the house) is very difficult: a traditional mortgage generally allows you to have access to financing equal to about 80% of the value of the property.
Another factor to consider is that to access a mortgage you need to demonstrate to the bank that you are reliable and able to pay the monthly installment. This, normally, cannot be more than a third of the applicant’s monthly income.
The silver lining?
Today, in general, mortgage installments tend to be lower than monthly rent installments in the largest Italian cities; furthermore, buying a house means having the possibility of reselling it at a better time at higher prices or receiving income by renting it.
What are the advantages and disadvantages of renting a house?
Renting can be a good solution for those looking for a home in the short term or for those with fixed-term employment contracts.
Furthermore, those who live in rented accommodation enjoy a lot of flexibility (there are no major constraints in the event of early termination of the contract) and do not run the risk of spending on structural work on the property.
Finally, renting can guarantee a home to those who do not have enough money to buy. The initial investment is in fact generally limited to the payment of a few months’ deposit.
The best choice is personal
To decide whether to buy or rent a house, it is important to do the math and reflect on your needs, values, and lifestyle.
There are many factors that can tip the scales toward one possibility or the other.
Regardless of the individual economic situation, some may decide to give priority to freedom and the absence of risks or worries related to owning a property. Others may decide to invest in real estate, perhaps to leave to their children as an inheritance.
The important thing is that the decision is always informed and aware.
The Museum of Saving was created to spread financial education and help people make rational and informed economic decisions. Its contents are explained in a simple, fun and accessible way. The goal is to ensure that every individual can make economic choices in line with their financial availability, goals and desires.