Is It More Profitable to Buy a House on Credit or to Rent a House?

To find out the truth of the matter, we did research from many sources and consulted a banker. With our findings Differences between renting and paying a mortgage we have clarified.

In both ways pros and cons available. But which one is more profitable, you will learn after we explain.

Both options have their own advantages and disadvantages. To summarize:

The disadvantages of renting are:

• If your income level is not very high, you must pay rent to buy a house at the same time. Collecting can be difficult.
• From the host to decorate the house as you wish. you need permission.
• with the host you may experience problems. (For example, after 5 years, he may want to remove you without excuse.)
• Landlord about rent increases you are on your own initiative.
• moving cost it can burn your pocket.

The advantages of renting are:

• At any time you want you can move.
• Instead of high loan costs You can live with a reasonable rent..
• Immovables in the house (combi boiler, honeycomb, etc.) is not your responsibility.
• renovation such works belong to the landlord.
• Deposit fees of your water, electricity and natural gas subscriptions while moving You can get it back with inflation interest.

The advantages of buying a home are:

• rent out a income source you can get.
• a long term investment tool you get.
• ‘I will be evicted from the house you have no fear.
• When to decorate the house You don’t have to ask permission from anyone.
• Rent you don’t pay.
• Long time the cost of moving You don’t have to think.

The disadvantages of buying a house are as follows:

• As you wish you cannot move.
• If you are going to rent a high rental tax you pay.
• From real estate and renovation of the house you are responsible.
• home loan with high interest you struggle.
• Your investment plan with the depreciation of the house We would say it could sink, but Real estate prices in Turkey never fall…

We also consulted a banker, who gave us his views:

Our banker expert we consulted said that they would of course argue that it would be more logical to take a home loan in order not to disparage the place where any bank employee works and to receive premiums. don’t want to give your name He shared his thoughts with us by stating:

“If we look in the US, it may be more profitable to buy a house with the mortgage system there than to rent it out. The interest of the system there is much lower than the interest of the home loan in our country. In addition, the tax and insurance costs paid by the landlords there are lower.

Also in Turkey 20 years ago It was more convenient to take and pay off a home loan than to rent. However, today’s home loan interest rates and house tax + insurance fees Considering that renting is less costly, even if rents have skyrocketed.

Of course, I say this for people with an average income level. If you have monthly income between 30.000-50,000 TLOf course, buying a house with a home loan will be more profitable than renting it.”

We can best explain this as follows: Suppose the price of an apartment is 500.000 TL and its rent is 5.000 TL.

You wanted to buy this house and took out a loan of 500.000 TL. pay in 10 years You signed a contract for making 120 months. Even when we exclude the maturity difference that the bank will apply to your loan, the annual tax you will pay for the house and the insurance fee, the fee you will pay every month for 10 years is 4.166 TL.

The interest rate given by the banks for the housing loan of 500.000 TL for 120 months is 1.14%. In other words, the total cost of the 500.000 TL loan was 920.089 TL for you. That too The installment for 120 months is 7,667 TL per month.. We have not included the tax and insurance fees you will pay when you become a home owner yet.

If you are not going to file a non-rent income statement (that is, if your only income is rent), the rent tax you will pay is 294.90 TL for this 5.000 TL flat. If If you are going to declare income other than rent, this amount increases to 1.044 TL.

Did it cost you 7,667 TL? 8,711 TL… Also, you are responsible for the maintenance of the immovable properties in the house and the renovation of the house. We cannot add their expenses to this equation on a monthly basis, but they will also be a burden.

Finally, let’s come to the insurance issue. The only insurance that you have to have compulsory for residences in Turkey, DASK (Natural Catastrophe Insurance Institution). If we consider that this hypothetical flat is 100 square meters, the cost of TCIP insurance is 301,600 TL and the insurance premium is 214 TL.

When we divide this fee by 10 years, we need to pay monthly. total fee 11,224 TL is happening.

So, let’s come to our question in the title: Is it more profitable to pay rent or pay a 10-year home loan?

What our banker said ‘if you have a monthly income of 30.000-50,000 TL’ if you meet the criteria and will be stable for 10 years If you trust, of course, buying a house makes more sense than renting.

However, if you are middle-income or low-income, you can be a home owner instead of 11,224 TL. Renting 5,000 TL and living is more profitable than buying a house.