We are tenants who dream of their own home. If, from a purely financial perspective, in recent years the answer to the question “buy or rent a property” was unambiguous, today things are a bit more complicated. However, if you think carefully and choose the most convenient financing solution, you can still save on housing costs by purchasing a primary home. However, the dream of your own four walls goes far beyond cost issues. Those who buy a home do so because they want to feel it more like home https://www.kindhousebuyers.com/wa/yakima/
The low mortgage interest rates that have characterized the last decade have meant that the costs of owning home were much lower than those of a rented apartment. Regardless of the type of financing, those who have been able to move into their own home instead of a rented apartment have automatically saved. Due to the increase in rates, however, from the end of 2021 what seemed to be a saving rule for owners, began to falter. As a result of inflationary fears, long-term rates have risen relatively significantly, so much so that, in the case of long-term fixed mortgages, it is now necessary to carefully calculate whether home purchase still agrees in purely financial terms.
How much does it cost me to purchase a property?
At least 20% equity capital is required for the purchase
If you want to buy a house or an apartment, you need to have your own funds: banks require at least 20% of the purchase price. Example: A property worth CHF 800,000 requires CHF 160,000 of equity capital. In order for a mortgage with a maximum amount of 80% (in this case CHF 640,000) to be sustainable, the total housing costs, including mortgage interest, amortization and ancillary costs, cannot exceed one third of gross income .
Mortgage interest charge: calculated plus
For reasons of caution, the burden of mortgage interest for determining this sustainability is assumed to be at a higher rate than it could be in the current low-interest environment. The financial sector is based on an indicative long-term average interest rate of 5%.