Should I buy or continue renting?
We answer this question extensively in this interactive article, “Should I rent or buy a property in Germany.”
Generally, this comparison starts with comparing your current rental expenditure to the cost and benefit of owning a similarly sized home.
Let’s say your rent costs are 1.000 € per month and buying a similar property would cost you 350.000 € in total. To compare these two, we would need to calculate the monthly rate of buying. This is calculated by taking the interest rate + the principal repayment and multiplying by the loan amount and dividing by 12 months. For example
350.000 € * ( 1,50 % + 2,00 % ) / 12 = 1.020 € per month.
In this example, it’s important to understand that the cost of buying is not 1,020 euros per month. It’s only an interest of 1.5% or 437 euros per month. So you save 1.020–437 euros every month. However, you also have to consider maintenance costs and homeowners insurance on the minus side and the appreciation on the plus side.
In our rent-or-buy-calculator, we then also add that the rent can increase while the property price increase is compounding. In other words, the higher the value of the property over time, the higher the euro amount of a given percentage price increase.
To calculate whether renting or buying is better for you, you can read this interactive article and change the parameters to fit your case.
