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Bank lease or rent installments? What do you choose?

Bank lease or monthly rent? What do you choose? What are the main advantages of each element?

We know all too well that this subject is quite controversial in Romania. Foreigners, or Romanians with a “western mentality” are PRO rates at the bank and against RENT, while, of course, there are also people AGAINST bank rates and PRO rent.

Who wins this unprecedented “war”? Who is right? What’s better? Why installments and not rent? Why rent and not loans?

We hear many discussions on Facebook groups, on forums, in everyday online conversations, and even in discussions with family/relatives or friends.

“The slave of the bank for 30 years”
“You pay the installments to the bank with the money obtained from the rent and after 20-30 years it remains yours”
“In Romania, it is worth having bank installments and tenants to pay them”
“I buy in installments, and I know it’s mine and when I feel like it I can sell it”
“Why pay the owner’s rate when you can pay yours?”
“If you rent you throw money out the window”
And many such phrases.

Rent

Renting brings the following advantages:

• flexibility: you are not “fenced” by a safe place; you can always move to another area, another city, another country; you don’t depend on the monthly rate
• it is ideal for students, entrepreneurs or people who travel a lot for business purposes
• you have time to get on your feet: when you are at the beginning of the road, it takes time for you to choose a career and you end up with a constant income that will satisfy you
• you can share the house with other people and pay less on rent
• you can choose the conditions in which you want to live (there are homes for rent for all budgets)
• if you live long-term abroad, paying rent is much cheaper than buying a property abroad
• you are not forced to pay the installment at the bank (if you can no longer pay the rent, you end it somehow, but if you no longer pay the installment at home you risk losing the house and the initial investment)

Bank installments

According to a recent study, in Bucharest, the monthly rate for an apartment of 45 square meters has an average of 420 euros, while the rent reaches 470 euros.

The rate for a loan is 12% lower than the rent. In other countries, (eg Prague), the rate for the apartment is 40% higher than the rent. This explains the higher number of tenants in Western Europe.

Buying a house in installments has the following advantages:
• the value of real estate increases over time
• taxes are relatively low, as is insurance (depending on various factors)
• you pay less in installments than in rent
• you have control over the property: if you want to redecorate, you do it, if you want to replace the furniture, you can do it
• you can rent the house at any time if, say, you can no longer afford to pay the monthly installment and move to parents / friends / on a cheaper rent (as well as in the case of tenants)

Why do most Romanians choose to pay bank installments to the detriment of the rented state?

According to official sources, currently 96% of Romanians are the owners of the homes in which they live.

There are many factors behind these decisions. Indeed, after graduating from high school, the best option in the short term is to rent. However, most people over the age of 25 are seriously thinking about buying a home.

Some would say that these factors come from communism, because at that time our home was provided by the Romanian state.

People have become accustomed to owning a car, land, a house, no matter what sacrifices this situation requires.

What should be the ideal rate at the bank to lead a decent life?

Although the bank accepts a degree of indebtedness of up to 45%, it would be ideal for the rate not to swallow more than 1/5 of the income.