09/20/2024 – 7:30
The dream of buying a property is common among many Brazilians. However, moving away from renting and taking out a loan is not always the best option in financial terms. So how do you know when it is worth it?
Experts consulted by the website This Is Money explain that buying your own home may not be the best option when you only look at the financial side.
“The best choice depends on each person’s financial situation and goals,” summarizes Leandro Lopes, founding partner of Septem Capital. “The decision must take into account both the numbers and personal and family aspects, such as long-term financial security and the desire to own or not own a property.”
+ How much does it cost today to finance a property worth R$350, R$500, and R$750 thousand; see rates and simulation
Even in terms of mathematics, the president of the Regional Economic Council (Corecon-SP), Afonso Gomes, highlights that there are variables to be considered carefully. “It is not a perfect calculation, because it depends a little on the rental conditions, the actual value of the property and, even more so, whether the person needs that property or not,” he says.
The decision to stay in the rental property, however, will also depend on the person’s ability to invest money in their future every month.
“Today, mortgages have an interest rate that varies between 10% and 11% per year,” explains Lopes. “If we compare it to rent, which can vary from 0.25% to 0.35% of the property value, renting tends to be cheaper, which can allow you to invest the difference between the rent and the mortgage payment.”
With annual adjustments, rental prices may exceed financing
For those who already have enough money to make a good down payment, financing becomes an option that should be seriously considered. Lawyer Daniela Akamine, who specializes in financing, explains that a substantial down payment helps to reduce the total cost of the financing.
“Choosing a financing option with initial payments similar to the rent amount helps to maintain a balanced budget,” explains the expert. “This allows for a smooth transition between paying rent and financing, without putting a strain on your finances.”
The expert presents the calculations of financing and rental costs for a property worth R$500,000. See the comparison below:
- Property financing of R$500,000
Required deposit: R$ 100 thousand
Installments: Over 360 months (30 years), they would reduce month by month, starting at R$4,488.49 and ending at R$1,144.96
Total value: R$ 1,088,915.56
- Renting a property worth R$500,000
Amount paid today: R$ 4,100
Rent increase in the year according to FipeZap Index: 8.02%
Amount paid in 30 years: R$ 1,476,000
What if I rent and invest every month?
Financial educator Thiago Martello recommends staying in the rental market and investing the money saved on interest from a mortgage. He creates the following simulation:
- In a property worth R$1 million:
Average rent: R$5,000
Initial financing installment: R$ 10,730
Difference: R$ 5,730
The expert recommends that this difference be invested in an investment with a return equivalent to the CDI. After 14 years, the investor will have accumulated R$1 million and will be able to look for a property to buy, even with a discount.
If you want to continue renting, the monthly income from this accumulated R$1 million would be R$9,000 in CDI. By keeping the money in investments, in another 30 years, it will be possible to save R$12 million.
The expert highlights, however, that these calculations do not apply to houses acquired through Minha Casa, Minha Vida, as the program uses government subsidies to offer financing installments that are cheaper than rent, eliminating the difference that could be invested.
Decision should not be just financial
“If you don’t get into the habit of investing this difference regularly, you may end up without a property of your own, since you will be paying rent indefinitely,” says Leandro Lopes. “In addition, when you take out a loan, you have the advantage that the property will be paid off in the event of your death, thanks to the insurance included in the loan, and your family will keep the property.”
For those who dream of owning their own home and are determined to acquire a property, Afonso Gomes advises evaluating their own life plan. “The decision is this: what do I need first? Do I need a property? How big? Make a projection for the next few years. Are you single or married? Do you have children? Do you intend to have any?” he explains.
One advantage of owning a property is that you can make improvements and renovations to the property whenever you want, and you can stay in the property without worrying about lease renewal deadlines and the risk of having to vacate the property in the short term. For this group, the general recommendation is to always keep an eye on market opportunities, especially in the region where you want to live.
For those who have a more volatile lifestyle, or intend to move to another city, neighborhood or house in the future, a rental and investment plan is the best option.
#Renting #financing #property #option #math