Ownership or Rent—The Housing Dilemma
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This is a very complex question, not only because it straddles an entire lifetime, but also because it has strong overtones of emotion, security and comfort which affect different people differently. Let me try to highlight some of the main factors for two groups of people – the newbie starting working life, and the oldie seeking peace after decades of toil.
First, the math.
Ownership generally requires a loan, the interest on which is around 8% nowadays. But hold on—there is a catch. This is not a lifetime interest rate. It is just the initial rate on a floating rate loan, which means that, years later ,it can go up and you have absolutely no idea of what the rate will be 10 years from now. If you want a fixed-rate loan, one in which the interest rate will not change during the entire payback period, you will have to pay around 12%, which means that banks do expect interest rates to rise in the future.