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More and more people believe that access to housing is more expensive than years ago. In this situation, many people consider whether it is better to live on a rental or jump to pay a mortgage.

The belief that there is a real estate bubble in Spain is becoming stronger, in fact it is already 49% of tenants who have this claim of the Spanish real estate market. And this is one of the reasons why there is so much indecision between choosing to live for rent or launch for a home with a mortgage.

Live rent: prices that do not stop rising

Live rent: prices that do not stop rising

The fact that tenants warn of a possible real estate bubble is based on the rise in rental prices, which has been up for three years. The fact that rental housing prices have not stopped rising, has triggered all alarms among tenants.

However, the experts of the sector try to reassure the population and affirm that there are no reasons for alarmism . According to experts, these continued upward increases are only taking place in cities such as Madrid and Barcelona.

However, it seems that expert claims do not just convince tenants. According to a study more and more people believe that there is a bubble. In 2017, 32% thought they lived a new bubble, and in the data collected during 2018 that percentage has increased to 49%.

Tenant Pessimism

Tenant Pessimism

And in the face of this situation, there are many people who wonder that it will be more profitable if they opt for a rental home or apply for a mortgage to own their own home.

According to the study, more than half of Spaniards, 54%, consider that both rental homes and mortgages are at very high levels and that prices are too high.

It is a pessimism that is on the rise and has been increasing in all sectors of the population and in all Autonomous Communities. Although the most affected sector are young people , since the study shows that during this year only 15% of young people have participated in the real estate market, which is 14% less than the previous year.

So live rent or pay a mortgage?

So live rent or pay a mortgage?

To know whether to choose between a rental or having to pay a mortgage , you should keep in mind that rental prices have been rising consecutively for 3 years and that it is expected to continue doing so progressively. However, it is convenient that you value your economic capacity carefully and the advantages and disadvantages of each option of access to housing.

Advantages of rental housing:

  • Fewer steps and procedures to buy

  • Fewer requirements and less initial savings than to apply for a mortgage

  • Monthly expenses more controlled

  • Greater flexibility; If your circumstances change you can leave the rent and look for a new home that suits what you need

Disadvantages of rental housing:

  • Prices are rising and on the verge of a possible bubble

  • The tenant can raise the price you pay

  • Negotiations with the tenant (payment of supplies, repairs, contract … etc)

  • The house will not be your property at the end of the contract

Advantages of applying for a mortgage:

  • When you finish paying it, you will have a property home

  • Finance the purchase of a home and pay a price similar to the rent

  • You will have a home in the future

  • You can get a return on your home, such as a home equity loan

Disadvantages of applying for a mortgage:

  • In case of non-payment of fees you can lose your home

  • You need a lot of savings to apply for it

  • More requirements and procedures are needed than for a rental

  • You don’t have the same flexibility to change housing as with a rental

Therefore, it will be important that you value the current situation of the current real estate market , in which there is an increasing rise in rental prices, especially in large cities such as Madrid or Barcelona. However, you should assess your economic capacity and circumstances thoroughly to know which option will be the best for you.

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