Mortgage and apartment rental

Renting an apartment has recently become a very good way to earn extra money. In the pursuit of money, people invest in real estate, which increases in value every year. Some buy them with their own money, most choose a mortgage. Is it worth it?

It was expected that flats from the secondary market would begin to depreciate. However, this did not happen and due to admission to the Good Finance program, their value will probably increase with the growing interest of participants of this program. For people who want to learn more about the current Good Finance program policies.

Is it worth taking a mortgage to buy a property for rent?

Is it worth taking a mortgage to buy a property for rent?

Before making a decision, there are a few important things to consider that can help you calculate your profits and possible losses. First of all, it’s worth focusing on:

  • creditworthiness
  • loan installment
  • additional fees
  • housing prices
  • demand
  • payments related to the flat

The calculation of creditworthiness is the basis for applying for a mortgage. The bank will certainly ask about earnings and will take into account the credit history recorded in the BIK. Being aware of your creditworthiness, you can know how much to apply for to get a mortgage. In this way it is also known in which price ranges should you look for an apartment.

The loan installment is of great importance because it depends on it

The loan installment is of great importance because it depends on it

Whether and how much we will gain or how much we will lose by renting the flat bought. The amount of the installment is made up of such factors as the interest rate, the actual amount of the loan taken out and the length of the loan. If it turns out to be very high, we may have problems paying it back. All rental money can be paid in installments, without making any profits except “paying off” the loan, sometimes you even have to add something from your own money. You can also set a high transfer price, but then you have to take into account less feedback on your own offer.

Additional fees related primarily to the mortgage for the purchase of a flat are a commission for the bank, credit insurance (not obligatory, but often part of the loan offer), flat insurance (compulsory) or low own contribution insurance (optional) as well as housing valuation, entry at a notary public, etc. All this increases the cost of mortgage.

The prices of flats on the market depend on their location (big city, small city, downtown, suburbs) and individual preferences (apartment size, room arrangement, noise and light intensity, general condition of the flat). It is worth determining in advance the amount of credit that will be available and confronting it with the features of the apartment that you plan to buy.

General demand for apartments for rent is everywhere

General demand for apartments for rent is everywhere

However, it’s enough to get a little interest in the real estate market to see where interest is higher. For example, a student city will certainly need housing near colleges for students, and there will be a much greater demand for housing near workplaces and in the city center. Apartments located in the area of ​​poor communication or uninteresting surroundings (no shops, schools) will meet with less interest.

There are usually a lot of fees associated with an apartment . After buying an apartment, you often have to renovate it or bring it to a condition that encourages future landlords. You have to reckon with the fact that larger renovation works will always be the participation of the owner of the apartment, unless the parties agree otherwise.

It is also worth remembering that before there is a landlord there may be a period when the flat will be empty, so paying the rent and paying the installment will be due to the owner. The problem will be more important if the tenants are found but do not pay. A well-structured tenancy agreement can help you deal with this situation (e.g. high initial deposit).