27/10/2020 | Buy a property

Renting or buying your property? Some thoughts to guide you

A wedding, the arrival of a newborn baby in your family, a new job, aging to the next decade, an inheritance, etc. So many events that are a turning point in life and which may lead to considering investing, purchasing a house or an apartment. Buying at the right time is crucial because sometimes, keeping renting your accomodation is more appropriate… Here is some food for thought to guide your reflection.

What are your financial possibilities?

The first question to ask yourself obviously concerns your savings. Is it enough to get you started on a purchase ? In Switzerland, your financial contribution must be equivalent to 20% of the property sale price. If you are able to bring in that equity, investing in real estate makes sense: instead of « loosing » your money in your rent, you redirect it to pay off your mortgage. In the end, you will greatly benefit from it.

But the financial question does not end there. Indeed, you may have enough savings to invest (thanks to an inheritance for example), but not the adequate level of income to be a homeowner. Indeed, the amount to be reimbursed each month may be more or less equivalent to the amount of your rent. However, remember that you will also have to pay taxes on your property and that all repairs will be at your expenses. For example, will you be able to afford spending 2000 CHF to have the heating repaired urgently in the middle of winter? In order to avoid unpleasant surprises, it is essential that you find out about the amount of taxes and have a good knowledge of the condition of the property you wish to acquire.

Do you favor security or flexibility?

Becoming the owner of your home is part of a search for security which corresponds to certain personalities and which is more or less important depending on age and living situation. How about you? Are you sure you have explored all your options? Perhaps you fancy a trip, expatriation, moving to a different city to revive your career? If so, it makes more sense to remain a tenant and afford the luxury of flexibility. Indeed, most lease agreements provide for a three-month notice period to vacate a home. This will allow you to quickly free yourself from your ties! It is longer and more complicated when you are the owner.

What to do if you are an indecisive? Let’s take the case of an opportunity to work abroad: you are a foreign national and you have the possibility to work in France for a few years. Is it more interesting to buy or to rent? One of the first things to consider is the length of your stay. To plan for a real estate purchase, it seems wise to have a horizon of at least five years. But here again, other considerations come into play. Perhaps your means only allow you to invest in a home outside the city. However, in a context of expatriation, wouldn’t you rather live in the city to take full advantage of this experience abroad? In this case, renting in a central and lively area will better suit your lifestyle.

Taking that into account brings us to our third line of thought: the list of your desires and needs.

Do you have any specific wishes or needs regarding your accomodation?

Are you dreaming of a soundproof recording studio in your home? Or more modestly, of a bathtub and a double sink? Owning is the only way to be able to decide on certain arrangements. If you are frustrated because you can’t do whatever you want in your home, maybe it is time to buy. And you will be free to decorate as you wish.

But the other side of the equation must also be taken into account. On the one hand, your savings and your level of income do not necessarily allow you to afford the house or apartment of your dreams in the neighbourhood which suits you best. On the other hand, the property you are renting is more comfortable, better located, etc.

You have understood, the decision to buy real estate to live in requires a reflection on the state of your finances, your medium-term horizon and your lifestyle. Whatever your decision, do not hesitate to contact one of Lookmove’s partner real estate agents. His/Her experience and knowledge of the market will provide you with invaluable help, both in terms of financial advice and in practice, in order to make the best decision.