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The order of things often suggests that it is natural to first rent a place to live at and only later buy your own home. Both renting and buying a home have their own pros and cons.

Keep the following in mind in terms of housing rental

  • Renting is not as big of a financial commitment as buying your own home. Even though you initially have to pay a larger sum when entering into a lease contract (advance payment and deposit, commission fee if using a broker), it is still a considerably smaller own contribution than that of buying your own home on a loan.
  • Renting means less commitment to you than buying a home on a loan: you can move out fairly easily and find another place to rent if the cost of the previous rented home or other conditions etc. no longer suit your needs.
  • The rent that you pay each month can be equal to potential loan payments in the case of buying your own home, but you will never gain ownership of the real estate you are renting.
  • It is necessary to get permission from the owner prior to renovating your rented home. The owner’s permission is also necessary for when you wish to get a pet. A lot of owners may not want to rent their place to people with kids of pets.

When buying a home, remember the following.

  • Buying a home on a loan is a very big financial commitment for years/decades to come, as it is generally not possible to pay for your home in full. Keep in mind that, depending on the conditions of a bank, your own contribution will make up 10-30 percent of the market value of the property to be purchased. You should also have enough money to cover the additional costs related to the sale and purchase transaction: loan agreement fee, property assessment fee, notary’s fee, state fee, property insurance.
  • You will need to provide the bank with collateral when buying a home on a loan. For this end, a mortgage or a pledge is tied to the purchased immovable. A mortgage can also be set to some other immovable. For example, a mortgage shall be tied to your parents’ home if that is the collateral of the home you are buying for yourself. 
  • In order to buy a home, you should have regular and sufficient income so that you could pay loan payments and handle other financial commitments, e.g. utility bills, incl. water, gas and electricity.
  • As a homeowner, you can renovate and thereby increase the property value of your home without asking for anyone’s permission.