It is quite possible to buy an apartment without an onerous mortgage

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

So, we take a calculator (or better, Excel), recall the mathematics for grade 3 of high school and together we consider which is more profitable: renting a house or a mortgage.

All prices shown are valid as of January 19, 2014, for the city of Kazan. In your city, the situation will be different, but hardly much, because The "free market" has almost everywhere "adjusted itself" the ratio between the cost of housing and its rent.

The financial flow and value of money are calculated using a mortgage calculator on the Sberbank website. For most regions, they will be the same as in my calculation.

Given:

2-room apartment with an area of 56 meters in a 9-storey panel building, built a little over 20 years ago. No renovation, almost no furniture, with an old refrigerator, an old stove and the same washing machine.

The price of such apartments declared by realtors is 2,590,000 rubles.

To be closer to reality and further from realtor expectations, further calculations will be carried out at a price of 2, 500, 000 rubles.

The cost of renting an apartment is 17,000 rubles, including a communal apartment, but without the cost of electricity and the Internet.

At first the realtors wanted 18,000, but in the end the owner and I agreed on 17,000 rubles a month, plus we agreed that any improvements I made would be offset against the rent.

Since, in any case, we will have to pay for electricity and the Internet separately from an apartment and a communal apartment, I think everyone will agree that they should not be taken into account in the calculations, as well as other items of the family budget. We count only housing.

Consider the option of acquiring this apartment on credit

We go to the Sberbank website, drive in the number 2, 500, 000 rubles into the mortgage calculator, indicate the minimum down payment (15%), select the general conditions and perform two calculations - for 10 years (120 months) and for 20 years (240 months).

We get that in any case, we must immediately pay 375,000 rubles for the apartment, and then:

1) or pay 38,068 rubles a month for 10 years;

2) or pay 30, 635 rubles a month for 20 years.

The overpayment of the loan for the entire period will be 2, 068, 228 or 4, 852, 432, respectively.

The numbers are not small, but nevertheless, we must add to them the cost of a communal apartment, because it is included in the rent of an apartment, but not in the mortgage.

In my case, the landlord will declare that the communal service costs him around 7,500 rubles a month. Personally, I tend to believe him, because firstly, he pays for it himself from a fixed rent and therefore it makes no sense for him to deceive me, and secondly, this apartment was bought from maternity capital for his growing children and therefore several people from his family are most likely registered in it, which affects the cost of utilities.

Anyway, let's take 5,000 rubles for the true volume of utility bills. For a two-room apartment in my city, this is a very small figure. But even if it differs from this value, it will not be able to greatly distort our further calculations.

Now we add these 5,000 rubles to mortgage payments and we get the following picture:

1) we will have to pay 43,062 rubles monthly for 10 years, or;

2) we will have to pay 35, 635 rubles every month for 20 years.

We remember these numbers. Twice we swear dirty at the greedy bankers. We close the bank's website and move on to the most interesting.

We accept these dire conditions. We accept it unconditionally, as an objective reality, which we are not able to change right now. Therefore, we are preparing for these abnormal in terms of volume payments for the killed kopeck piece in the Soviet socket and … we are renting an apartment.

We rent an apartment to "overpay someone else's uncle"

We rent an apartment and live in it for 17,000 rubles a month. BUT:

1) by the time we move to this apartment, we should already have 375,000 rubles, which we did NOT give for the first installment;

2) every month we must have in our hands 43, 062 or 35, 635 rubles (depending on the term of the loan), which we DO NOT give for a mortgage.

The question of the availability of this money is fundamentally important. If we took out a mortgage, then we would have to pay these amounts every month, no matter what happened. Imagine that your home is pledged by the bank and be prepared at the end of each month to have one of these amounts on hand, as if you would be evicted for late payment!

Now, as well as in the future, out of these monthly sums we pay the rent of an apartment in the amount of 17,000 rubles, and the rest is calmly, disciplined and adamantly accumulating on our housing.

Repairs, furniture, household items and much more, which will inevitably require spending at a new place of residence, we buy and pay from any other money! Monthly NOT SPENT payments only INCREASE!

And this is what we get as a result.

At the beginning of the year (we just moved into the apartment) we have 375,000 rubles on hand, which we did not give for the first donation. We live for a year, monthly accumulate the difference between the proposed mortgage and real rent, then at the end of the year we get:

Year 1:

(43,062 - 17,000) 12 = 312,744 savings 375,000 = 687,744 rubles or

(35, 635 - 17, 000) 12 = 223, 620 savings 375, 000 = 598, 620 rubles

Year 2:

687, 744 312, 744 = 1,000, 488 rubles

or

598, 620 223, 620 = 822, 240

Year 3:

1, 000, 488 312, 744 = 1, 313, 232

or

822, 240 223, 620 = 1, 045, 860

Further, everyone can calculate for himself, simply adding 312, 744 or 233, 620 each year, according to the chosen term of the "mortgage".

Who is too lazy to count, I inform you:

instead of a mortgage for 10 years, you can easily save up for your apartment in 7 years, instead of a mortgage for 20 years, you will save up for an apartment for 10 years and you will have another 100,000 rubles.

Taking into account the money that you spent on renting an apartment, you will save on bank interest 640, 228 and 2, 812, 432 rubles, respectively (we multiply 17,000 by the number of months of rent until we have enough to buy an apartment and subtract the result from the amount of the expected overpayment).

At the same time, for 7 or 10 years you have been living in peace, without debts and at the same time having a significant "cushion" of cache just in case of emergency!

Sudden illness or job loss will not lead you to eviction

If you have problems with money, you may have to spend a little of your accumulated rent on housing (and thus roll back on the way to your goal), but this is in the most extreme case and only for the time you are looking for a new job.

Agree, this is not the same as staying on the street and even with debts (banks, in case of a delay in payment, take the apartment to offset the debt at a very low price, and you owe them the accrued interest and lose those already paid).

All the lyrics like “we live in our own home”, “no need to huddle in rented quarters”, “but we can already do repairs”, actively imposed by banks, is nothing more than an illusion. In case of problems with your solvency, the bank will very quickly show you in whose apartment you actually are.

But when renting, all these issues are simply resolved by an agreement with the owner, according to which he does not have the right to evict you within a certain period, cannot evict you without advance warning and can raise the rent by no more than a certain number of percent per year.

A little more about price increases and percentages

By the way, about the growth of rent, the rise in the cost of an apartment and other percentages … Here I can be scolded for such layouts, but you can't throw words out of the song, and if your conscience and worldview allows you personally, you can use the conditions of the fucking capitalist system to your advantage.

In short, if you do not have either a business or investment skills, you can, without too much ado, hand over money to moneylenders-bankers at interest in the form of a regular deposit and compensate for inflation, a possible increase in the cost of real estate, and at the same time seriously accelerate the growth of your savings.

Let's calculate what will happen if instead of saving money in a mattress (or wherever you hide it) you take it to the bank on a regular deposit at a rate of 10% per annum and every year you renew the deposit with interest capitalization, adding your savings to them.

First year start:

we deposit 375,000, saved on the first installment.

Year 1 ended:

we have 375.000 1, 1 = 412, 500 in our bank to which (43, 062-17, 000) 12 = 312, 744 accumulations are added and it turns out

412, 500 312, 744 = 725, 244

or

412, 500 223, 620 = 636, 120

Year 2:

725, 244 1, 1 312, 744 = 1, 110, 512

or

636, 120 1, 1 223, 620 = 923, 352

Year 3:

1, 110, 512 1, 1 312, 744 = 1, 534, 308

or

923, 352 1, 1 223, 620 = 1, 239, 307

Year 4:

1, 534, 308 1, 1 312, 744 = 2, 000, 482

or

1, 239, 307 1, 1 223, 620 = 1, 586, 858

Year 5:

2, 000, 482 1, 1312, 744 = 2, 513, 151 - It?

or

1, 586, 858 1, 1 223, 620 = 1, 969, 164

Year 6:

Those who wanted a mortgage for 10 years have been living in their own apartment for a whole year.

Or continues to rent an old apartment, the costs of which are fully covered by bank interest (about 20, 900 per month).

Year 7:

Whoever wanted a mortgage for 20 years buys an apartment for 2, 628, 670 rubles at the end of the 7th year, or stays in a rented apartment, paying for rent with bank interest, which runs up a little more than 21,000 rubles a month.

Here is such a simple mathematics.

15 minutes of calculations, which save from 5 to 13 years of life, which would have to work for bankers with a mortgage.

It is clear that when investing money on a deposit, the interest you received will have to work out for those who like to take a plasma or a jeep on credit, so if you do not want to participate in the robbery of these impatient comrades, then just save up without investing in a bank. All the same, it will be much more profitable than maintaining bankers and replenishing the ranks of people working off other people's capital.

Do your calculations match this? Write in the comments.