Mortgage Credit: Punishing Low Income Families -

Housing: Is it more profitable to buy or rent an apartment for your child? –

Many graduates are preparing to begin their higher education at the beginning of the academic year, with many new students to be accommodated as of September. Due to the increase in rental prices, more and more parents are asking themselves the question of buying an apartment for their children instead of renting it. A specialized rental investment agency ran a simulation to determine the most beneficial solution.

“We see that among investors, we are getting more and more calls from parents asking the question,” explains Yves Antoine, co-founder of Circuméo. Based on that observation, the rental investment startup has tried to see if buying is more beneficial than hiring a young person beginning their higher education, according to Le Figaro Immobilier.

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Putting the studio to the test

To do this, the agency, based in Nantes, carried out a simulation of a mortgage on a studio located in the same city, the characteristics of which are as follows: location in the city center, with an area of ​​about twenty square meters, purchase price of 110,000 euros excluding notary fees, including 10.000 euros Contribution, fixed rent of 550 euros per month.

Through her simulations, Circuméo considered the scenario of a student who would occupy the residence for 5 years, i.e. the duration of the course. if Parents choose rent, They will have to pay 33,000 euros. Added to this is an investment of €10,000 in life insurance, which is equivalent to the personal contribution needed in the apartment purchase scenario. After 5 years, this investment will have generated €1,040 on a 2% rate basis.

On the purchase side, to get a monthly payment equal to the rent amount, it is necessary to take out a loan of €100,000 over 20 years. If the apartment is resold after 5 years, Its price is estimated at 137,500 euros. However, this 25% capital gain does not go into the pocket of the seller who has to pay the fee.

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Match result: 1 – 0 rent

Verdict: In this case, the purchase is more Financially attractive than rent, According to Circumeo. why ? Because the rent costs approximately 32,000 euros in total, while the purchase generates 6,750 euros in net gains.

In fact, from the resale price of the apartment, 10,000 euros invested in the beginning must be deducted, plus Pay the loan and fees for 5 years, That is 33,000 + 8,750 euros. Not to forget the €1,000 capital gains tax, and finally the remaining capital outstanding: €78,000.

Race results? A difference of approximately 38,750 euros. A large sum that will make parents think twice before considering rent. In fact, roughly 15 to 20% of Circuméo’s investors eventually decide to buy a property, according to Le Figaro Immobilier.

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