Mortgage or Rent?
Mortgage or rent? It’s a question almost everyone faces at some point in life. How do you make the right decision? Which option is more advantageous economically? Below, we provide a realistic comparison focusing mainly on the benefits of both choices. Logically — what is an advantage in renting is often a disadvantage in owning, and vice versa.
The era of cheap mortgages is slowly coming to an end, which is why the POSUDEKPRAHA.cz team recommends not hesitating and investing in your own housing. Those who do not inherit a property or have enough money in their account (or under the pillow) must rely on external — usually bank — financing.
If you can afford it, own your home.
In the long term, buying a home with a mortgage is more economically advantageous than renting. The main benefit is that you are investing in something you own, and you have the certainty that the landlord will not suddenly raise your rent (the mortgage’s annuity payment remains fixed during the rate period) or evict you.
On the other hand, one clear advantage of renting is that you are not in long-term debt and your initial costs are minimal (usually just a few months’ rent as a deposit). By contrast, the Czech National Bank (ČNB) has recommended that banks require clients to finance at least 10% of the property’s value from their own funds.
However, finances aren’t everything. A landlord will want to keep control over their property — occasional inspections or approval for any renovations are standard in most rental agreements today.
The advantage of owning your property is that you can manage it as you wish — for example, rent it out. A Prague apartment worth CZK 2,500,000 typically rents for around CZK 10,000 per month. The financial market still offers mortgages with monthly payments under CZK 10,000 for a 30-year term. In practice, this means that after 30 years, you will own a property that was essentially paid off by someone else.
However, statistics show that despite these advantages, roughly one-third of people still live in rented apartments or houses.