Is it better to rent or buy in Portugal? 5 things to keep in mind

Is it better to rent or buy in Portugal? Is buying property in Portugal a good investment? These are all questions that you might be asking yourself if you plan to move to Portugal in 2022, and this can be a major financial dilemma with a number of associated issues.

There are pros and cons of buying property in Portugal. On the one hand, the awareness that with renting long term, you have the feeling of throwing money away because you will never own the property. On the other hand, buying a home is a decision with a lot of financial commitment required that ultimately affects your life choices. What is clear is that there is no single answer as to whether buying or renting is best, and this decision depends on your personal and economic situation. Here is what to consider when choosing between buying or renting a house in Portugal in 2022, with the help of the experts at Habitissimo who have identified 5 important things to keep in mind.

Consider your family situation

The most opportune moment to take the plunge and become a homeowner in Portugal is conditioned by your employment, financial and family situation. Buying a home is for many the first step towards stabilisation. To make this choice with complete peace of mind, you should study all the options and define your budget, as well as the various financial plans, savings and family protection measures to be adopted. This is especially important when moving abroad where things may be different to what you're used to. 

Having economic stability

Buying a house provides stability but at the same time requires it. Having a certain economic solidity is essential in order to carry out such an operation without issues. Having savings, a regular income and no debts to pay allows you to take this step and buy a property in Portugal. If all of these conditions are met, buying a property in Portugal, instead of renting, is likely the best option financially. 

It must also be said that in order to obtain a mortgage in Portugal, you must have a stable income situation: banks in Portugal demand proof of continuous income as a guarantee when granting mortgages. Note that if you are applying for a mortgage as a non-resident in Portugal, mortgage conditions may not be as favourable. 

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Finding a property at the right time

Desire is not everything, it is always conditioned by an opportunity. Sometimes, there are deals not to be missed and in many cases, you'll need to do your research about the current situation of the Portuguese property market. For example, you may find the perfect house, even if it's on sale while you're looking for a house to rent. If the cost and quality are aligned with your goals for the future, it's worth thinking about, and buying might be the right move. This is especially true if rent is higher than mortgage payments, and therefore buying may be the better option (and vice versa).

Think about the future

Buying a house requires looking to the future, so some thought is required, especially when moving abroad is concerned. Asking yourself a series of questions is important to understand if buying a house in 2022 is the right choice. For example, you should ask how long you intend to live there, but it is also necessary to ask what changes may occur in the future, if your family may grow, for example.

On the other hand, for those who like to take long trips around the world or have a job that requires a lot of travelling and moving around, renting property in Portugal may be the best option. In summary, a mortgage will tie you to a property, and even once purchased, a house you own is harder to give up for a new one.

Freedom to make changes to a property

Those who live in a rented house most often experience the discomfort of having to live in an environment that does not meet their needs. Most lease agreements prohibit making alterations and carrying out work to adapt the property. This is another reason to move towards buying rather than renting.

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When buying or renting property, it is necessary to distinguish needs from wants. Needs should include things that cannot be changed, such as location, proximity to schools, type of neighbourhood, budget, number of bedrooms, square metres, etc. Wants, on the other hand, may include things that are not essential and can be changed after the purchase, such as the style of the house, the colours of the walls, the presence of a shower instead of a bath or the heating system. These are all important factors to consider when deciding whether to buy or rent in Portugal. 

When is it best to buy in Portugal, and when is it better to rent?

Once you have considered all the above questions, you're getting closer to deciding if it is better to buy or rent a house in Portugal. Here are some of the main points to consider when making your decision:

When it's better to buy property in Portugal

• Owning property provides certain security. You pay for something that will be yours and that you can sell in times of need, or rent out rooms for extra income.
• If you have savings in the bank, a stable employment situation and a good mortgage profile, buying property is the best option.

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When it's better to rent property in Portugal

• When rent is lower than the mortgage payments, or when you are not eligible for a mortgage due to your financial situation (lack of savings, unstable employment situation etc.)
• If you travel a lot and are away for long periods due to work, for example, renting a house allows you to be more flexible.

Find long-term rentals in Portugal