A flat for cash? Find out whether it is worth it

At some point everyone faces the decision to buy their own dream flat. Sometimes this happens after years of saving, at other times after checking several loan offers.

• You can finance this purchase from two sources
• Out of your own pocket or with the help of a bank?

You can finance this purchase from two sources:

• your own funds,
• borrowed funds.

Think carefully about how to finance your own place, because it is a key issue for your future savings. Consider all the advantages and disadvantages of each of these solutions.

Out of your own pocket or with the help of a bank?

Of course, the main argument for buying a flat with your own funds is that it removes dependence on a bank. This is very tempting. The operation itself then becomes quicker and smoother.

When buying a flat with a financial institution's money, checking our creditworthiness alone can take some time. The interest on the loan taken out will also increase the final price of the flat.

However, not everyone can afford to buy a flat for cash. For the purposes of this article, let us assume that you do have such cash and want to use it to buy your own place.

READ ALSO – TURNKEY FLAT VERSUS DEVELOPER'S STANDARD

Remember one basic matter: the tax office. The way the tax office works in Poland does not restrict such a transaction in any way, however, and classifies it as an ordinary purchase. It is worth pointing out, though, that it is a good idea to have evidence that the money was accumulated legally.

Experts point out that buying flats for cash will gain importance in the future, because loans are becoming less and less cost-effective. This is not considered in terms of interest rates, but in terms of the costs of entering and exiting a loan. Many banks reserve the right to charge a fairly high fee for early repayment. In addition, many people are daunted by the prospect of making repayments for 30 years.

CHECK FLATS FOR SALE IN SOSNOWIEC!

It is worth mentioning a new type of flat purchase – the so-called FLIP purchase. It is nothing more than: buy, renovate and sell. When, however, you are buying a flat to let, it is most advantageous to pay in cash. After all, you are buying the property in order to earn a monthly income from it. This income goes into our pocket, not to the bank along with the loan instalment. This is one of many situations that favour buying a property for cash – renting it out afterwards. Reinvesting the money collected will let us quickly accumulate the cash needed to buy the next property.

If, however, you plan to settle in the property you buy and do not choose to remain a rentier – borrow the money from a bank, and the money you have saved so far will allow you to furnish it adequately and have peace of mind.