In principle, buying a home is always a good solution. But it involves a huge variety of terms, concepts and even jargon. Since housing is usually a pretty big investment, it’s not a good idea to do it if you don’t really know what you’re talking about.
I myself have been involved in the housing trade and I have found that there are a few basic terms you need to understand before you get too excited. Let’s start with the pricing of the property:
A stopping example
For example, I’ve had a client call me who had found a new property for sale and was about to buy an apartment virtually over the phone when “it only costs a little over €80k and it’s brand new!”. The enthusiasm quickly waned when I explained that it was the sale price, which is the same as the purchase price. By paying this fee, you get the shares that entitle you to own the apartment in question. Shares, which also include the corresponding share of the construction loan. Which in this case was about 170k€. Even after this, there will still be a payment to make, because nowadays very often the plot is separated into its own use. In this example, if the buyer had also wanted to acquire his share of the plot, the bill would have been about €60k higher. So in this case the total price of the property was about 320k€. A little more than the €80k that inspired the enthusiasm.
Let’s stick to the same example: as I said, you could have “got hold” of the apartment at that purchase price and leave the company loan and land plot contributions to be paid monthly in the form of contributions. Then the poor person would be penalised by a monthly maintenance fee, which is still payable even if he or she has bought the property without debt. This contribution – as the name suggests – is used to pay for the maintenance and management costs of the company. In addition to this, the company would have had to pay a finance charge to cover its share of the company’s loan servicing and repayment costs. And still a land objection, with the same formula. This would have meant monthly housing costs, excluding the cost of managing your own mortgage, of around one and a half tonnes. Then no deal was done.
Terminology of new and old
New buildings have their own terms and old buildings have their own terms. If you are about to move into a brand new home that is said to be an RS property, it doesn’t mean it will be any sportier or more powerful, as the RS label often means in cars. In housing RS stands for “Recommended by MFIs“, which indicates that the developer, the builder and the founding partner are bound by a number of different obligations defined by law. Such as post-construction and performance guarantees provided by the homebuyer as security. In old housing companies, on the other hand, there is often a redemption clause in the articles of association. It sounds downright scary, but with a clause like that, no one can come ringing the doorbell and tell you they’re buying your home now. The redemption clause specifies when it can be used. For example, if you are selling your home and the redemption clause specifies the right of redemption to the company or another shareholder within a certain period of time, someone specified in the clause can redeem the home that was sold at the same agreed price under the nose of the first buyer.
So to sum up: buy a home, but only after you understand all the details of the project. And if you don’t understand something, ask someone who really does. Inevitably, that cousin-in-law of your uncle’s godfather, who always appears to know everything, may not be the best adviser.