When a mortgage on an apartment lease profitable

Some say that the mortgage on an apartment costing significantly more expensive than renting, while others claim that the borrower wins in the long term. Today, when the rates returned to pre-crisis levels, while lending this year, according to forecasts, may again come to a peak in 2008, it's time to revisit this issue. Must say at once that he did not come just like that. Unlike developed countries where the monthly payments on a mortgage for an apartment rental rates are approximately equal, in Russia there is a gap between them more than 2 times. However, proponents of the mortgage offer to compare with the cost of renting only the portion of payments on the loan, which accounts for payment of interest. Under this approach, based on 15 years of overpayment on the loan by about 20% higher than the amount of lease payments. The experts say that mortgage loan for an apartment will be cheaper, and the outcome of the sum can be equal. But this is only the interest and the borrower will still need to pay the full cost of the apartment. And here things are more complicated. Most often, banks are offering to repay a mortgage loan for an apartment on the annuity scheme. In this case, the borrower contributes monthly to the bank an equal amount until payment in full, but in the early years nearly all the payments necessary to repay the interest. Given that they are charged on the principal amount, with long-term lending annuity payments are unprofitable. The alternative is a differential scheme in which the amount for repayment of principal is distributed in equal installments for the duration of the loan agreement. In this case each month on debt interest payments reduced proportionally, and the resulting overpayment of a loan will be lower. However, taking a mortgage for an apartment on the differential scheme benefits only when we are talking about a large amount of long-term loans. In this case, the difference with the annuity over the last 15-20 years can reach 15 - 18%. Thus, at first glance, apartment for rent seems cheaper mortgage. But when you consider that housing becomes fully available to the borrower in the payment of last installment, the optimal solution for many is still a mortgage loan. It is important to choose a profitable scheme for the calculations, for example, differential, if a credit for 10 - 15 years or annuity with the possibility of early redemption. This will avoid overpayments and make mortgages more affordable.