:fill(fff,true):no_upscale()/contentlounge-s3.bf-contentlounge-production.aws.bfops.io/styles/manual_crop/s3/2020-12/real-estate-3408039_960_720%20Cropped.jpg "Real estate as retirement provision: What you should consider")
Buying real estate is a popular form of retirement planning. Homeownership can bring many advantages in old age. What you should consider when buying a house or an apartment for the purpose of security in old age can be found in the article.
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Real estate makes sense as a retirement provision
Real estate as a retirement provision is popular. Because of the aging of society, the state pension will not be enough for very few in old age. Private provision is therefore important. A common form is the acquisition of real estate. You should heed the following tips:
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- Houses or apartments can generate additional income when rented. Bear in mind that rental income must be taxed. After increasing in value, you can sell objects at a profit. Or you can live in it yourself and thus reduce your cost of living. In addition, you are safe from any rent increases.
- Depending on the planned use, you should carefully consider the location of the property. Avoid overpriced objects. The real estate bubbles in some major cities could soon burst. Better to buy at low prices in a region where value can be expected. Attention: In some regions real estate can also lose value significantly.
- If you want to live in the property yourself, the following questions are relevant: Do you want to spend your retirement years in the area? Are there enough shopping opportunities and medical care? And: an apartment on the fourth floor without a lift, for example, is not suitable as a retirement home. The property and the surroundings should be age-appropriate.
- Remember that real estate involves a certain amount of effort. Land must be managed and maintained. A large property is more expensive than an apartment. Weigh up the pros and cons carefully.
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When buying a property, financing is crucial
The following aspects are important when it comes to financing the property:
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- You can benefit from low interest rates when buying property. Nevertheless, the more equity you can bring in, the cheaper the loans are. Consider taking out a home loan and savings contract. In any case, the property should be paid off by the age of retirement in order to offer you financial freedom.
- When purchasing real estate, also consider the additional purchase costs. Because the costs for notary, broker and the land register entry are not to be neglected.
- Under certain circumstances, the use of state-subsidized financing can be useful. The so-called Wohn-Riester can support you in buying a property. You can also put money back to finance maintenance work and repairs.
- Don’t put everything on one card when it comes to your retirement provision. Real estate markets can collapse. Spread your retirement provision and the associated risk across various forms of investment.
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Thousands of real estate loans invalid – Solmecke explains
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Find out what the three pillars of retirement provision mean in the next article.
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