7 July 2020
English
Buying a holiday home is a decision that should be considered together with the household as it involves considerable expenditure for the family. It should take some aspects into consideration and assess the advantages and disadvantages of having a second home.
In Portugal, the Algarve is one of the favourite destinations for families to buy a holiday home. This is due to the proximity of the beaches with warmer water and also due to their climate. However, the question may arise whether it pays more to rent just for the holiday season or to opt for the purchase
To be able to calculate the impact it may have on your finances, and after visiting some desired homes, you should examine the financing conditions for a home loan to buy a holiday home. Then, after knowing the total cost of the credit and the monthly amount, you will have to calculate your effort rate to check that it does not represent a major burden on the family's personal finances taking into account your income and expenses. This rate should not exceed 33%, or one third of total household income.
One of the advantages of buying a holiday home is that later on when you retire you can sell your home in town and move into your second home. Many pensioners and retired people are moving to the Algarve due to its climate conditions and quality of life.
In addition, you can take short holidays or weekends during the year at no extra charge for accommodation, and your children or family can take holidays and invite friends at a reduced cost. On the other hand, you have the advantage of being able to rent your holiday home temporarily if you are not using it (always letting the bank that holds the credit know of your intention to rent).
The disadvantages are that you are a little more limited to travel to other destinations, both financially, since you are paying your house to the bank, as well as due to the location of the accommodation.
The values for renting a holiday home, taking as an example the Algarve and proximity to the beach, are around EUR 1500 per fortnight. If the family wants to spend a 15 day holiday on Easter, 15 days in the summer and 7 days on New Year's Eve, the amount spent over a year can be as much as EUR 3750.
When compared to the purchase, renting a house is less than the amount of the financing. In addition, you can choose to rent a holiday home in a different location because apart from the fact that the rental price is lower and you do not have the responsibilities of a second home, it is not fixed to a location. However, you are concerned about accommodation costs, you always look for a holiday and you will be paying for a house that will not be yours.
Most people might think it would be more advantageous to buy a holiday home. However, there is no better option as it depends on several factors in the household. Whatever your choice, contact our consultants who will help you make the best decision.
If your decision is to buy a house, research several loan options to choose the one that best suits your financial capacity and you will be making an excellent investment. If you prefer to rent, you will have no charges or expenses with the bank and you can always spend holidays elsewhere, without having to worry about buying a property.
By renting you can get a more economical holiday, in the location you want. However, do not forget to compare the prices of the local hotel chain because sometimes some promotions may arise and may reach lower prices than the flats.
Local accommodation has the advantage of saving on meals, using the kitchen, and of hosting more people than simple hotel rooms. The supply of local accommodation for tourists has grown considerably in recent years and demand has grown simultaneously. In addition to foreigners, more and more Portuguese are opting for local holiday accommodation, looking for more accessible alternatives.
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