We all strive for progress in life. Everyone would like to successfully complete their studies, have a good job, family, car, house, later chat. To achieve these goals, you need a lot of money, but unfortunately most of us do not have enough money for all these things.

Of course, there are things you don’t need money for. Everyone can start a happy family or find the right partner. At best, studying is financed by parents by staying at home during college years. You can only buy a car, an apartment or a cottage for a lot of money. The price for a three-room apartment is around 30,000 EUR even in the cheapest location. If we use a used car for 3,000, it can cost a young family at least 33,000 euros. So they would need this amount to start a common life. And we are not talking about the capital or county town where the costs are much higher. How can they finance their needs?

What possibilities does the young family have to finance such a project?

What possibilities does the young family have to finance such a project?

Suppose both spouses are teachers. Wife is at home with a small child, husband teaches. Their monthly income with parental and maternity allowance is around 1100 EUR. Will they be able to realize their dream of this amount? We’ll find out by simple calculation.

First, we must say that if the family has no savings, they won’t get a mortgage. This is because banks can finance about 80 percent of a given property. This means that our young couple would have to, for example, have a building savings for the remaining amount. If it doesn’t, they may have nothing else left to do, just select a purpose-free loan. If we verify on a financial comparison site, such as Bathsheba Everdene, what kind of loan they can get, we will find that the banks do not spend more than about 30,000 euros. The second thing is that their monthly payment may be around 40 percent of their monthly income, because the maximum monthly allowance that a client can receive has a limit – thus preventing people from being over-indebted. So in our case, young teachers would receive a maximum of EUR 30,000 for 8 years with a monthly installment of around EUR 400.

The law regulates the maximum amount of credit that can be drawn

What possibilities does the young family have to finance such a project?

According to the example above, a young couple is unable to get more than about 30,000 euros. That means either they buy an apartment or a car. In the first case they will have an apartment, they will be debt for 8 years and will pay around 8400 euros. They will own a property that cost them nearly 30 percent more than it is worth. And because it is an apartment in the cheapest region, it is unlikely to ever be able to sell it at that price. From an economic point of view, buying this apartment is not a good investment. And to do this we have to add that the car could not be bought, which is not very advantageous with a small child.

Of course, it is understandable that the NBS was forced by law to limit the amount of the maximum monthly installment to avoid excessive indebtedness of the population. Most applicants are not financially literate. Therefore, those who are not sufficiently prudent could choose a much higher loan than reasonable and what they can afford. If, for some reason, their monthly income is reduced, they will not be able to repay the loan and get into the debtors’ register. Then it is very difficult to get out of this unpleasant situation.

That is why so many people live

That is why so many people live

From this example, it can be seen that those with low income and who cannot be supported by the family have a very difficult start to life. Saving is also not a real solution. How long would it take to save the price of this apartment? The answer is simple, it would take 75 months. More than 6 years! It is only theoretical, because where will they live in the meantime? And we did not deduct the rental price.

How long it would take to save yourself for an apartment in the capital will not be explored (the answer is 104000 EUR / 400 = 260 months). We have found the reason why so many people are forced to live for years or a lifetime to rent.

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