To Rent or to Buy in Brno?
This article was written by Monika Souza, a European Financial Planner. With over 10 years of experience, she advises expats living in Brno on investments, pensions, mortgages, and long-term wealth strategies.
A mortgage is more than a loan. Often, it is a decision as to where you will pay to live for the next thirty or more years. You will be paying someone either way, a bank or a landlord, so the real question is who gets your money.
Most of my clients fall into one of two groups:
1] The expat who decided to stay in Brno
I am currently helping an expat family find a home and arrange their mortgage. They know they want to stay in the Czech Republic: their children are growing up here and they want a stable life in one place.
For them, buying makes sense, and even with the mortgage, they still have:
- an emergency reserve;
- money for repairs and unexpected expenses;
- sufficient monthly flexibility;
- and space in their budget for the long term.
Owning a home can be part of a retirement plan, but it should not be the entire retirement plan.
Rates today are around 4.89–4.99%. Many people assume this is a bad moment to borrow, but I do not see it that way.
The length of the loan shapes the monthly cost far more than the rate does. Here is a calculation on a loan of CZK 8,000,000 at 4.99%:
- With a 30 year maturity: CZK 42,897 per month
- With a 25 year maturity: CZK 46,721 per month
The difference is roughly CZK 3,800 a month. Put that into an investment portfolio and it can either pay the mortgage off years earlier or help to build the passive income that gives you real freedom later.
2] The expat who’s not committing to Brno
My second client wants close to the opposite. He has no intention of committing to one city, or even one country, so we built a very different plan around him.
We went through the numbers together. He pays about CZK 20,000 a month in rent, and buying would add roughly another CZK 25,000 on top of that. Instead of handing that difference to a bank, we put it into an investment portfolio and raised his target passive income to cover his future housing costs. He can choose where he lives, year by year, with no bank and no flat tying him down.
This is an equally sound plan, but it depends on one step most people skip: if you expect to rent for life, you will need considerably more capital in retirement, and the portfolio has to be built for that.
A bank will never ask you how you want to live, where you plan to retire, or whether a high monthly payment fits the rest of your life. Brokers are no different. Their job is to sell a product, and here the product is a mortgage.
So, these are the questions you need to ask before you buy:
- In ten years, what matters more to you: a home that is yours, or the freedom to live wherever you choose?
- When and where do you want to retire, and how do you want to live at that age?
- Would a mortgage limit your ability to invest, travel, take time off, or live a comfortable life?
- Are you buying because it fits your life plan, or because everyone around you is buying?
One thing I will add: if you do want to own a property, buying sooner is better than waiting. Prices keep climbing regardless of where rates go, and holding out for a cheaper loan often means paying more for the flat itself.
Where to start?
Should you take on a mortgage, or invest the same money and build enough passive income to rent comfortably even in your retirement? Nobody can answer that without seeing your real numbers and the big picture. That is what a proper financial analysis is for.
Consider getting professional help to get you started. Here’s a list of expat-friendly financial advisors the Brno Expat Centre tested for you. This article was by Monika Souza.