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When is it advisable to stop paying rent to pay off a mortgage? -La Nacion Propiedades
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www.lanacion.com.ar
November 25, 2025
In recent months banks have raised the interest rates on their loan programs: how does this affect the monthly payment? Does it make it more expensive to rent?
Is it in my best interest to continue paying rent or a mortgage payment?Inna Kot - Shutterstock
Mortgage lending returned to banks in mid-2024 with competitive rates averaging around 5.5%, and the real estate market changed from then on. But, since the beginning of 2025, the situation has changed again.
In recent months, the cost of UVA mortgage loans has skyrocketed, and by November 2025, some lenders were offering nominal rates exceeding 15%. This situation is making it increasingly difficult for people who dream of becoming homeowners to access housing.
The result is an increasingly complex equation: is it more profitable to move into your own home or continue paying rent in the city of Buenos Aires?
Should I take out a loan to move into my own home or continue renting? Shutterstock
According to experts, it's advisable to stop paying rent when the mortgage payment is equal to or less than the current rent , especially if the loan has a competitive interest rate.
It is also a good strategy if you have economic stability and initial capital for the loan , since you are building your own equity instead of an expense that ends up being lost.
In the case of UVA loans , whose installments are adjusted for inflation according to the CER index , the increase in interest rates is particularly sensitive. While the indexation system allows these loans to be a viable option in inflationary contexts, increases in interest rates can increasingly restrict access to loans .
The higher the rate, the higher the income that the applicant must justify , since, according to bank conditions, the initial payment cannot exceed 25% (and in some cases up to 30%) of the family income.
So, as the interest rate rises , the down payment also increases , requiring a higher verifiable income. This is the factor that can prevent someone from accessing or buying a particular property, forcing them to look for something smaller or in a more affordable neighborhood.
High bank fees make it difficult to obtain a mortgage loan.Daniel Basualdo
A loan payment vs. renting an apartment
“Those who took out a UVA loan in the first phase—during Macri's administration—saw their initial monthly payments jump from 25% of their income to as much as 40% due to high inflation,” explained José Rozados, director of Reporte Inmobiliario. But he also reflected: “ That percentage is very similar to what a person has to allocate from their salary to pay rent .” Therefore, many people face a crucial decision: is it better to pay a mortgage or continue renting?When LA NACION inquired about this months ago, the calculation between the two operations was quite similar. Now, with the new rate hike, the equation changes :
The choice between buying and renting depends not only on the initial value of the installments, but also on other factors such as: job stability, the necessary initial amount (from 20% to 35%, depending on the bank) and the long-term projection (from 15 to 30 years) of what you want to acquire as a home.
To illustrate the intersection between both alternatives, we take the example of a couple looking for a one-bedroom apartment of 50 m² in Barracas, valued at an average of US$93,250 (about $132 million, taking an official dollar of $1425), so they take out a UVA bank loan for $100 million and have an initial savings of US$23,312 (25% of the value of the property):
- A 20-year UVA loan with an 11% interest rate: the first installment would be $1,100,000 , and it will be adjusted monthly for inflation. The minimum required salary would be $4,400,000 .
- UVA loan for 20 years, with a rate of 6% (from Banco Nación) : in this case, the installment would drop to $800,000 and the minimum salary required would be $3,200,000 .
In contrast, the average rent for a unit with the same characteristics in Barracas is around $637,503 per month , significantly lower than the cases mentioned. Although, in this case, the rent will also be adjusted for inflation, it will be every three or four months depending on the agreement signed in the contract.
Ultimately, the decision to buy or rent will depend not only on a specific financial calculation, but also on each family's profile and the risks they are willing to take . As long as interest rates continue to rise, homeownership will remain more expensive than monthly rent payments, potentially delaying the dream of homeownership for a growing segment of the population.
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