Buy or Rent a Home – Which is the smarter move?

April 10th, 2021

Every Indian has the ultimate dream of purchasing a house, while most of us compromise on this thought by opting out to stay in a rented home. This is because of the ever-increasing property prices in most of the Indian metropolitan cities. A comparatively lower percentage of the Indian population possess the capability of owning a house. However, those who can afford to own a house are also in a dilemma of whether to purchase or rent the property. They struggle to make a decision on which would work better financially in the long run. This barrier is a major reason for the delay in the purchase of the first property by most of us. The barrier can be overcome by thoroughly understanding the merits and flipside of both buying and renting a property.

Most of us are not capable of investing in a property by paying in a single shot. However, our determination of acquiring a home of our own makes us choose the facility of paying EMIs. This is also a wise choice. But the question is, “Which option is better and smarter?” Let’s see some of the advantages and disadvantages of owning and renting a house so that we can take a better stand.

Buy or Rent a Home – Which is the smarter move?

What makes renting the property a better option?

Staying in a rented house for the initial few years of your life’s journey gives you ample benefits, including the flexibility to change, no debt, predictability of monthly expenses and less burden of responsibility. You are free from the burden of EMI payments, house tax and other property ownership related factors. Renting offers you a lower liability and flexibility to choose the location of your possession. For example, in a metropolitan city, you will be able to rent a house for Rs. 10,000 to 15,000/- per month in a comfort zone with all facilities. You may have to shell out twice or thrice the cost if you choose to own a house by paying EMIs. Moreover, on renting a house, you can cut down the costs of property tax,  homeowners insurance, flood, and earthquake insurance in some areas. You will also acquire the benefits of HRA (Home Rent Allowance) by renting a property. Most of the employers offer 40 to 50% of the basic monthly salary as a home rent allowance.

Why should you own a house?

The intangible benefits of homeownership include the wisdom of belonging to a community and being more stable. The tangible benefits of an own house include tax deductions and equity. Owning a house offers you a proud feeling of ownership and makes you more secure towards spending a happy evening of life. Moreover, rent is a wasteful expense that gives you no physical asset or a wave of mental peace. However, you are rendered with two major benefits by paying EMIs for your own house. You will not only get a secure roof over your head but also increase your proportionality of ownership of the house. Renting offers you shelter for a minimum period of your life. Despite having the flexibility of change, it has a demerit of wasting time, money and energy while vacating the house and shifting to a different possession. You may have to vacate as per the needs of the property owner. These risks are absolutely nullified in the case of owning a house. Investing in real estate gives you a real asset that comes with capital assistance and tax benefits. Though the monthly budget is unpredictable, sometimes, you are never put under the financial stress of paying rents.

Additionally, as a homeowner you can enjoy the freedom to customize your home according to your desire. You can decide the paint shades, room layout, make minor architectural alterations or hire a professional designer to design the home interiors. You can also have a small garden in your balcony or terrace without worrying about any objection.

Choose wisely

It is a tedious task to choose between renting and owning a property if your math is not strong. A proper conclusion can be acquired when you analyse the pros and cons of the two options thoroughly. The understanding can be even better when you consider an example of a person who lives in a metropolitan city and is in a dilemma of whether to rent or purchase a property. Though the rents are initially low, they may increase more than the EMI amount after a few years of tenure. The rent is hiked at a rate of 10% after every 11 months of tenure. On the other hand, the down payment for owning a house may be higher, and you may have to pay EMIs for many years. However, you are left out with a beautiful house that you can claim to be your own in the end. It would help if you considered that you are not wasting or shedding your hard-earned money by renting a property. At the same time, you should also remember that owning a house does not mean that you are multiplying your treasure in the long run. It is up to you to make a good decision.

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