Renting vs. Buying – should you make the big leap ?
The biggest decisions of your lifetime, gets simplified here!
Buying a new house is one of the biggest decisions anyone makes in their lifetime.
But the question that arises most often is whether to rent a house or to buy one. While buying a house requires immediate availability of funds, renting does not provide the same security of owning a home. Both cases present some compelling arguments.
The decision usually depends on your current financial condition, ease of moving, availability of homes and other such personal circumstances. Lets’ take a look at some factors that influence the decision of renting vs. buying a house.
Pros & Cons of Buying a Home
Buying a home is a huge financial commitment. However, the introduction of home loans has made this task much easier. Home loans allow you to make the big leap and own that beautiful home you always wanted.
Owning a home has a lot of emotional value attached to it as it provides long-term security and a sense of permanency to you and your family.
When you buy a house, there are a lot of other benefits too. Buying a house is a long-term investment for one, and you can expect high returns as the property prices are usually on the rise. This gives you the added advantage of a possible lower interest rate in the future.
In addition, when you take a home loan you can avail of tax benefits under Section 80C of the Income Tax Act. Lastly, your credit profile improves if you own a home.
The downside to buying a home is that you are committed to staying in the place for at least 10-15 years. Therefore, you should make sure you like the locality too, as moving to another home will not be that easy.
Additionally, if you are taking financial help to own a home, there are some initial costs that need to be incurred, including the down payment and additional fees.
And after the down payment, comes the monthly interest or the mortgage. Other recurring costs include home insurance and property taxes, although these are tax deductible. Maintenance also becomes your responsibility, so you have to pay for day-to-day expenses, such as costs for plumbing issues, chipped walls and other such breakdowns.
Advantages & Disadvantages of Renting a Home
On the other hand, renting a house gives you relative freedom from the responsibilities of owning a home. For all maintenance issues, you can simply call the owner and get it done. You do not have to pay insurance and property taxes per month either.
And say, if you want to move for any reason, you can just pack up and leave as there is very little procedure involved. You will, however, need to serve a notice as per the initial agreement.
There are some disadvantages to renting a home. The money that you pay as rent does not go towards any investment and therefore could be considered unproductive.
Dealing with the landlord on a daily basis can be a tedious task, and disputes on home-related issues are common. Your initial deposit can get wiped out eventually with the maintenance costs incurred. In addition, you do not get complete control of your home, that is, there are limitations on the way you can decorate or furnish your rented home.
Renting or Buying, Which is Right for You?
As you can see, renting vs. buying a house is a tough decision to make. It is therefore advisable to consider both options thoroughly, especially when the interest rates are low.
In which case there could be very little difference between buying and renting a home. Check your monthly outgoing before making such decisions. A simple comparison of your monthly rental and your monthly EMI will give you the answer.