The question of buying a home vs. renting sparks many opinions but no clear answer. You can make a case for both alternatives, but will it render a precise answer? Most likely not.
Some prefer renting a house due to limited funds, while some deem it a superior option due to affordability. But with financial institutes offering a low-cost housing loan, is it the affordable option? Nowadays, you can easily find home loans with EMIs matching your monthly rent.
So, buying a house was the right choice all along? Not exactly. Both options can provide different results to users. You can make an educated decision with minimal risk by learning more about the alternatives. That is why we have prepared a quick guide to help you understand their pros and cons. So read through and learn which one is a better choice for you.
Which Option Is Better For You? Buying vs. Renting a House
Questions to Ask While Assessing the Choices
You should ask these questions before you make a final decision or even learn about them:
- Which option suits your age and objectives?
- Can you move to a new locality?
- Will using a home loan EMI calculator help you find an affordable loan?
- What role will future inflation and savings play?
Once you have a clear answer for the questions, read through to get useful insights.
What are the Benefits of Buying a House?
- Buying a house provides a sense of security. You always know there is a roof above your head. Once the mortgage is paid, you can rest assured always to have a place you own.
- A home adds to your assets even if it is acquired through a housing loan. Paying a mortgage is not an expense; it is a contribution to reducing liabilities. The same will never be true by renting a house.
- Nowadays, finding an affordable home loan does not require hours of running around and long form-filling. Financial institutes have both simplified the application and repayment process. You can make use of a home loan EMI calculator to find a low-cost EMI for a longer tenure.
- In most cases, buying a home is a good investment. Unfortunately, real estate is among the rare assets that appreciate over time. On average, the value of a house increases 3% to 4% every year. For instance, a house worth 20 lakh rupees will be valued at 24 lakhs in five years.
- Owning a home can address the issue of inflation. Even with surging inflation, you will pay the same EMI for the home loan. Moreover, a married couple can even be exempt from capital gain tax made on a house’s sale.
What are the Disadvantages of Buying a Home?
- A high initial cost is the most prevalent reason many people refrain from buying a home. Generally, you must pay approx—33% of the property value to secure its ownership.
- You need to pay double taxes during the house’s purchase. Similarly, you will also pay capital gains taxes unless you are a married couple.
- Unfortunate circumstances can increase your home’s maintenance and improvement costs.
- Buying a house restricts your options for a long time. While there is an option of renting it, but other than that, you have a considerable amount invested for several years.
- You cannot sell fixed assets like a home on short notice. Thus, it will not help in case of a sudden fund requirement.
What are the Benefits of Renting a Home?
- Renting a home provides liberty since you are not restricted to one space. In addition, you can quickly shift homes without spending much time or money.
- It avoids any expenses like maintenance, insurance, and the IBI. Moreover, expenses like community spills are not an issue with renting.
- It does not restrict you from missing out on career opportunities since you can find a new property and relocate without hassle.
- You can terminate a rent agreement in no time. Contrarily, owning a home requires a long-term commitment.
What are the Disadvantages of Renting a Home?
- Generally, monthly rental expenses are higher than owning a home unless there is a mortgage.
- There is no sense of security as landlords can ask you to leave the property at any time.
- Customization is not an option when you rent a property.
- The cost of renting a home stays constant since housing loan repayments are tax deductibles. Therefore, it decreases the overall cost of an owned home while renting is not eligible for any tax deductions.
As already mentioned, there is no straight answer to the question of buying vs. renting a home. The final choice entirely depends on your preferences and circumstances. Of course, renting a home is ideal for the short term, but you can even consider buying a home with the market offering affordable home loan options.
The article provides keen insight into how both options can affect your portfolio. So go through the information and choose the best option for you.