Renting vs. owning a home is a dilemma that the majority of the audience faces. When it comes to renting, people often argue that rent costs less as compared to EMIs. And those who favor buying can cite long term benefits and freedom it offers. Every Indian dream of owning their own house but the sky-rocketing property prices keep all decisions at the shore.
What should be your ideal choice? It depends on various factors, needs, and goals. Let’s discuss this in brief to simplify your decision.
When you start your professional career renting a house is an obvious choice because of the flexibility it offers. You don’t have to pay a lot and still can lead an affluent lifestyle with decent money in hands. But as time progresses stability and investment decisions become priorities.
In this case, especially insufficient information can lead to disaster. So let’s discuss the advantages and disadvantages of renting a house.
On the other hand, there are many disadvantages to renting a house as well. Let’s have a look at them.
The above-mentioned cons are heavily overshadowing pros. Is buying the right solution to avoid these cons? Let’s see.
If you are certain about the city in which you are going to stay in the future it is highly recommended by experts to own a home. Owning a home forces savings in the form of EMIs, which are otherwise spent if you rent a property.
But there are many other big advantages of buying a home like:
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Now that we have understood what are the advantages of owning vs renting a home. We have enough reasons to justify why buying is better than renting? But do finances also tell the same story?
Let’s take an example of three friends Sameer, Anand, and Jacob. (All figures in rupees)
Sameer - Pays rent for 20 and more years.
Anand - Pays EMIs for 20 years.
Jacob - Pays rent for 20 years + investing 10,000/monthly.
Sameer (Rent only) |
Anand (Buy only) |
Jacob (Rent + Investment) |
Rent - 15,000 appreciating @8% per year |
House value = 50,00,000. Loan amount 40,00,000 at 8% interest |
Rent - 15,000 appreciating @8% per year + 10,000 investment per year |
In twenty years rent becomes 69,914/monthly |
EMI = 46,607. Total amount paid in 20 years = 1,11,85,680 |
In twenty years rent becomes 69,914/monthly |
Total rent paid by you in twenty years becomes 89,99,350 |
Property value appreciation at 8%. The total value of the property after twenty years = 2.33 crores |
Total rent paid by you in twenty years becomes 89,99,350 |
Lived affluent life in initial years but later rent becomes a burden. |
No rent burden. Owns a house. |
Rent becomes a burden. But at the end of 20th year gets 48,61,468. And rent continues... |
Even after deducting taxes, maintenance and interior costs buying a home would be a better decision by huge margins. Yes, there are conditions in buying a house but the benefits you will reap in later years are convincing enough to go ahead with the buying decision.
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