Why Buying a house is Better than Renting?
Why Buying a house is Better than Renting?
While owning a house is typically the dream of every individual, you should do a proper analysis of the pros and cons list of buying a house. Investing in a home or property is a big decision both financially and mentally. You should be able to face the risks along with the benefits of owning a home.
In this article, let us find out Why buying a house is better than renting. We will also compare the process of renting or buying a house.
This is a comprehensive description of advantages of buying a home and a weightage of both renting or buying a house.
Why do you want to rent a house?
You have a job that requires frequent relocation
A job that has more transfers than a stable location which requires you to frequently keep changing cities is a major hindrance in your home-buying. You are better off renting a house wherever you go than buying one without staying in it.
You cannot afford to pay the EMIs associated with a home loan
You have crunched finances where you struggle to make both ends meet. You are worried about whether you can afford to pay your home EMIs. It adds additional burden to your already stressed finances.
You did not find the right property within your budget at your preferred location
You want a home at your preferred location within your budget and you did not find one. Your home search should involve more trusted builders.
You are sceptic of the home-buying process
Home-buying process makes you worried about the paperwork and the associated technical process which is neither clearly explained nor executed.
You have experienced fraud in home-buying process
You yourself have experienced or know someone who has experienced fraud in the form of brokers, price-hiking, unprecedented expenses in the form of commissions, fake properties, huge advances, etc. You may be sceptical about home-buying after a bitter experience.
What are the advantages of renting?
It does not involve liability of maintenance and repairs
You have almost zero liability for any maintenance and repair of the home you are renting. Your out of the pocket expenses are none for the repairs and maintenance of the place you are staying.
You can rent closer to work or your child’s school
Half of your expenses are cut short when you reduce the distance between your work place or your child’s school from home. Sometimes, you end up spending more for transport than your other expenses.
Renting offers predictable monthly expenses
You can set your monthly budget without any unforeseen expenses, like a sudden plumbing failure or a broken tile. You have no liability whatsoever for the repairs and maintenance of the house you rented.
Various options across different budgets
You can shift locations when you don’t feel comfortable in the house you rented. A problem with the building association does not make you think twice about shifting houses.
What are the Disadvantages of Renting a house?
Unpredictable or sudden changes in rent
You never know when your owner will shock you with sudden rent hikes or unpredictable maintenance charges along with the rent.
Illegal evictions citing various unethical reasons
Your landlord or landlady might have gotten a better bargain in terms of rent for the house that you rented. They may unreasonably ask you to vacate the house abruptly.
Your HRA is not enough for rent, you will still need to spend out of your pocket
Though your company pays an allowance for your house, it is but a meagre amount. Today’s cost of living is no match to what your company pays.
Unreasonably high rents in metros and tier-1 cities
High rents and even higher cost of living is an additional burden. Mostly where the working population lives in Metropolitan and large tier-1 cities rents are high and owning a property is almost impossible.
Issues with landlords or owners and the unfreedom to spend your time as you please
Sometimes you get good owners who don’t involve in your personal affairs. But you will be most unlucky if you get a noisy neighbour or an intruding owner. You will need to live according to their terms instead of your own.
Why do you want to buy your own home?
You want to invest in a long-term asset
When you have surplus finances, you think of investing in a permanent asset. A home is one such which gives you great value for what it’s worth.
You have the perfect financial planning for your post-retirement
You plan ahead for all your future needs. It is most important for you to have a roof over your head when you retire. So buying a home seems like the most logical choice.
You want to rid yourself from the rent burden
An annual increase in the rent and increasing rents in metropolitan cities are the major drawbacks of renting a house. It is always best to pay your EMIs and call the place you live your own home.
You have surplus finances to invest
The down payment for buying a house is the only financial commitment you have to take care of. The rest is taken care of by the low interest bank loans.
You can bear the additional burden of a home loan EMI
You have the additional income support that will guarantee timely payment of the EMIs for your bank loan.
You have a permanent job at the said location
You think of buying your own home when you know you want to settle down at a location. It means you have a fixed job location and you work for an organization that does not require your frequent relocation.
What are the benefits of home ownership?
We have already explained why you should buy a residential flat in India and the advantages of owning a home, in our previous blog. (Residential flat in India) Here’s a summary for the same.
We have also explained the income tax benefits on home loans in this post.(Income tax benefits on home loans)
A sense of social and financial security
Long-term investment in assets is profitable
Value appreciation on residential properties
Tax benefits of owning a home
Lower interest rates on home loans
A place you can call home and the pride of ownership
A sense of belonging to a community
Shared responsibilities among home owners in an association/apartment
Now that we have seen the advantages and disadvantages of renting a house and the benefits of buying Vs renting, let us compare the process of buying vs renting a house.
While renting a house is an easy process, the modern age requires a much thorough scrutiny of the background of tenants. It is important that your house remains intact and not much damage is done while you rented it out. The expenses will sometimes fall upon the tenant and the owner may impose strict rules of curfew and restrict consumption of water and electricity.
Though some owners require rental agreements, most of the rental process is informal. Also we should be well aware of the brokerage charges as we might end up paying unnecessarily.
The process of buying a property and the tips for hassle-free home-buying are explained in this article. (Tips for buying a property during lockdown)
Is owning a house important in life?
A place you can call home is what drives most of you to buy a home. Most of us do not dare to attempt buying a house because of the EMI Vs Rent dilemma. Is it a wise decision to spend so much on an EMI when you can rent for a far less amount? Buying a home will bring you closer to the community. Your social life will drastically improve your trust in the community and bring you closer to people. Your children and family too will feel a sense of security among their own and take pride in their achievements along with you.
Home ownership increases stability and sustainability. It will help you stop for a moment and observe the life surrounding you. It will enrich your quality of life. However, if you feel the responsibility and financial burden will stress you out, you most certainly should think twice before making such a large commitment.
Think Wise. Invest Wiser.
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