In India, one of the traditional goals of life has always been owning your own house. It is considered an important milestone in one’s life. Here we take a look at the pros and cons of renting vs buying a home. In modern times, the cities are bursting at the seams, and land costs have been spiralling, and in such a scenario, the dream of owning a home is not an easy one to pursue.

Pros And Cons Of Renting Vs Buying A Home

There is no dearth of financial options in the form of home loan availability, but are you ready for the EMI?
Does it make good financial sense to invest in a home?

Let us look at the pros and cons of renting vs buying a home. Both options have their advantages and disadvantages, and there is no, “one size fits all solution”. It all depends on your financial situation, your income level, your age, how well you are able to make your mortgage calculations, and your financial panache.  The external factors, including the market dynamics of the real estate market and the money market, also play an essential role in determining which option is best for you.

Advantages of Buying A Home

The advantages of owning your own home are many and easily discernible. The main benefits of buying a home are listed below:

• You are your own master, the sense of ownership and pride of having a home that you can call your own is a feeling and experience that is a significant intangible benefit
• When buying a home, you are creating for yourself a physical asset
• Even though you are paying EMI for your home, technically you own the place
• You are saving on the amount of rent that you would have otherwise paid for a rented home
• Your own home provides a sense of stability and security
• A rented home entails more frequent movement because of relocation which in turn results in increased expenditure while buying a home makes you avoid this
• If you have taken a home loan for buying a home, you are eligible for Income Tax relief under the relevant provisions
• Investment in real estate is a long-term and secure investment with the potential for capital appreciation and tax savings

Advantages of Renting Vs Buying A Home

Buying a home may be the desired scenario for all, however, it may not necessarily and always be the best alternative. Depending on an array of factors, renting a house may have more advantages than actually buying a home. This is especially true if you are just beginning your career, and do not want to see a heavy amount being drained every month to pay for the monthly instalments on your home loan.

Here are some major advantages that come into play when you decide in favour of renting a home as opposed to buying a home.

• You do not face the prospect of heavy monthly payments on your home loan
• You can better manage your finances as you can rent a home within your own budget
• If you have rented a home, you have greater flexibility of relocation if the need arises
• Your liabilities are much less as compared to buying a house with a home loan
• You can choose a home that is near your workplace or near your children’s school even if the prices are high in that area as you are opting for rent and looking at buying a home
• You can channel your saving to other investment avenues or enjoy the good things in life

These are some of the advantages of renting and also of buying a home. As you can see, both have their pros and cons. It is not an easy and simple decision to make the rent or buy decision. The decision needs to be taken after a careful and thorough analysis of all factors.

It is no doubt a tough decision and the factors to be looked at including the total capital investment and its breakup. How much would be your own contribution? How much would it be by way of a home loan? What is the down payment? What is the EMI? How much would be the appreciation of the property?

In conclusion, when evaluating your decision, you need to think both in the short and long terms and arrive at a decision that takes care of both.

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