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As Indians, we are emotional about every aspect of our lives, and buying a house is one among many. In Indian culture, owning a home is often seen as a crucial milestone in life, reflecting achievement and success. For us, home is not just a place to live but a space where we create beautiful memories with our loved ones. Many Indian families (I'm sure yours too) consider property as a legacy to pass down to their children, thus, ensuring a secure future for the coming generations.
As much as we wish to buy a house, it's not easy to buy one. Prices of properties are appreciating at bullet speed and it has become extremely difficult for middle-class and upper middle-class families to live in their own homes. Well, in that case, what other option remains? Renting a house. Although renting a house might sound like a smart financial decision in the short term, it can't be considered a sustainable decision in the long run, especially if you are living with your family. The rent vs buy debate is on for today as I'm about to give you some valuable insights into whether to rent or buy a property. So, let's move forward and learn something new today.
Embracing the Rental Lifestyle
Renting a house is of course a convenient thing to do especially when you're switching places every year or two due to your professional obligations.
Here I'm sharing the pros and cons associated with renting a house.
Pros:
Flexibility: Renting a house provides more flexibility as you can change your place as per your budget anytime you desire without much hassle.
Minimal responsibility: Since you're living in a rented home, you're not obliged to bear maintenance and repair expenses as they are your landlord’s headache. You also don't have to buy home insurance or pay property tax which will eventually lighten up your financial load.
No chaos of down payment: Tenants are saved from the trouble of down payments. They only have to pay a one-time security deposit which is usually equivalent to a month's rent before moving to the house. That security deposit is completely refundable once you leave the property. However, the owner has the right to deduct from your SD if you have damaged their property.
Cons:
Not much stability: Although the tenure of a rental agreement is usually 11 months in India, your owner can tell you to pack your bags once your rental lease expires. It is up to your landlord for how long he or she allows you to stay in that particular property.
Frequent rent increases: Technically, rent increases every year by 10% but most landlords exceed the % as per their choice and you either have to pay them more or leave the premises at the earliest.
No room for personalization: Since you don't own the house, you can't make permanent changes as per your whims and fancies. You've less control over making changes to the property which will make you feel less at home.
Enjoying the "Homeowner" tag
Buying a house is every Indian's dream. For Indians, purchasing a house is more than a financial transaction as we Indians take ownership very seriously.
Allow me to share some pros and cons of buying a house that I've come across after thorough research.
Pros:
Stability: As a homeowner, you are well-protected from sudden rental increases and eviction notices. When you buy a home, you don't have to worry about where you'll live next in the upcoming year.
Liberty: It's your house! You can keep it the way you want without any landlord's approval. Whether it's changing the living room windows or building a new wardrobe, you will take the call!
Equity build-up: Your house is your greatest asset. The property that you've purchased today is only going to appreciate with time, thus, giving you a higher ROI in the coming years. Remember, paying rent is an expenditure but paying EMI is an investment!
Tax Benefits: When you buy a home with a home loan then you get a tax break. As per the IT Act, you can claim tax deductions on both interest paid and the principal amount of your home loan.
Cons:
Less mobility: When you buy a house, you tie yourself to a specific place. If you need to move due to job changes or other reasons, selling the property or finding reliable tenants can be a time-consuming and exhausting process. So, yes, moving out from your own house is not as easy as moving out from a rented house.
Expensive affair: Buying a house is expensive, period. From paying a down payment to EMI to loan interest to bear maintenance and repair expenses, everything about owning a house is expensive. Also, how can I forget that dreadful property tax which you have to pay every year without fail? Let's not forget to add up home and fire insurance premiums that you've to pay from your own pocket.
Fear of losing your home: A majority of people buy a house with a bank loan and pay EMI every month to repay the loan. In case you skip your EMI payments due to job loss or any other reason then banks have the right to auction your home to recover the money. This fear haunts every homeowner and that's why most people stay away from buying their own homes.
To sum up, whether you should buy or rent a house completely depends on your current and future financial health.
Determinants that matter to make this important decision - financial situation, long-term plans, housing market conditions, and personal preferences. Buying a house can build equity and offer stability while renting provides flexibility and fewer responsibilities. Evaluate your situation and use your best judgment to take the right call.
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