THE ULTIMATE DILLEMA – BUYING V/S RENTING?

Owning a house can source a great feeling of accomplishment, ownership and satisfaction. But of course, it can be quite challenging too!

A well to do person, earning a princely sum every month can either rent a house or prefer to take a home loan to buy a residential property for himself. However, with interest rates on home loans steadily climbing, the latter seems to be a choice many people now hesitate to take.

An ‘affordability gap’ has come up as a result of the crushing combination of high home costs and not so high incomes. This can at times put one in a dilemma whether to choose a rented house or to buy it.

Both buying a house and renting it have own set of costs attached to them.

Like, buying a house helps you to freeze your monthly payments once the loan is paid off and comes with a guarantee of appreciation over a period of time.

An own house also comes with the liberty of being able to decorate and design it according to one’s will too! But, this is followed by the responsibility of maintenance.

A person who is transferred frequently, or a family looking for short term stays might not find the ‘buying option’ feasible. Relocation plans, if any, need to be revised till the current property is disposed off or rented properly…which is not so easy! And lastly, the property taxes, stamp duty, broker’s fee, insurance costs, society charges, registration fees etc all tag along with the purchase.

…and homes loans are not as easy as they seem! Loans might take care of 80-85% of the requirement but the remaining amount is left to you to arrange!

On the other hand, renting a house provides you with a greater freedom and flexibility of choices. The headache of maintenance lies solely with the landlord and you are not responsible for that. 

However, the landlord can send you a notice to vacate the place at any time on violation of a term or condition mentioned in the agreement.

He/she can also increase the monthly rent at the end of the 11 month agreement. This increase is normally 11%. The main reason behind this increase is the high in appreciation of the property.

…And, of course, any redecoration, painting, renovation requires the permission of the landlord. In some cases, it is strictly not allowed!

Just like a down payment for a home loan, the landlord might ask for a ‘deposit’ at the time of renting the house which is generally 2 months of rent in advance.

Buying or renting a house is largely based on personal preferences, perceptions and financial factors.

In one sentence, it is the battle ‘capital appreciation’ v/s ‘flexibility’.

If you’re looking to increase your assets and make your investment portfolio look attractive, buy a house.

If you’re looking for flexibility or choice and freedom of relocation, renting a house would be a more practical option.

Buying a house is an excellent investment prospect.

Renting a house is advisable in case of unfavorable financial circumstances.